GST Rate of 18% applicable on Educational and Training Services: AAR

The applicant is an individual who provides Educational and Training Services to M/s Mentors Eduserv, Bihar, and was paying tax under the category of Other Educational and Training Services under HSN 999294 of chapter 99 of the tariff code which is taxable at 18% under GST law. Subsequently, the applicant was advised by the Income Tax authority that the service provided by them is in the nature of employer and employee. Therefore, it will be out of the purviews of the GST Act as per entry 1 of schedule III read with section 7(2).

The main question before the authority to be decided was whether the services under consideration will be covered under entry 1 of schedule III of the RGST/ CGST Act or not.

The Authority went through all the relevant legal provisions and was of the view that the explanation in section 15 defines the related person. Schedule I of the GST Act deems every transaction between the related or distinct person as a supply, even if there is no consideration. Also, schedule I of the GST Act excludes the supply by an employee to the employer from the GST scope and is deemed as no supply.

The tribunal on going through the facts that the applicant intends to provide Educational and Training Services to its service recipient i.e., M/s Mentors Edusery on the basis of section 13 of the agreement found that there is no establishment of term ’employment’ under the S.13. Hence, activity or transaction between service provider i.e., applicant and service receiver does not constitute employee-employer relation. Thus, the tribunal held that this activity or transaction is not covered under entry no. 1 of the Schedule HI of the act and resulted in a ‘supply of service’ as per Section 7 of the CGST Act, 2017 and tax will be leviable under section 9 of the CGST Act, 2017 and valuation thereof will be done as per section 15 of the CGST Act, 2017.

Therefore, the tribunal held that the services under consideration will not be covered under entry 1 of schedule III of RGST/ CGST Act, 2017.