No GST if school fees cover paper, milk, biscuits

MUMBAI: School kids welcome a break, more so one in which they get treats such as biscuits. The Maharashtra bench of the Authority for Advance Rulings (AAR) has held recently that when food items are supplied to school kids, and their cost is part of the fees charged, they will not attract goods and services tax (GST).

No doubt, this advance ruling will cheer parents who would have borne the cost of such GST. While advance rulings do not set a judicial precedent, they do have persuasive value. The ruling was sought by Rahul Ramchandran, who had set up a new business — Nashik Cambridge Pre-School.

To be more precise, the AAR has held that supply of books, stationery, drawing materials, sports goods, food items, milk and beverages provided by a school to its students without any consideration (as the cost is included in the fees charged) will not be subject to GST

In this case, the AAR bench noted that the cost of such goods will be included in the education fees that will be charged by the school. In other words, it is a composite supply. It consists of principal supply in the form of educational services — which is exempt. Thus, supply of other goods for no additional consideration would attract a ‘nil’ GST.

However, if any of these goods were supplied to students on a standalone basis for some consideration, it would be outside the ambit of a composite supply and would attract GST, states the AAR ruling. It also held that transportation services provided to its students, faculty & staff, whether free or for a consideration, would not attract GST as these are specifically notified at a nil rate. Similarly, canteen facilities provided to its staff and faculty would also attract a nil rate.