GST exemption for services provided to educational institutions doesn’t apply when a vendor directly serves and bills students.
Issue
Is a private business providing transportation and catering services eligible for a GST exemption if it provides these services directly to students and gets paid by them, rather than by the school itself?
Facts
- An applicant runs a business providing transportation and catering services to school students.
- The applicant’s contract is directly with the students (or their parents), and it collects all charges directly from them.
- The school administration is not a party to the transaction; it neither pays the applicant nor receives any payment for these services.
- The applicant sought to claim a GST exemption under serial number 66(b)(i) & (ii) of Notification No. 12/2017-Central Tax (Rate), which exempts specific services provided to an educational institution.
Decision
The authority ruled in favour of the revenue, meaning the services are taxable and not exempt.
It was held that the exemption is specifically for services rendered to an educational institution. In this case, since the applicant receives payment directly from the students, the service is being provided to the students, not to the school. The school is not the recipient of the service. Therefore, the applicant is not eligible for the exemption.
Key Takeaways
- The Recipient of the Service is Crucial: For this specific GST exemption to apply, the educational institution itself must be the direct recipient of the service.
- Follow the Money: The payment flow is a key indicator of who the service recipient is. Since students paid the vendor directly, the contractual and service relationship was between them.
- No ‘By Extension’ Exemption: Providing services to students of a school is not legally the same as providing services to the school. The exemption doesn’t apply by association.
- Contract Structure is Paramount: For the exemption to be potentially applicable, the school would likely need to be the one contracting with and paying the vendor for the services, even if it later recovers the cost from students.
AUTHORITY FOR ADVANCE RULING,GUJARAT
Protego Services LLP, In re
Kamal Shukla and VISHAL MALANI, Member
GUJ/GAAR/R/ 2025 /26
Application No. Advance Ruling/SGST & CGST/2024/AR/04
Application No. Advance Ruling/SGST & CGST/2024/AR/04
JUNE 26, 2025
Ms. Raveena Narang, CA and Ms. Arptia Modi, Adv. for the Applicant.
proceedings
Brief facts:
1. M/s. Protego Services LLP, 406, Solitaire Quays, Dandi Road, Surat, Gujarat-395009 [for short -‘applicant’] is registered under GST and their GSTIN is 24AADFF3677P1ZY.
2. The applicant is engaged in the business of providing transportation and catering services exclusively to students and staff members of Fountainhead School, Ambetha Water tank, Kunkni Gam, Rander-Dandi Road, Olpad, Surat, Gujarat-395005. This school has been set up & is being managed by Fountainhead Education Trust.
3. The applicant has entered into an agreement with the Fountainhead Education Trust [for short – ‘Trust’] to provide transportation and catering service exclusively to the students and staff members of the school. As far as the supply of transportation service is concerned, the applicant has stated the following:
| • | that the service is being provided exclusively to the staff and students of the school from the designated pickup points; |
| • | that the service includes daily pick up from specified location and times as agreed by the Trust; |
| • | that the name of the school is displayed on the buses; |
| • | that for the said transportation service, they receive the payment directly from the parents; |
| • | that the applicant was identified by the Trust for the transportation service and that the school communicated the same to the parents. |
4. As far as the supply of catering service is concerned, the applicant has stated the following:
| • | that they provide catering service to the students during morning/evening and whenever any events are held in the school; |
| • | that the service is being provided exclusively to the staff and students of the school; |
| • | that they incur all expense relating to running and maintenance of kitchen utensil including timely repairs, maintenance and service of utensil in the canteen; |
| • | the applicant ensures all compliance with safety, security policy of the school with respect to canteen; |
| • | they receive payment directly from the parents in respect of the catering service provided to students; |
| • | that the applicant was identified by the Trust for the catering service and that the school communicated the same to the parents. |
5. The applicant is of the opinion that they are eligible for benefit of serial no. 66 of notification No. 12/2017 dated 28.6.2017, wherein transportation & catering service provided to education institution from pre-school education & upto higher secondary school or equivalent is covered under the purview of exemption. The applicant has further relied upon the ruling/judgements in the below mentioned cases viz
| • | Muniyasamy Abinaya, In re 100 GST 383/78 GSTL 93 (AAR – T.N.)/2023 (9) TMI 765 |
| • | Akshar Travels v. C.C.E. & S.T. [ST Appeal No. 263 of 2012-DB, dated 17-8-2023]. |
| • | Sangam Travels v. CCE & ST [FINAL ORDER No. 70074 of 2017, dated 10-1-2017]. |
6. In view of the foregoing, the applicant raised the following questions seeking a ruling, viz
| (i) | Whether the applicant is eligible for exemption as per serial No. 66(b) (i) of the notification No. 12/2017-CT(Rate) dated 28.6.2017 in respect of transportation services provided to the students exclusively on behalf of the school wherein the applicant is charging fees from the students directly. |
| (ii) | Whether the applicant is eligible for exemption as per serial No. 66(b) (ii) of the notification No. 12/2017-CT(Rate) dated 28.6.2017 in respect of catering services provided to the students exclusively on behalf of the school wherein the applicant is charging fees from the students directly. |
| (iii) | If the applicant is eligible for exemption as per entry no. 66(b) (i) & (ii) of the said exemption notification, what is the relevant section and rule under which refund of the tax paid on said exemption services in earlier years can be applied for. |
7. Personal hearing was granted on 28.10.2024 & 03.01.2025 wherein Ms Raveena Narang, CA & Ms Arptia Modi, Advocate, appeared on behalf of the applicant and reiterated the facts as stated in the application. They submitted additional submissions dated 2.1.2025, reiterating the contentions already made & further stating as follows viz;
[a] with regard to Transportation service:
| • | that the applicant has obtained the school bus permit from the appropriate authority under the Gujarat Transport Department in compliance with the relevant rules & regulations; |
| • | that one of the essential documents which is an authorization agreement for bus transportation between the bus owner & the education institute is submitted; |
| • | that the permit is only for the school bus; |
| • | that the applicant is not obligated to obtain the school bus permit exclusively in the name of the school; that the permit can be obtained under the name of the service provider or any other eligible entity; |
| • | that in terms of the school bus transportation agreement it is clear that the Fountainhead School has authorized the applicant to operate the bus under school bus permit for 5 years on behalf of the school including safety, bus parking, service area, etc. which clarifies that the applicant is providing the service to the educational institute; |
| • | that they would like to rely on the term ‘consideration’ as defined u/s 2(31) of the CGST Act, 2017 & the judgement in the case of Sangam Travels, ibid wherein it is held that the bus fees can be directly collected from the parents of the school & they would be eligible for the exemption as per serial no. 66(b)(1) of notification No. 12/2017-CT(Rate). |
[b] with regard to catering service
| • | that they are providing catering services exclusively to the Fountainhead school; |
| • | that the food licenses obtained by the applicant for the catering service pertain to the address of Fountainhead school; |
| • | that the copy of the FSSAI license provides comprehensive details regarding the provision of food facilities; that the applicant has obtained the license for the authorized premises which is the address of the fountainhead school; |
| • | that the license includes the details of the individual responsible for overseeing foods service operations at the school and ensuring compliance. |
7.1 In pursuance to the transfer of Member (Centre), fresh personal hearing was held on 22.5.2025, wherein Ms. Raveena Narang, CA, appeared on behalf of the applicant wherein in-addition to reiterating their grounds of application, she submitted a letter dated 21.5.2025, informing the Authority that the constitution of their firm had undergone a change from LLP [Limited Liability Partnership] to Private Limited Company effective from 3.5.2025; that this may be updated in the records; that the orders may be issued in the name of Protego Services P Ltd having GSTIN 24AAPCP7381R1ZD. To substantiate, they also attached a copy of the certificate of incorporation, new PAN card of private limited company and new GST registration certificate.
