GST Not Applicable if School Fees Cover paper, milk, biscuits

The Authority for Advance Rulings (AAR) Maharashtra bench recently ruled that when food items are provided to school children and their cost is included in the fees charged, they are not subject to goods and services tax (GST).

This advance judgement will undoubtedly bring relief to parents who would have had to bear the brunt of such a tax. While advance judgements do not establish a legal precedent, they can be persuasive. Rahul Ramchandran, who had started a new firm called Nashik Cambridge Pre-School, requested the judgement.

The applicant is registered under Goods and Services Act 2017 for Trade Name “Inspire Academy w.e.f. 28/05/2020”, under which it is in the business is of selling stationery, educational books etc. mainly to school students.

This application is pertaining to applicant’s new business, under the Trade name “Nashik Cambridge Pre-school”, for which he is holding Udyog Aadhar Registration Certificate No. MH23D0045306 issued by the Ministry of Micro, Small and Medium Enterprises, Govt of India. Applicant is not registered u/s 12AA of Income Tax Act for “Nashik Cambridge pre­school”.

“Nashik Cambridge Pre-school” intend to supply the following to its students, faculty and staff:

1) Pre-School education service to its students against fee.

2) Necessary goods such as books, stationery, drawing material, sports goods, foods items, milk, beverages etc. to its students without any considerations, as the cost thereof will be covered in the fee charged.

The Question was that, “1. Whether “Nashik Cambridge Pre-School” is covered under Notification No. 12/2017-CT, dated 28th June, 2017 SI No. 66, under the Heading 9992 under GST Act?

2. 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/, on the supply of Pre-school education service to its students against fee?

3. Whether “Nashik Cambridge Pre-school” is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/25017-CT (Rate) dated 28/06/2017, on the supply of some goods to its Pre-school students, without any consideration?

4. Whether “Nashik Cambridge Pre-school” is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/25017-CT (Rate) dated 28/06/2017, on the supply of some goods to its Pre-School students for some consideration?

5. Whether “Nashik Cambridge Pre-school” is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/25017-CT (Rate) dated 28/06/2017, on the ,;supply of transportation service to tits Pre-school students without any consideration?

6. Whether “Nashik Cambridge Pre-school” is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/25017-CT (Rate) dated 28/06/2017, on the supply of transportation service to its Pre-school students for some consideration?

7. Whether “Nashik Cambridge Pre-school” is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/25017-CT (Rate) dated 28/06/2017, on the supply of transportation service to its faculty and staff for some consideration?

8. Whether “Nashik Cambridge Pre-school” is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/25017-CT (Rate) dated 28/06/2017, on the supply of canteen service to its faculty and staff for some consideration?”

The Authority Ruled out that, “Nashik Cambridge Pre-school is also entitled to a 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 pre-school education service to its students against fee; on the supply of transportation service to its pre-school students without any consideration; on the supply of transportation service to its pre-school students for some consideration; on the supply of transportation service to its faculty and staff for some consideration; and on the supply of canteen service to its faculty and staff for some consideration.”

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