Services provided to conduct exam not eligible for GST

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Karnataka AAR ruled , “The process of conducting examination is not limited / restricted to the test centre. Services provided by an external agency to an examination board in relation to conducting examination will not attract Goods & Services Tax (GST)”.

It is an undisputed fact that the process of conducting examination is not limited / restricted to the test centre. Examination is an incomplete activity without assessment. Scanning of answer sheets and qualifying marks is an essential part albeit main objective of the examination process. Educational institutions or the examinees do not look at these activities in isolation.

The applicant, Bengalauru-based Datacon Technologies, is a services provider of print solution and IT infrastructure services. It provides services all over India. It caters to educational vertical in terms of stationary items for the conduct of examination and post examination process such as Marks Card/Certificate etc.

The applicant was awarded a contract by the Bihar School Examination Board (BSEB) for scanning of OMR (Optical Marks Recognition) flying slip, OMR Marks Foil, OMR Attendance Sheet, OMR absentee sheet and finalisation of data.

These are critical part of modern examination system and normally State Examination Boards and Central Board of Secondary Education (CBSE) award contract to a specialised agency to provide such services. The applicant sought Advance Rulings in respect of the question whether such services are exempted from GST or not. 

The applicant submitted that BSEB is an educational institution and services are in relation to conduction of examination and accordingly should be exempted from GST. It may be noted that in a similar matter relating to Orient Press Limited, Maharashtra AAR held identical services exempted from GST.

After going through the facts of the matter, Karnataka AAR took note of a notification stating that Central and State Educational Boards shall be treated as educational institutions for the limited purpose of providing services by way of conducting examination to the students. Thus, BSEB becomes an educational institution for the purpose of conduction of examination. Keeping this in mind, AAR held that services provided by the applicant to BSEB will be exempted from GST.

The AAR helps the taxpayer by giving an advance decision in relation to the supply of goods and/or services proposed to be undertaken or being undertaken by the assessee. The decision is binding on the applicant and the jurisdictional tax authority. Though such a decision does not have precedent value like that of a High Court or Supreme Court judgment, it can be used as persuasive tool in future cases.

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