GST on supply of coaching services with uniform, bags and printed material or books
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Case Details: |
Resonance Eduventures Limited |
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Advance Ruling No.: |
Raj/AAR/2021-22/35 |
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Ruling Pronounced by: |
GST AAR Rajasthan |
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Date of Ruling: |
28-12-2021 |
Author’s Note:
The concept of composite supply vs. mixed supply in the GST regime is a contentious issue as there is a very thin line of difference between these two terms. The above ruling passed by AAR Rajasthan is a classic example of the confusion between composite supply and mixed supply. The above ruling is quite significant as it contradicts its own ruling passed by the GST AAR Rajasthan in the case of M/s Symmetric Infrastructure Private Limited dated 02-09-2021 where it was held that supply of services of coaching to students which also includes a supply of printed material, books, and uniform, etc. to students is composite supply where coaching service is the principal supply. Whereas in the above ruling, it is held by the AAR that the supply shall be treated as a mixed supply of goods as well as services and shall attract the highest rate of tax @ 18%.
Brief Facts:
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The applicant M/s Resonance Eduventures Limited, Kota is registered under GST under “Commercial Training or Coaching Centre Services” and “Advertising Agency’s Services”. The applicant has been providing coaching services under the physical classroom model but now due to the Covid environment, it is shifting its business model through a remote channel partner network. The applicant is providing coaching services to its enrolled students under its supervision through network partners. The applicant provides study material and student kit which includes test paper, printed material, uniform, bags, and other goods. |
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Students enrolled with the applicant are charged a lump sum consolidated amount which will be all-inclusive and include the supply of coaching services and other related supplies of goods like bags, uniforms, etc. The applicant will raise tax invoice to students who wish to enroll with the applicant for coaching services. |
Questions on which advance ruling is sought
The applicant is supplying services of coaching to students which also includes along with coaching, supply of goods/ printed material/ test papers, uniform, bags, and other goods to students. Such supplies are not charged separately but a lump sum amount is charged, the major component of which is imparting of coaching. The applicant would like to know whether such supply of coaching services shall be considered as composite supply under section 2(30) of the CGST Act, 2017? If yes, what shall be the principal supply as per section 2(90) of the CGST Act, 2017?
Observations:
- In the instant case, the applicant is providing coaching service along with the sale of goods i.e. printed material/ test papers, uniforms, bags, and other goods, etc. to its enrolled students for as consideration which will be a lump sum amount for both goods and services. Therefore, there two components i.e. rendering of coaching service and sale of goods are existing.
- As per sub-section (74) of section 2 of the CGST Act, 2017, mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.
- As informed by the applicant, they are charging GST @ 18% on the entire supply of coaching services along with goods from the students. In the instant case, supply of a package consisting of coaching services as well as goods/ printed material/ test papers, uniform, bags, and other goods to students when supplied for a single price is constituting a mixed supply as each of these items can be supplied separately and is not dependent on any other. Thus, the supply in question shall qualify as ‘mixed supply’.
- As per clause (b) of section 8 of the CGST Act, 2017, the tax liability on a mixed supply shall be determined in the manner, namely:- a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Thus, in the present case, the supply is a mixed supply of goods as well as services and the highest rate is 18% as applicable to the applicant.
Ruling:
In the present case, the supply is a mixed supply of goods as well as services and attracts the highest rate of tax @ 18%.
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Disclaimer: The above article is based on the ruling of Hon’ble Advance Ruling Authority, Rajasthan and is meant for educational purposes. Readers are requested to act diligently and under consultation with any professional before applying the information contained in this article.
