Education Provided By Isha Yoga Center Ineligible For GST Exemption: AAR Karnataka
In a recent ruling, the Karnataka Authority For Advance Ruling bench has held that the education provided by Isha Yoga Center's residential school, Isha Samskriti, does not qualify for exemption under the Goods and Services Tax (GST) laws. The ruling came in response to an application filed by Isha Yoga Center seeking clarification on the applicability of GST exemption to its...
In a recent ruling, the Karnataka Authority For Advance Ruling bench has held that the education provided by Isha Yoga Center's residential school, Isha Samskriti, does not qualify for exemption under the Goods and Services Tax (GST) laws. The ruling came in response to an application filed by Isha Yoga Center seeking clarification on the applicability of GST exemption to its educational services.
M/s Isha Foundation, the contended submitted that its a Public Charitable Trust established in 1992 by Sadhguru. The trust holds exemptions under section 12AB and 80G of the Income Tax Act for its activities. The primary objective of the trust, as stated in its Trust Deed, is to promote education, yoga, meditation, and various charitable endeavors.
The applicant intended to establish and operate Isha Samskriti, a residential school located in Chikkaballapur, Karnataka.
It was further contended that the school follows a gurukul-style educational system, aiming to provide traditional Bharatiya (Indian) education to children aged 7 to 18, and its main focus is on nurturing students' physical, mental, and energetic growth to their fullest potential.
It was submitted that Isha Samskriti planned on teaching subjects such as Sanskrit and English languages, Indian classical music (Carnatic and Hindustani), Indian classical dance (Bharatnatyam and other forms), Kalaripayattu, Yoga, and basic arithmetic. Additionally, extracurricular activities such as football, volleyball, and treks will be conducted.
Further, it was submitted that the school would not issue any education certificates, but students would have the option to appear for the National Open School examination at the 10th and 12th grade levels.
It was also submitted that ISHA Samskriti, both in its conception and execution will be like a residential/ boarding school where students live in school campus; that the only difference would be that the school seeks to define its own curriculum which is in line with Bharatiya tradition of gurukula and would focus on classical arts while seeking complete physical, mental, emotional and spiritual development of the students.
It was argued that they believed that education sought to be provided by ISHA samskriti is covered under entry No. 57 of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017.
Isha Foundation filed an application for Advance Ruling under section 97 of the CGST Act, 2017 read with Rule 104 of the CGST Act, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of the KGST Rules, 2017, in Form GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the KGST Act.
The applicant sought advance ruling in respect of the following questions:
i. Whether the Education being provided by the applicant is exempt under Entry No.57 of Notification No.9/2017-Integrated Tax (Rate) dated 28th June 2017?
ii. If no for point (a), whether such service is exempt under any other notification?
RULING:
In this case, the bench clarified that the CGST Act, 2017, and the KGST Act, 2017 are in pari-materia, having similar provisions and differing only on a few specific points. Unless explicitly mentioned, references to the CGST Act also apply to corresponding provisions in the KGST Act.
The bench considered the application for advance ruling along with the issues raised, relevant facts, and arguments presented by the applicant's authorized representative during the hearing.
According to Notification No. 9/2017-Integrated Tax (Rate), certain services are exempted if specific conditions are met. The conditions are as follows:
- The service provider should be registered under section 12AA or 12AB of the Income-tax Act, 1961.
- The services provided should be categorized as 'charitable activities' as defined in the notification.
The bench emphasized that the services must align with the definition of 'charitable activities' as per the notification. To examine the applicant's eligibility, the bench scrutinized each condition.
The applicant claimed to be registered under section 12AB of the Income-Tax Act 1961, and they submitted supporting documents, specifically a copy of the order for registration in Form No. 10AC. The bench agreed that the first condition was satisfied.
Next, the bench reviewed the objectives of the trust, ISHA Foundation, as laid down in the trust deed. While the applicant stated that the primary objective was promoting education, yoga, meditation, and other charitable objectives, the bench observed that the objectives mentioned 'spreading of knowledge and practice of yoga, meditation, and related fields' as well as 'spreading of education,' alongside other objectives such as providing relief to the poor and medical relief. However, the bench noted that there was no mention of activities related to the advancement of religion or spirituality.
Based on this observation, the bench concluded that the applicant did not provide services related to the advancement of religion, spirituality, or yoga. Consequently, the bench ruled that the services offered through 'Isha Samskriti,' a gurukul-style residential school, did not qualify as 'charitable activities' as defined in the notification. Thus, the applicant was not eligible to claim exemption under Entry 1 of Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017.
The bench then proceeded to assess whether the education provided by the applicant was exempt under Entry No. 69 of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017.
According to the mentioned entry, to claim exemption, the applicant should be an educational institution, which is defined as an institution providing services in the following areas:
(i) Pre-school education and education up to higher secondary school or equivalent.
(ii) Education as part of a curriculum for obtaining a recognized qualification.
(iii) Education as part of an approved vocational education course.
The bench found that the applicant did not offer pre-school education or education up to higher secondary school. Instead, they followed their own curriculum. As such, the applicant did not fall under the definition of an "educational institution" as per Notification No. 9/2017-Integrated Tax (Rate) dated 28th June 2017 and thus could not claim exemption under Entry No. 69 of the same notification.
Consequently, the bench ruled that the education provided by the applicant was not exempt under Entry No. 69 of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017.
Furthermore, the bench clarified that the service provided by the applicant through ISHA Samskriti was not exempt under any other notification.
Applicant’s Name: M/s Isha Founder
Date: 13/07/2023