No GST levy on exam services- Gujarat HC

Ahmedabad: In an important order, the Gujarat high court held that the government cannot levy goods and services tax (GST) on services provided to educational institutions for conducting exams as “examination is an essential component of education”.

With this conclusion, the of Justice J B Pardiwala and Justice Nisha Thakore quashed decision of the Gujarat Appellate Authority for Advance Ruling that services provided by a private firm, Educational Initiatives Pvt Ltd, in the form of Assessment of Scholastic Skill Through Educational Testing (ASSET) for schools were liable to be taxed under CGST laws.

The company deals in products and solutions used by primary and secondary schools for assessment and learning. It works with private and public schools and organizations such as the World Bank and has undertaken assessment projects with various state governments. It prepares question papers and evaluates answers. The exams are conducted by schools on the their premises or online.

The company approached the Gujarat Authority of Advance Ruling seeking a declaration of exemption from GST for its ASSET services for schools and cited the Centre’s notification that education-related activities are exempt from GST. The authority accepted its contention and declared that exemption is available for providing ASSET services to educational institutions.

The central authority challenged this exemption granted to ASSET services before the appellate authority, which ruled that this service by a private company is liable to be taxed .It said that this examination is actually conducted by the company and not by schools, and the company pays 10% administrative cost to schools.

When the company challenged the appellate authority’s conclusion before the high court, the division bench held that examination service are part of education and are hence duly exempted by the government from being taxed under the GST regime.

Source: The Times of India