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This circular clarifies the goods and services tax rates and exemptions for sixteen specific services including ice-cream supply, educational fees, cotton storage, transit cargo, sanitation services, advertisement space, mineral transport, land leases, guest anchor honoraria, toll fees, assisted reproductive technology, land sales, motor vehicle renting, employee transport, dairy plants, and ferry tickets. The Central Board of Indirect Taxes and Customs issues these clarifications based on recommendations from the Goods and Services Tax Council. The affected parties include service providers and recipients across various sectors who must apply the clarified tax treatments, exemptions, and reverse charge mechanisms according to the specific conditions and dates detailed for each service.
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Circular No. 177/09/2022-TRU
CBIC-190354/176/2022-TRU Government of India Ministry of Finance Department of Revenue (Tax Research Unit)
Room No. 146G, North Block, New Delhi, the $3^{\text{rd}}$ August, 2022
To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All), The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Clarifications regarding applicable GST rates & exemptions on certain services–reg.
Representations have been received seeking clarification on the following issues:
Rate of GST applicable on supply of ice-cream by ice-cream parlors during the period from 01.07.2017 to 05.10.2021;
Applicability of GST on application fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational institutions;
Whether storage or warehousing of cotton in baled or ginned form is covered under entry 24B of Notification No. 12/2017-Central Tax (Rate) which exempted services by way of storage and warehousing of raw vegetable fibres such as cotton before 18.07.2022;
Whether exemption under Sl. No. 9B of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 covers services associated with transit cargo both to and from Nepal and Bhutan;
Applicability of GST on sanitation and conservancy services supplied to Army and other Central and State Government departments;
Whether the activity of selling of space for advertisement in souvenirs is eligible for concessional rate of 5%;
Taxability and applicable rate of GST on transport of minerals from mining pit head to railway siding, beneficiation plant etc., by vehicles deployed with driver for a specific duration of time;
Whether location charges or preferential location charges (PLC) collected in addition to the lease premium for long term lease of land constitute part of the lease premium or upfront amount charged for long term lease of land and are eligible for the same tax treatment;
Applicability of GST on payment of honorarium to the Guest Anchors;
Whether the additional toll fees collected in the form of higher toll charges from vehicles not having fastag is exempt from GST;
Applicability of GST on services in the form of Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF);
Whether sale of land after levelling, laying down of drainage lines etc., is taxable under GST;
Situations in which corporate recipients are liable to pay GST on renting of motor vehicles designed to carry passengers;
Whether hiring of vehicles by firms for transportation of their employees to and from work is exempt under Sr. No. 15(b) of Notification No. 12/2017-Central Tax (Rate) transport of passengers by non-air conditioned contract carriage;
Whether supply of service of construction, supply, installation and commissioning of dairy plant on turn-key basis constitutes a composite supply of works contract service and is eligible for concessional rate of GST prior to 18.07.2022;
Applicability of GST on tickets of private ferry used for passenger transportation.
The issues have been examined by GST Council in the $47^{\text{th}}$ meeting held on $28^{\text{th}}$ and $29^{\text{th}}$ June, 2022. The issue-wise clarifications as recommended by the GST Council are below:
Rate of GST applicable on supply of ice-cream by ice-cream parlors during the period from 01.07.2017 to 05.10.2021
3.1 On the recommendation of the GST Council in its $45^{\text{th}}$ meeting, it was clarified vide circular 164/20/2021-GST dated 06.10.2021 that ice cream parlours sell already manufactured ice- cream and they do not have a character of a restaurant and hence, ice cream sold by a parlour or any similar outlet attracts standard rate of GST @ 18% with ITC.
3.2 Representations have been received requesting that GST at 18% may be levied on supply of ice-cream by ice-cream parlors with effect from 06.10.2021.
3.3 It has been represented that ice cream parlors which paid GST @ 5% without ITC in view of prevailing doubt before the issuance of the Circular dated 6.10.2021 did not avail ITC and paid 5% in cash. Such ice-cream parlors have thus foregone significant ITC benefit.
3.4 Considering the overall circumstances of the case, it is clarified that past cases of payment of GST on supply of ice-cream by ice-cream parlors @ 5% without ITC shall be treated as fully GST paid to avoid unnecessary litigation. Since the decision is only to regularize the past practice, no refund of GST shall be allowed, if already paid at 18%. With effect from 6.10.2021, the ice Cream parlors are required to pay GST on supply of ice-cream at the rate of 18% with ITC.
4.1 Representations have been received regarding applicability of GST on application fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational institutions.
4.2 In this regard, it is stated that educational services supplied by educational institutions to its students are exempt from GST vide entry 66 of the notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 relevant portion of which reads as under, -
“Services provided –
a. by an educational institution to its students, faculty and staff;
[(aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee;]..."
4.3 Therefore, it can be seen that all services supplied by an ‘educational institution’ to its students are exempt from GST. Consideration charged by the educational institutes by way of entrance fee for conduct of entrance examination is also exempt. The exemption is wide enough to cover the amount or fee charged for admission or entrance, or amount charged for application fee for entrance, or the fee charged from prospective students for issuance of eligibility certificate to them in the process of their entrance/admission to the educational institution. Services supplied by an educational institution by way of issuance of migration certificate to the leaving or ex-students are also covered by the exemption. Accordingly, such activities of educational institution are also exempt.
4.4 Accordingly, it is clarified that the amount or fee charged from prospective students for entrance or admission, or for issuance of eligibility certificate to them in the process of their entrance/admission as well as the fee charged for issuance of migration certificates by educational institutions to the leaving or ex-students is covered by exemption under Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
5.1 Representations have been received regarding applicability of GST exemption on the service of storage or warehousing of cotton in baled or ginned form.
5.2 Prior to 18.07.2022, entry 24 B of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 exempted services by way of storage and warehousing of, inter alia, raw vegetable fibers such as cotton, flax, jute etc. Cotton Fiber glossary by barnhardtcotton.net defines ‘cotton staple, virgin cotton or raw cotton’ as cotton fibers that are removed from the cotton seed by the gin. Further, CESTAT Chandigarh in the case of R.K.& Sons vs CCE, Rohtak dated $14^{\text{th}}$ July 2016 has observed as under:
