Case Details:

Symmetric Infrastructure Private Limited

Appeal No.:

Advance Ruling No. RAJ/AAR/2021-22/09

Ruling pronounced by:

GST AAR Rajasthan

Date of Ruling:

02-09-2021

The applicant intends to provide coaching services to its enrolled students under its supervision through network partners. For this purpose, the applicant will appoint a ‘Network Partner’ in different cities/ towns for rendering and providing, on a principal-to-principal basis, training/coaching and other related ancillary functions/ services for the course decided by the applicant to its enrolled students.

The applicant shall provide study material and student kit which will include test paper, printed material, uniform, bags, and other goods. The applicant will also decide the schedule of the course, schedule of the method of teaching to the students. The students enrolled with the applicant will be charged a consolidated amount which will include the supply of goods and/ or services, i.e. service of coaching and other supply of related goods like bags, uniforms etc.

The applicant will raise tax invoice to students who wish to enroll with the applicant. The Network Partner shall carry out/ conduct course classes offered by the applicant at its premises for the students enrolled with the applicant. The Network Partner shall engage qualified, experienced and competent faculty for teaching the courses offered by the applicant. Fees collected from the students will be deposited in an Escrow account. For such coaching services provided to the applicant, the Network Partner will raise an invoice of coaching charges to the applicant for the services provided.

Sr. No.

Question

Ruling

1

The applicant supplies coaching services to students which also includes the supply of goods/ printed material/ test papers, uniforms, bags, etc. Such supplies are not charged separately but a consolidated amount is charged, the major component of which is imparting of coaching. In such circumstances, whether such supply shall be considered, a supply of goods or a supply of services?

The sub-section (1) of Section 7 of the CGST Act, 2017 states that the activities to be treated as supply of goods or supply of services as referred to in Schedule-II. In the instant case, the applicant is providing coaching services to its enrolled students for consideration which will be a lump sum amount for both goods and services. Therefore, transaction of supply of coaching service for consideration falls under the ambit of “Supply of service.”

2

If the answer to the above question is ‘Supply of service’ whether such supply shall be considered as composite supply? If yes, what shall be the principal supply?

• We find that the essential components of a composite supply are as under:

(a) Two or more taxable supplies
(b) Services should be naturally bundled
(c) Supplied in the ordinary course of business
(d) One of the supplies out of whole should be a principal supply.

• It means, in the present case, there is a composite supply of goods and services, one of which is a principal supply and the tax liability of such principal supply will be the tax liability of the composite supply.
• In the instant case, the applicant along with coaching services provides goods in the form of uniforms, bags, study material, etc. Supply of goods is a part of the supply of service which shall qualify as ‘composite supply’. The principal supply being the supply of coaching services to the students, tax on such supply shall be levied accordingly.

3

The applicant provides coaching service under a business model through Network Partners. The Network Partners provide the services to the student on behalf of the applicant. In such case, who shall be considered as a supplier of service and recipient of service under the agreement?

• Where the services are provided by the applicant to the students, the students shall be regarded as recipients as consideration is payable for the supply of goods or services or both by the students to the applicant. Here, in this case, the applicant will be the service provider to the students.
• Similarly, the Network Partner will be considered as the provider of service to the applicant.

4

Subject to question no. 3 above, what shall be the value of service provided by the applicant to students and by network partner to the applicant?

• The applicant has been incurring the cost of goods supplied to the students. Therefore, in the light of the provisions of section 15(2)(b) of the CGST Act, the value of goods is part of the value of services provided by the applicant and the applicant charges a consolidated amount to the students.
• Therefore, the consolidated amount charged for which tax invoice is generated by the applicant will be the value of service supplied by the applicant.

5

Whether both, the applicant and the network partner can avail eligible ITC for their respective supplies?

• In this case, the applicant is a registered person under GST and can avail eligible ITC as per the provisions of the GST Act, 2017.