Revenue’s submission:
8. Assistant Commissioner, CGST & CE, Surat, vide their letter No. TECH/Misc/6/2024-TECH-O/o COMMR-CGST-SURAT, dated 18.06.2024 submitted the following comments viz:
| • | that as per Sr. No. 66 of the Notification No. 12/2017 dated 28.06.2017 exemption is allowed in case the services i.e. Transportation and catering are provided to an educational institution whereas in the instant case as per the application the applicant is providing services directly to the students instead of educational institution. |
| • | that therefore, it appears that the applicant is not eligible for exemption under Sr. No. 66(b) (i) and (ii) of the Notification No. 12/2017 dated 28.06.2017. |
Discussion and findings
9. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act.
10. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant’s submission/interpretation of law in respect of question on which the advance ruling is sought.
11. Before adverting to the submissions made by the applicant, we would like to reproduce the relevant provisions for ease of reference:
CENTRAL GOODS & SERVICES TAX ACT, 2017
| • | Section 2. Definition |
(31) “consideration” in relation to the supply of goods or services or both includes-
| (a) | any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; |
| (b) | the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: |
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;
| • | Sec. 7. Scope of supply [relevant extract] |
(1) For the purposes of this Act, the expression “supply” includes-
| (a) | all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; |
| • | Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 |
Table
| SI.No. | Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate (per cent.) | Condition | |||||||||||||||||||||
| 66 | Heading 9992 | Services provided –
| Nil | Nil |
12. The first issue on which ruling is sought is whether the applicant is eligible for exemption in terms of serial no. 66(b)(i) & (ii) of the notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 in respect of transportation and catering services provided to the students exclusively on behalf of the school wherein the applicant is recovering the charges directly from the students. Now, in terms of serial No. 66 (b) (i) of notification No. 12/2017-CT (Rate), as reproduced supra, states that services provided to an educational institution, by way of transportation of students is exempt. The proviso further states that nothing contained in entry (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.
13. Now, the school bus transportation agreement notarized on 16.8.2023, states that the applicant, an established transport provider will provide school bus for transporting students to Fountainhead school within the city of Surat; that the agreement is for 5 years, commencing from 1.4.2023 to 31.3.2028. However, Annexure-I which details the routes, schedules, safety protocols, and other additional terms, is not attached. Likewise, the applicant has also attached the services agreement between the Fountainhead Education Trust and the applicant entered into on 1.4.2023. There are two service agreements, [i] for transportation services and [ii] catering services to students. This agreement has been entered into by the Trust with the applicant, wherein para 3, [which is similarly worded for both the service agreements], states as under:
3. Consideration
3.1 In consideration for the services provided by the service provider, the trust shall pay the service provider such fee as is specified in the Schedule I to this Agreement (“Service Charges”). The Service charges shall be inclusive of all applicable taxes, if any, cess or surcharge & other applicable levies payable thereon, in accordance with the terms and conditions set forth in this Agreement. The Service Charge specified includes all amounts payable by the Trust and the Service Provider shall not incur any out of pocket expenses or introduce any other fee or expense without the prior written consent from the Trust.
3.2 The Service Provider hereby agrees & confirms that in the event the Service Provider is unable to provide the Services in accordance with the specifications & standards set out in Schedule I to this Agreement and the Trust has had to incur any additional cost or expense to cover such shortfall or deficiency in Service, the Trust shall be entitled to recover such cost or expense from the Service provider including by setting off against the service charges.
3.3 to 3.4…….
Schedule I
Invoicing-
The service provider will invoice the trust on a monthly basis for provision of transportation services for staff, accrued during the preceding month.
The service provider will invoice the trust for provision of transportation services for events/outdoor field trips at the end of the financial year.
