No GST Exemption on Student Bus Services When Fees Collected
Directly from Students – Batcha Noorjahan AAR
In this Advance Ruling,
M/s Batcha Noorjahan, operating under the trade name "School
Transport", sought a ruling on the applicability of GST exemption on
transportation services provided to school students and staff. Although the
applicant had lease agreements with schools and exclusively used the buses for
transporting students and staff, the fee was collected directly from the
students, not from the schools. The Tamil Nadu Authority for Advance Ruling
(AAR) held that in such cases, the service is not considered as being provided to
the educational institution. As a result, the exemption under Sl. No. 66
of Notification No. 12/2017 – CT (Rate) does not apply, and GST at
the applicable rate must be charged.
·
Advance Ruling Number: 06/ARA/2025
·
Date of Ruling: 13 February 2025
·
Ruling Authority: Authority for
Advance Ruling – Tamil Nadu
·
Name of Applicant: M/s Batcha
Noorjahan
Business
Activity:
- Engaged in providing school
transportation services using 34 buses.
- Buses leased to schools under formal
agreements, with permits for school use only.
- Transport fees are directly
collected from students, not paid by the schools.
Questions
Raised:
1. Whether
the services provided to school students for transportation can be considered
as services provided to educational institutions?
2. Whether
such services are exempt from GST under Sl. No. 66 of Notification
No. 12/2017 – CT (Rate)?
Relevant
Legal Provisions:
- Section 97(2)
– Applicability of Advance Ruling
- Sl. No. 66 of Notification No.
12/2017 – CT (Rate) – Exemption to services
provided to educational institutions
- Sl. No. 8(vi) of Notification No.
11/2017 – CT (Rate) – Passenger transport service
taxable @5% without ITC
- SAC 9964
– Passenger transport services
Applicant’s
Submissions:
- All buses are used only for
transporting students/staff of schools under lease agreements.
- Claimed that although fees are
collected from students, the schools are still the service recipients.
- Asserted eligibility for GST
exemption under Sl. No. 66(b)(i) of Notification No. 12/2017.
Findings by
AAR:
Lease Agreement Exists
with School:
- Applicant submitted a 5-year lease
agreement with Alphabet International School.
- Agreement is only for compliance
with Motor Vehicle Rules for school buses.
- No mention of consideration/payment
by school in the lease agreement.
Fees Collected Directly
from Students:
- Copies of receipts show transport
fees collected directly from students, including 5% GST.
- Applicant issued receipts under their
own trade name and GSTIN, not through the school.
No Monetary Flow Between
School and Transporter:
- Profit and Loss Account showed only
student transport income; no income or expense involving schools.
- Thus, no service is rendered to
the school and school is not the recipient of transportation
service.
Exemption Not Available:
- Exemption under Sl. No. 66 of
Notification No. 12/2017 applies only when the educational
institution is the service recipient.
- Since the students pay directly,
the service is passenger transportation by motor vehicle under SAC
9964, taxable @5% without ITC.
Ruling:
1. No
– The transportation services cannot be considered as provided to an educational
institution, since the fees are collected from students directly and
schools do not pay for the service.
2. No
– The service is not exempt from GST, either under Sl. No. 66 of
Notification No. 12/2017 – CT (Rate) or under any other provision of the
GST law. The activity is classified under SAC 9964 and taxable at 5%
GST without ITC as per Notification No. 11/2017.
Conclusion:
The Tamil Nadu AAR held
that in the absence of consideration paid by schools, the transportation
service rendered by M/s Batcha Noorjahan is not a service to an educational
institution, but rather to students directly. Therefore, it is not
eligible for GST exemption and attracts 5% GST without input tax credit.
This ruling reinforces the principle that exemption is tied to the recipient,
and direct billing to students negates educational institution linkage.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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