Bus Transport Availed by Students and Staff on Hire is Not a Service Provided to the School: AAR Rules No GST Exemption [Read Order]

The Tamil NaduAuthority for Advance Ruling (AAR) held that transportation services paid for by students and staff on an individual basis, and not by the school itself does not qualify as services provided to the educational institution and thus are not eligible for Goods and Services Tax (GST) exemption.

The application for advance ruling was filed by Tvl. Batcha Noorjahan, proprietor of M/s School Transport who provided exclusive transport services for students and staff of schools in Tamil Nadu.

Also Read: No GST Exemption for School Bus Services Paid Directly By Parents: AAAR

The applicant had entered into lease agreements with multiple schools under which buses were exclusively deployed for school transportation. The fees for the transportation services were collected by the applicant directly from the students.

Represented by the authorised representative S. Jeyachandran, the applicant submitted that they operated 34 buses exclusively for transporting school students under agreements with four schools.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

It was further stated that the vehicles were registered with the Regional Transport Office as school buses and used only for transporting students and nothing else. The applicant collected bus hire charges directly from students as per the agreements and contended that the services provided qualified for GST exemption under Serial No. 66 of Notification No. 12/2017-C.T. (Rate), dated 28th June 2017 as they involved transportation of students and staff to educational institutions.

Also Read: GST Applicable on Batteries Manufactured using Extracted Silver received for Free from Navy: AAAR holds Activity is Not Job Work

The AAR Bench of Balakrishna S. (Member - CGST) and B. Suseel Kumar (Member - SGST) observed that while lease agreements existed, there was no monetary consideration provided by the school to the applicant. Furthermore, receipts produced by the applicant showed that they directly collected transport fees, along with GST from students under the trade name "School Transport".

Further, the Profit and Loss statement revealed that no revenue or expenditure involved the school, reinforcing that the school was not a party to the monetary aspect of the service.

Step by Step Handbook for Filing GST Appeals Click here

Consequently, the AAR held that the lease agreements appeared to be executed merely to comply with the Tamil Nadu Motor Vehicles Rules and did not establish a genuine service relationship with the schools.

Since the consideration was paid by the students, the service was rendered to them directly and not the school. Accordingly, the applicant was denied the benefit of exemption under Serial No. 66 of Notification No. 12/2017.

Also Read: Steel Manufacturer not eligible for GST ITC on Goods/Services used Exclusively for Running Solar Power Plant: AAR

The authority further clarified that the specific service provided by the applicant falls under SAC 9964 as "transport of passengers by motor vehicle" and is thus liable to GST at 5% without input tax credit.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates