Analysis of Entry (I): Specified services relating to education in negative list :
The following services relating to education are specified in the negative list –:-
(i) Pre-school education and education up to higher secondary school or equivalent;
(ii) Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
(iii) Education as a part of an approved vocational education course.
(i) Pre-school education and education up to higher secondary school or equivalent
1. Services provided by international schools giving certifications like IB (International Baccalaureate) are also covered in this entry.
2. Private tuitions are NOT covered in this entry. Hence, they are also liable to pay service tax if their aggregate values of taxable services exceed the threshold exemption.
3. Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act.
Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service.
(ii) Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force
(a) In order to be covered in the negative list, a course should be recognized by an Indian law. Services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country are NOT covered in the negative list entry.
(b) If a course in a college leads to dual qualification only one of which is recognized by law, service in respect of each qualification would, therefore, be assessed separately. Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. If an artificial bundle of service is created by clubbing two courses together, only one of which leads to a qualification recognized by law, then by application of the rule of determination of taxability of a service which is not bundled in the ordinary course of business contained in section 66F of the Act it is liable to be treated as a course which attracts the highest liability of service tax. However incidental auxiliary courses provided by way of hobby classes or extra-curricular activities in furtherance of overall well being will be an example of naturally bundled course. One relevant consideration in such cases will be the amount of extra billing being done for the unrecognized component vis-a-vis the recognized course.
(c) Services of conducting admission tests for admission to colleges are exempt in case the educational institutions are providing qualification recognized by law for the time being in force.
Education as a part of curriculum for obtaining a qualification recognized by law means that only such educational services are in the negative list as are related to delivery of education as ‘a part‘ of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to understand that to be in the negative list the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be covered. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification.
(iii) Education as a part of an approved vocational education course Approved vocational education course means,—
(i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961; or
(ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Union Ministry of Labour and Employment [Section 65B(11)].
Note: Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate houses/ MNCs, who come to the institutes for recruiting candidates through campus interviews. Service tax is liable on services provided by such institutions in relation to campus recruitment as such services are not covered in the negative list.
Vocational education course offered by Institutions as independent entities: Service tax is not leviable on vocational education courses (VEC) offered by the institution of the Government (Central Government or State Government) or a local authority because in terms of section 66D(a), only specified services provided by the Government are liable to tax and VEC is excluded from the service tax.
However, if the VEC is offered by an institution, as an independent entity in the form of society or any other similar body, service tax treatment would be determined by either sub -clause (ii) or (iii) of clause (l) mentioned above. In the context of VEC, qualification implies a Certificate, Diploma, Degree or any other similar certificate. The words “recognized by any law” will include such courses as are approved or recognized by any entity established under a central or state law including delegated legislation, for the purpose of granting recognition to any education course including a VEC [Circular No.164/15/2012 ST dated 28.08.2012].