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Doing an executive post-graduate programme at the Indian Institute of Management (IIM) may pinch your pocket more with the Authority for Advance Ruling of Madhya Pradesh ruling that such course will not be exempted from the Goods and Services Tax (GST). The GST rate on such course is 18 per cent.
The Indian Institute of Management-Indore had approached the AAR for a ruling on two issues: first, whether the course —Executive Post Graduate Programme in Management (EPGP) — attracted GST, as the Indian Institute of Management Act 2017, notified with effect from January 31, is exempted from the tax. The second was whether the fees collected for the programme for the academic session 2018-19 is exempted; whether it is applicable for the fees collected before the enactment of IIM Act 2017 or only for the amount collected after the enactment of the Act?
The core of this issue lies in two notifications (11/2017 and 12/2017). One notification prescribes GST at the rate of 18 per cent on educational services, while the second prescribes exemption for certain categories under educational services.
It said that services provided by an educational institution to its students, faculty and staff and also various services such as catering, security and conducting examination provided to the educational institutions will not attract GST.
The said notification also exempted the two-year full-time Post Graduate Programmes in Management (for which the admissions are made on the basis of Common Admission Test -CAT), Fellow Programme in Management and Five-year integrated programme in Management, from GST. The notification by the Madhya Pradesh Government had also listed the same three programmes.
IIM-Indore submitted that services provided by an education institution which provides education as a part of curriculum for obtaining a qualification recognised by any law for the time being in force is exempted under notification for exemption. It also pleaded that degrees and diplomas granted are recognised by law by virtue of being granted under the IIM Act. As EPGP is provided by the applicant as institute under the IIM Act, it (EPGP) qualifies to be an exempted from GST, it was said.
No ambiguity
However, the AAR made it clear that there is no ambiguity in the notification. The entry in the notification seeks to exempt various education programmes conducted by IIMs, except the Executive Development Programme, from payment of GST. It is, thus, clear that irrespective of enactment of IIM Act 2017, the intention of the legislature was not to tax the flagship education programmes conducted by these institutions.
“However, specific exclusion of Executive Development Programme from exemption has been made loud and clear, leaving no scope for any interpretation or reading between the lines,” it observed. Accordingly, the Authority held that the Executive Post Graduate Programme will not be eligible for exemption from GST. Also, such programme being conducted by the applicant shall be chargeable to GST, irrespective of enactment of IIM Act 2017, it ruled.
Shubham Mittal, DGM (GST) at Taxmann, said the government has not exempted all the educational services from GST. There is specific provision (Chapter 99, sub-heading 9992) for levy of tax on Executive Development Programme. “Thus, there was no reason to exclude this specific entry and to cover it in general exemption clause. The AAR has correctly classified the IIM’s Executive Post-Graduate Programme in to taxable category,” he said.
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