The Kerala Authority for Advance Rulinghas ruled that examination fees collected by the Kerala Devaswom Recruitment Board are liable to Goods and Services Tax (GST) and that the Board is required to obtain GST registration once its aggregate annual turnover exceeds ₹20 lakh. The ruling was delivered by a Bench comprising Jomy Jacob, Additional Commissioner of Central Tax, and Mansur M.I., Joint Commissioner of State Tax, on an application filed by the Kerala Devaswom Recruitment Board seeking clarity on its GST liability and registration requirements
The applicant Board, constituted under the Kerala Devaswom Recruitment Board Act, 2015, conducts recruitment examinations for filling various posts in Devaswom Boards across different regions of Kerala. It approached the Authority to ascertain whether GST registration was mandatory and whether GST was applicable on application fees and examination fees collected from candidates appearing for recruitment examinations.
The Board contended that it is a government-controlled, grant-in-aid institution and that the fees collected from candidates were utilised solely to meet administrative and operational expenses related to the recruitment process. It was argued that the activity was not commercial in nature and that the examination fees could not be treated as consideration for supply of services under the Central Goods and Services Tax Act, 2017.
The Authority, however, rejected these submissions. Examining the nature of activities undertaken by the Board, the AAR noted that the recruitment process involved multiple identifiable services rendered to candidates, including issuance of notifications, conduct of examinations, evaluation of answer scripts, publication of rank lists, and facilitation of selection to various posts. It held that candidates pay examination fees in return for these services and that such payments clearly constitute consideration for supply.
The AAR further observed that the recruitment activity undertaken by the Board falls within the ambit of “business” and “supply” as defined under Sections 2(17) and 7 of the CGST Act, respectively. It held that the fact that the fees were collected to meet expenses or that the Board was grant-in-aid did not alter the character of the transaction as a taxable supply.
On the claim of exemption, the Authority held that recruitment examinations are not sovereign functions and are also not functions entrusted to municipalities or Panchayats under Articles 243W or 243G of the Constitution. Consequently, the services provided by the Board could not be treated as exempt services rendered by a governmental authority. The AAR specifically noted that recruitment services do not fall under any of the exempt categories prescribed under Notification No. 12/2017–Central Tax (Rate).
The Authority further clarified that once the aggregate value of taxable services, including examination fees collected from candidates, exceeds the threshold limit prescribed under Section 22 of the CGST Act, registration under GST becomes mandatory. It rejected the argument that GST would not apply merely because the Board is constituted by statute or operates under government control. Accordingly, the Kerala AAR ruled that the recruitment services provided by the Kerala Devaswom Recruitment Board are taxable, that GST is payable on examination and application fees collected from candidates, and that the Board is liable to obtain GST registration once its annual taxable turnover crosses the prescribed threshold limit.
Applicants Name: Kerala Devaswom Recruitment Board
