Examination can be considered an essential component of education, so State Boards are eligible for exemption from Goods & Services Tax (GST), Gujarat Appellate Authority for Advance Ruling has said. It also clarified that not every exam conducted by the board can be given the exemption

This was said while disposing an appeal by Gujarat’s State Examination Board against the ruling of Gujarat’s Authority for Advance Ruling. Though AAR and AAAR rulings are binding only on applicant and jurisdictional tax officer, these can be referred to in similar matters. Also, many policy changes have been done on the basis of ruling by AAR and AAAR.

AAAR said that education can be considered as the act or process of imparting knowledge, especially at a school, college or university. This act of imparting knowledge also includes all the matters relating to imparting and controlling education. Quoting a ruling by the Supreme Court in the matter of State of Tamil Nadu vs. K Shyam Sunder (2011), it also said, “the examination is always considered as one of the major means to assess and evaluate candidate’s skills and knowledge, be it a school test, university examination, professional entrance examination or any other examination. Thus, examination can be considered as an essential component of education,” it said.

The appellant, State Examination Board, first moved AAR wanting to know whether it claim exemption benefit for the 23 types of examination it conducts. AAR said out of 23, seven including Primary Scholarship Exam, Secondary Scholarship Exam, National Talent Search Exam and Rashtriya Indian Military College, can be said to be pertaining to ‘education including primary and secondary schools’ and hence, are eligible for the benefit of exemption under GST law.

The remaining 16 include exams for diploma in pre-school education, diploma in elementary education, art teacher diploma, teacher eligibility, beside others. AAR observed that these exams pertain to employment for the successful candidates. As these exams are qualifying ones, they cannot be covered under the definition of education, including primary and secondary school, or in the list of functions entrusted to a panchayat. Hence these will not get the exemption.

Unhappy Aggrieved by the ruling, the board moved to AAAR and after going through all the facts and arguments, AAAR made it clear that for getting exemption, qualifications for examination related with a course need to be recognised by any law for the time being in force. Primary and secondary school education or education at higher secondary schools or colleges are always recognised by the law. Alternatively, it should be considered as functions entrusted to a panchayat under article 243G of the Constitution.

Keeping all these in mind, AAAR modified the AAR ruling and said exemption benefit with regard services supplied for the 12 types of examinations including Teacher Eligibility Tests, Teacher Aptitude Tests, Diploma in Elementary Education. However, no such benefit will be available for examination related with Diploma in Home Science, GCC Typo Steno or Departmental Exam.

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