Society Supplying Free Textbooks To Students Is Not "State Government": Karnataka AAR

The two-member bench of M.P. Ravi Prasad and T. Kiran Reddy has observed that the rate of tax being charged by the printers on the printing of textbooks supplied to the society is taxable at the rate of 18% GST.

The applicant is proposing to submit a bid in response to the tender floated by the Karnataka Textbook Society (KTBS) for the printing of school textbooks as prescribed by the Karnataka State Board. The applicant states that the Karnataka Text Book Society is a society registered under the Karnataka Societies Act, 1960. It was promulgated to form an umbrella body in the context of preparation, printing, and distribution activities of all government-approved school textbooks.

The KTBS receives grants from the Government of Karnataka for the supply of textbooks freely to students enrolled in government and aided schools and by sales to private schools affiliated to the Karnataka State Board.

The KTBS calls for tenders for the printing and supply of textbooks on a contract basis, wherein the contractor supplies the service of printing. The materials (physical inputs) are supplied by the contractor, and all the content is provided by and belongs to KTBS. KTBS is also registered under GST and, at present, 12% GST is charged by contractors for the printing of textbooks.

The applicant has sought an advance ruling on the issue of whether KTBS can be classified as an "educational institution" for the purposes of the applicability of GST on printing services provided to it by the applicant.

Yet another issue raised was whether the 12% GST charged by printers on the printing of textbooks supplied to KTBS was correct.

The applicant stated that KTBS was established to supply textbooks to students under the Sarva Shiksha Abhiyana. In order to achieve the goal of the Sarva Shiksha Abhiyan Scheme, KTBS ought to be classified as an educational institution within the meaning of the phrase as per Clause 2(y) of the Notification No.12/2017-Central Tax (Rate).

As per the definition, an "educational institution" is not restricted to schools, which would be covered under (i), but also an institution which provides education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. As such, KTBS is engaged in preparing and supplying textbooks to students, whether they are enrolled in a school or not, who are working towards obtaining the Secondary School Leaving Certificate (SSLC) upon completing the 10th standard.

The AAR observed that KTBS is not an institution providing services by way of pre-school, higher secondary education, or education as a part of the curriculum or as a part of an approved vocational education course, but it is a society that is only in supply of textbooks to students. Hence, KTBS cannot be classified as an "educational institution".

Applicant's Name: Bhagyam Binding Works

Date: 12.08.2022

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