Private coachings for CA, CS, CMA etc. are not educational institution, liable to pay GST

Last updated: 21 July 2021

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The Kerala Appellate Authority for Advance Ruling (AAAR) has ruled that private coaching centres preparing students for professional exams like CA, CS, and CMA are not 'educational institutions' for GST purposes. The ruling clarified that only institutions providing formal education leading to recognised degrees or certificates, or vocational courses, qualify as educational institutions. Therefore, these private coaching centres are liable to pay GST on their services.

Court :
AAR, Kerala

Brief :
In Re: Logic Management Training Institutes Pvt. Ltd. [Order No. AAAR/13/21 dated May 05, 2021] the Logic Management Training Institutes Pvt. Ltd. ('the Appellant') appealed against the AAR, Kerala ruling wherein it was held that institutes imparting education to students for becoming Chartered Accountant ('CA'), Cost Accountancy, Company Secretary ('CS'), Certified Management Accountant ('CMA') etc are not covered under the definition of "educational institution" in Para 2 (y) of the Notification No. 12/2017 Central Tax (Rate) dated June 28, 2017 ('Services Exemption Notification').

Citation :
Order No. AAAR/13/21 dated May 05, 2021

In Re: Logic Management Training Institutes Pvt. Ltd. [Order No. AAAR/13/21 dated May 05, 2021] the Logic Management Training Institutes Pvt. Ltd. ('the Appellant') appealed against the AAR, Kerala ruling wherein it was held that institutes imparting education to students for becoming Chartered Accountant ('CA'), Cost Accountancy, Company Secretary ('CS'), Certified Management Accountant ('CMA') etc are not covered under the definition of "educational institution" in Para 2 (y) of the Notification No. 12/2017 Central Tax (Rate) dated June 28, 2017 ('Services Exemption Notification').

AAAR, Kerala observed that the Appellant is not providing any elementary education or pre-school or upto higher secondary level or equivalent, not is it engaged in providing Education as part of approved vocational education course. Further, the Appellant is not issuing any certificate or degree and it is not mandatory for student to taking coaching from institutions like that of Appellant’s for becoming, CA, CS, CMA etc.

Hence, held that the Appellant cannot be categorized as ‘education institution’ and upheld the ruling of AAR, Kerala.

Further, clarified that conduct of degree courses by colleges, universities or institutions which lead to grant of qualifications would be covered under the definition of "educational institution", and training given by private coaching institutes would not be covered, as such training does not lead to grant of recognized qualification.

FAQ :

No, according to the AAAR, Kerala ruling, private coaching centres for professional exams like CA, CS, and CMA are not classified as 'educational institutions' for GST purposes.

The AAAR found that these institutes do not provide elementary, pre-school, or higher secondary education, nor do they offer approved vocational courses. They also do not issue certificates or degrees, and their coaching is not mandatory for obtaining professional qualifications.

Institutions that conduct degree courses leading to the grant of qualifications, or those providing elementary, pre-school, higher secondary education, or approved vocational courses, are considered educational institutions.

Yes, as these private coaching centres are not classified as educational institutions, they are liable to pay GST on the services they provide.

The ruling is based on the definition of 'educational institution' in Para 2 (y) of Notification No. 12/2017 Central Tax (Rate) dated June 28, 2017, which excludes training that does not lead to a recognised qualification.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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