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Whether Abacas Services are taxable or exempt?
Whether Abacus services can be classified under Recreation services and availed the exemption specified in the notification. This issue is solved in following advance ruling.
Facts of the case:
The applicant M/s. Omnisoft Technologies Pvt. Ltd. (OTPL) is engaged in IT business and education sector, with thrust on the franchisee model. It is submitted that with products like UC-MAS, UC-DinoArt, and UC-MLS from UCMAS Education Group Malaysia, the applicant has ensured that with the medium of using tools like ABACUS, Arts, Various Memory enhancing Techniques (like mental mapping, mnemonics, etc.), a child’s mental abilities & faculties like concentration power, memory, alertness, imagination skills (visualization power), and focus can be enhanced.
The applicant has submitted that UCMAS (Universal Concept Mental Arithmetic System) is a product of UC International Corp is a child development program based on Visual Arithmetic and Abacus that boosts brainpower in children aged 4-13 years. Along with strengthening math skills, the UCMAS approach promotes whole brain development and establishes foundational building blocks like memory, concentration, creativity and problem solving – core skills that inspire greater confidence and success in all subject areas and in life. The program equips them with the skills they need to improve overall academic achievement and to confidently meet life‟s challenges and achieve greatness.
The applicant has raised the following question for advance ruling – “The activity provided by UCMAS using abacus whether qualifies for exemption from the payment of GST?
Following points are considered by the Authority submitted by the applicant:
It is submitted that UCMAS is much more than developing number skills. Using Math as a medium and Abacus as a tool, this program helps developing basic cognitive skills and cognitive Executive Functions of a child. Cognitive skills are the core skills that the brain uses to think, read, learn, remember, reason, and pay attention. Working together, they take incoming information and move it into the bank of knowledge a child uses every day at school, and in life.
It is also submitted that UCMAS Training or Coaching Services provided by the applicant falls under the category of a Recreational Training Service/Activity. The word “recreational activity‟ has not been defined in the GST Act specifically.
It is submitted that Recreation should not be confined to playing games or watching television. There are a variety of activities which could be called as recreational. Even though, a vast majority of students do not find mathematics or arithmetic very interesting, by employing special methods, the subject which some consider as drudgery can be made interesting and thereby recreational. There are many games which can be played by using mathematics and mathematical concepts. Under UCMAS, the applicant applies various methods to make learning of arithmetical skills enjoyable.
It is further submitted that Abacus taught under UCMAS which is a recreational activity relates to an art. ‟„Art‟ has again not been defined in the GST Act. ABACUS under UCMAS is not merely a method to improve the speed and accuracy of calculations but it is also an activity wherein the children undergoing training are developed with the other aspects of the mind.
According to Commissionerate Vadodara – I, that the activity performed by the applicant is a form of education imparted to the children to develop their interest and skills in mathematics and hence it is an education support service.
It has been further informed that the „Educational Support Service‟ is classified under SAC 999294. It is submitted that the section 2(y) of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 defines the „educational institution and that private coaching centers or other unrecognized institutions, self-styled as educational institutions or institutions supporting education, would not be treated as „educational institutions‟ under GST and thus cannot avail exemptions available to an „educational institution‟ under Sr. 66 for heading 9992 of above said notification.
Further, the training imparted by the applicant to create interest in students for more advance form of mathematics so as to enhance their thinking capacity and mental development or employing methods of play involving Musical, Visual and specialized effects does not make the activities of the applicant as the training or coaching in recreational activities.
Also Advance Ruling Authority has referred Dictionary meaning of the word Art and notification issued by the Governments
M/s. Omnisoft Technologies Private Limited (GSTIN 24AAACO3894M1Z1) is 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 activity provided by UCMAS using abacus does not qualify for exemption from the payment of Goods and Services Tax.