Supply of services by way of conduct of online examination, to an educational institution is EXEMPT: AAR MAHARASHTRA

Facts of the case:

Applicant is engaged in the business of providing services relating to conduct of online examination along with pre exam management processes, post exam management processes across different exam centers. These services are provided by the applicant to various clients including individuals, educational institutions, firms, corporate bodies, government undertakings, etc.

Matter on which clarification is sought:

• Whether the services provided by the applicant can be considered as a composite supply or a mixed supply as per the CGST Act, 2017 and if, it is a composite supply, will conduct of examination be the principal supply?
• Whether exemption under Central Tax (Rate)* notification be granted to the applicant for services provided to educational institution in relation to conduct of examination by such institution? Whether such exemption will also be granted if such service is provided to a customer who in turn provide services to the educational institution?

Contention of the Authority:

• It was observed that the applicant provides services to completely manage the conduct of examinations electronically in three phases: Pre-examination, Examination and Post-examination. The consideration is received in per-student-exam-hour basis. The service, conduct of examination, is naturally bundled here in such a way that it includes the service relating to all three phases as mentioned above. Thus, the service provided by applicant is a composite supply, conduct of examination being the principal supply.
• The exemption notification issued under Central Tax (Rate) clearly mentions that the services by way of conduct of examination is exempt only if provided to educational institutions. Thus, the services provided by applicant to a customer who then provide such service to educational institution shall not be exempt.

Ruling:

The services provided by the applicant is undoubtedly a composite supply with conduct of examination being the principal. However, as far as the exemption is concerned, it shall only be granted if the applicant provides the services to an educational institution.

Source: [2019] 109 taxmann.com 366 (AAR – MAHARASHTRA)
Reference: * N.no. 12/2017 – Central Tax (Rate) as amended by N.No. 28/2018 – Central Tax (Rate) w.e.f. 25.01.2018