14. To be eligible for the exemption in terms of serial no. 66(b)(i) & (ii) of the notification No. 12/2017-CT (R) dated 28.6.2017 as is claimed by the applicant, we find that the following needs to be satisfied
| [a] | the service has to be provided to an educational institution, |
| [b] | the service so provided has to be by way of |
| [i] | transportation of students, faculty and staff; and |
| [ii] | catering |
| [c] | it shall apply to an educational institution providing services by way of pre-school education & education upto higher secondary school or equivalent. |
Now, as far as educational institution is concerned, we find that paragraph 2 of the notification No. 12/2017-CT(Rate), defines ‘educational institution’ as under:
(y) “educational institution” means an institution providing services by way of.-
| (i) | pre-school education and education up to higher secondary school or equivalent; |
| (ii) | education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; |
| (iii) | education as a part of an approved vocational education course; |
The applicant’s claim is that they are providing services to the educational institution viz Fountainhead School [irrespective of the fact that the agreement has been entered into with the School or the Trust which manages the school]. However, the fact remains that they are collecting the transportation & catering charges directly from the students. The service agreement, paragraph 3 ‘consideration’, states that the Trust is obliged to pay the applicant service provider] such fee as is specified in Schedule-1. Schedule I is already reproduced supra. While the service agreement is silent on the consideration payable by the school as far as the students are concerned, Schedule I states that the applicant will invoice the Trust on a monthly basis for provision of transportation & catering service for the staff. The applicant themselves have mentioned that they are collecting the charges relating to the transportation and catering directly from the students. This was further admitted by the authorized representative during the course of personal hearing. This being the fact, the consideration towards the transportation and catering activity are received by the applicant from the students concerned and since no consideration is received by the school administration, it becomes clear that no services are rendered by the school to its students in relation to transportation and catering of students. Further as applicant is not receiving any payment from the school administration, no services are rendered to the school by the applicant, thereby ruling out any role of the school as far as the said transaction is concerned.
15. What is significant is the difference in the approach adopted by the applicant. As far as supply of service of transport and catering to the staff of school is concerned, it is the school/ Trust who is invoiced by the applicant. However, when it comes to the said services being provided to the students, the invoice is being raised on the students and the charges are being collected directly from the students.
16. We, therefore, hold that the services provided by the applicant to the school students by way of transportation and catering of students cannot be considered as services provided to the school. Since the primary condition of the service having been provided to a school is not satisfied, as far as the first issue is concerned, we hold that the applicant is not eligible for exemption in terms of serial no. 66(b)(i) & (ii) of the notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 in respect of transportation and catering services provided to the students.
17. We find that the applicant has relied on Tamil Nadu Advance Ruling in the case of Muniyasamy Abinaya (supra) However in terms of Section 103 of the CGST Act, 2017, the advance ruling pronounced by the Authority is binding only on the applicant. Further, the applicant has also relied upon the case of Akshar Travels (ibid) and Sangam Travels (ibid). We find that the reliance on these two cases is not tenable as it pertains to the service tax regime.
18. Moving on to the second issue, i.e., if the applicant is eligible for exemption as per entry no. 66(b)(i) & (ii), what is the relevant section and rule under which refund of the tax paid on said exemption services in earlier years can be applied for. Now, section 97 of the CGST Act, 2017, states as follows:
Section 97. Application for advance ruling.-
(1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought.
(2) The question on which the advance ruling is sought under this Act, shall be in respect of,-
| (a) | classification of any goods or services or both; |
| (b) | applicability of a notification issued under the provisions of this Act; |
| (c) | determination of time and value of supply of goods or services or both; |
| (d) | admissibility of input tax credit of tax paid or deemed to have been paid; |
| (e) | determination of the liability to pay tax on any goods or services or both; |
| (f) | whether applicant is required to be registered; |
| (g) | whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. |
Since refund does not figure in any of the clauses under subsection 97(2), ibid, we do not intend to answer this question.
19. The authorized representative during the course of personal hearing held on 22.5.2025 submitted a letter stating that the applicant had undergone a change in the constitution from LLP to a Private Limited Company. She further requested that the change be taken on record & the order be issued in the name of M/s. Protego Services P Ltd.
20. We find it difficult to agree with the contention more so since the application has been filed by M/s. Protego Services LLP. The request therefore is rejected.
21. In view of the foregoing, we rule as under:
RULING
| (i) | The applicant is not eligible for exemption as per serial no. 66(b)(i) and (ii) of the notification No. 12/2017-CT(Rate) dated 28.6.2017 in respect of transportation services and catering services, provided to the students exclusively on behalf of the school wherein the applicant is charging fees from the students directly. |
| (ii) | In respect of the question seeking to know the relevant section and rule under which refund of the tax paid on said exemption services for earlier years is concerned, we do not intend to answer the same in view of our findings recorded supra. |