Coaching Service with Goods is Composite
Supply & not mixed supply: AAAR

RAJASTHAN APPELLATE
AUTHORITY FOR ADVANCE RULING
GOOD AND SERVICES TAX

 Case Name: Resonance Edventures Limited (GST AAAR Rajasthan)             Advance Ruling No.: Order No. RAJ/AAAR/03/2023-24
 Date of Judgement/Order: – 23/11/2023

DISCUSSION & FINDINGS:

Point 8.1 The AAAR, Kerala in the matter of appeal filed by M/s LOGIC MANAGEMENT TRAINING INSTITUTES PVT. LTD. vide their Order No. AAAR/13/21, dated 5-5-2021 pronounced

Issue No. 6 : The appellant offers hostel facility to its students at a rate of less than Rs. 200/- per day per person  including food and at a monthly rate of maximum Rs. 6000/-, Whether there is any tax liability on such hostel fee?
Decision : The coaching/training provided by the appellant to their students along with hostel facility qualifies to be categorized as a composite supply as defined in Section 2(30) of the CGST Act, 2017 As per Section 8(a) of the CGST/SGST Act, 2017, the entire supply is to be treated as falling under “SAC – 9992-999293 – Commercial training and coaching services” being the principal supply and will be liable to G5T at the rate applicable for the principal supply.
Issue No. 7 : Whether there is any tax liability on the appellant for selling text books to its students?

Decision : As held in respect of hostel fees, the sale of text books to the students qualifies to be categorized as a composite supply as defined in Section 2(30) of the CGST Act, 2017, As per Section 8(a) of the CGST/SGST Act, 2017, the entire supply is to be treated as falling under “SAC – 9992999293 – Commercial training and coaching services” being the principal supply and will be liable to GST at the rate applicable for the principal supply.

Point No:- 8.2 The AUTHORITY FOR ADVANCE RULINGS, MAHARASHTRA in the case of Rahul Ramchandran       (Inspire Academy) vide their order dated 23.05.2022 held 

Question 3:- Whether “Nashik Cambridge Pre-school” is entitled for Nil rate of tax as per Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017, on the supply of some goods to its Pre-school students, without any consideration?
5.7.1.1 From the submissions made by the applicant, it appears that the applicant will be supplying goods such as: books, stationery, drawing material, sports goods, foods items, milk, beverages to its students without any considerations, as the cost thereof will be covered in the fee charged.
5.7.1.2 From the submissions made by the applicant, it is seen that, the cost of such goods, are included in the education fees charged by the applicant which would imply that the applicant will be supplying the said goods as part of a composite supply comprising of principal supply in the form of educational services and Since, the necessary books, stationery, drawing material, sports goods, foods items, milk, beverages are supplied to its students as a part of such composite supply wherein the principal supply of service is exempted under Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28-6-2017, “Nashik Cambridge Pre-school” is entitled for Nil rate of tax as per Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017, on the supply of the mentioned goods to its Pre-school students, without any consideration.

8.3 It is also pertinent to note that the appellant has placed reliance on the Rajasthan Authority for Advance Ruling order dated 02.09.2021 in respect of M/s Symmetric Infrastructure Private Limited, Kota. On perusal of the said order we find that M/s Symmetric Infrastructure Private Limited had sought Ruling on similar questions as in the instant case. We note that the AAR, Rajasthan in the said order has pronounced in their Ruling and answered the following questions:-

Q.1. Applicant supplies services of coaching to students which also includes along with coaching, supply of goods/printed material/test papers, uniform, bags and other goods to students. Such supplies are not charged separately but a consolidated amount is charged, the major component of which is imparting of coaching. In such circumstances, whether such supply shall be considered, a supply of goods or a supply of services?
Ans:- Supply by the Applicant will be considered ” Supply of Service”.
Q. 2. If the answer to the aforementioned first question is supply of service, whether such supply shall be considered as composite supply? If yes, what shall be the principal supply?
Ans:- Yes, such supply shall be considered as Composite supply, and Coaching service shall be principal supply.

8.4 In view of the above, we are of the view that the AAR were wrong in the instant case to hold the supply as mixed supply. In the case of M/s Symmetric Infrastructure Private Limited having completely same set of facts and same questions as the ones in the instant case, the authority had held that the supply made by them is composite supply.

8.5 Further, we note that the Ruling dated 02.09.2021 in the case of M/s Symmetric Infrastructure Private Limited has not been challenged either by the applicant or by the proper officer/junctional officer/concerned officer(department).

RULING

In light of the above discussion and findings, we hold that the Authority of Advance Ruling, Rajasthan has erred in pronouncing the impugned supply as mixed supply. On the contrary, we hold that the supply of coaching service by the appellant along with supply of goods/printed material/test papers, uniform, bags and other goods to their students is composite supply and their principal supply is coaching services. We modify the Advance Ruling No. RAJ/AAR/2021-22/35 dated 28.12.2021 to this extent.