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Services provided by UCMAS using abacus does not qualify for exemption under GST

March 15, 2019[2019] 103 taxmann.com 214 (AAAR-GUJARAT)
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GST : Services provided by product 'Universal Concept Mental Arithmetic System'(UCMAS) using abacus does not qualify for exemption from payment of Goods and Services Tax

• The appellant was awarded the franchisee for product Universal Concept Mental Arithmetic System (UCMAS) by company UCIC, Malaysia. UCMAS was a child development program based on visual arithmetic and abacus that boosts brainpower in children aged 4-13 years. The appellant raised the question for advance ruling before the Gujarat Authority for Advance Ruling (GAAR) that whether the services provided by UCMAS using abacus qualifies for exemption from the payment of GST.

• The GAAR ruled that the applicant was not entitled to the exemption provided vide Sl. No. 80 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 issued under the CGST Act, 2017 and corresponding Notification issued under the GGST Act, 2017 and Sl. No. 83 of Notification No. 9/2017-Integrated Tax (Rate) issued under the IGST Act, 2017. Hence, the services provided by UCMAS using abacus did not qualify for exemption from the payment of Goods and Services Tax.

• Aggrieved by the aforesaid advance ruling, the appellant had filed an instant appeal.

• Notification No. 9/2003-Service Tax dated 20.06.2003 and Notification No. 24/2004-Service Tax dated 10.09.2004 provided exemption from taxable services provided in relation to commercial training or coaching by a recreational training institute. Recreational Training Institute was defined in those notifications as a commercial training or coaching centre which provides coaching or training relating to recreational activities such as dance, singing, martial arts, hobbies.

• In Notification No. 12/2017-Central Tax (Rate), the relevant entry at Sr. No. 80 is - "Services by way of training or coaching in recreational activities relating to–(a) arts or culture, or (b) sports by charitable entities registered under section 12AA of the Income Tax Act." Thus, it is clear that the scope is different. Only recreational activities relating to arts or culture are given exemption.

• On merit, the service of the appellant cannot be construed as training or coaching in recreational activities service to art.

• In view thereof, the advance ruling of the GAAR is confirmed and the appeal filed by the applicant is rejected.

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