No GST Exemption for School Bus Services Paid Directly By Parents: AAAR [Read Order]
The Tamil Nadu AAAR held that school bus services paid directly by parents do not qualify for GST exemption, as the service is not provided to an educational institution
No GST Exemption for School Bus Services
No GST Exemption for School Bus Services
The AAAR Tamil Nadu State Appellate Authority for Advance Ruling (AAAR) ruled that no Goods and Services Tax (GST) exemption is available for school transportation services where payments are made directly by parents.
The appellant, Tvl. Batcha Noorjahan, proprietor of M/s. School Transport, had entered into long-term agreements with schools to provide transportation for students and staff. Although the services were exclusive to educational institutions, the appellant collected transportation charges directly from parents of the students availing the service.
The appellant’s counsel argued that the transport service should be treated as one provided to educational institutions because it was rendered under structured agreements and schools exercised oversight over its operations.
Citing Notification No. 12/2017-CTR, the appellant’s counsel claimed exemption under Sl. No. 66, which exempts services provided to educational institutions for transportation of students, faculty, and staff. They further relied on a favorable ruling in Advance Ruling No. 27/ARA/2023 (Muniansamy Abinaya), where a similar service was held exempt.
The bench comprising Dr. Ram Niwas (Principal Chief Commissioner of GST & Central Excise, Taminadu & Puducherry Zone/Member AAAR) and Dr. D. Jagannathan (Commissioner of Commercial Taxes Tamilnadu/Member AAAR) observed that under Section 2(93) of the CGST Act, the "recipient" of the service is the person liable to pay consideration.
The transportation charges were paid by the parents, not the schools, the parents were deemed the recipients. The tribunal also observed that the transport permits being in the name of the school were regulatory in nature and did not imply that the service was rendered to the school itself.
Referring to the exemption under Sl. No. 66 of Notification No. 12/2017-CTR, the AAAR emphasized that the benefit is available only when services are provided to an educational institution. In this case, the service was not provided to the schools but directly to students or parents, who bore the cost and engaged the appellant independently.
The AAAR clarified that merely entering into agreements with schools does not alter the taxability when the schools are not paying for the service. The schools paid no consideration and the schools were not recipients of the service, so the conditions for GST exemption were not met.
The AAAR stated that the appellant does not qualify for the exemption under Notification No. 12/2017 – Central Tax (Rate), and GST is applicable on the transportation services rendered.
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