The supply of food items under government-sponsored schemes for students to institutions such as the Industrial Training Institute (ITI) will not attract GST, an Authority for Advance Ruling (AAR) has held.
This ruling is critical as it has clarified that ITI can be considered an educational institution equivalent to higher secondary education eligible to get an exemption for the government-sponsored schemes including the mid-day meal scheme.
HV Azeez had approached Kerala AAR on whether the supply of boiled milk (without sugar), fresh banana, bread, and cooked egg in the shell to the students of ITI as per the government scheme will be taxable.
He said that since the basic qualification required for taking admission in ITI is 10th pass in most cases or 10th fail in some courses and students get certificate equivalent to 12th or 10th (if they take the tests for two additional papers under National Institute of Open School). This makes ITIs eligible for exemption from GST on supply under government-sponsored schemes for pre-school/institution providing education up to higher secondary school. The AAR noted suppliers, with an aggregate turnover of Rs.20 lakh or more, are required to register under GST Act. However, section 23 of the Act stipulates that “any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax and wholly exempt from tax shall not be liable for registration.” Hence, the applicant is not required to register.