Can Payments Made By School To International Baccalaureate Attract Tax Liability? Allahabad HC To Adjudicate

The Allahabad High Court, recently, heard a petition concerning the applicability of tax liability on payments made by an educational institution to the International Baccalaureate (IB). The matter arises under the framework of the Integrated Goods and Services Tax (IGST) Act, 2017, where the petitioners, an educational institution, challenged a notice imposing tax liability on such transactions.

Central to the case is whether educational services rendered in collaboration with the IB, a foreign body, constitute a “supply” liable to IGST, especially when the institution holds an exemption under the Income Tax Act. The bench has taken cognizance of the petitioners' claim for exemption under a 2017 notification and is examining whether education-related imports from IB fall within the taxable ambit.

The bench of Justice Rajan Roy and Justice Om Prakash Shukla issued notice and scheduled the matter for July 4, 2025.

Advocate Aprajita Bansal, representing the petitioners, contended that the school fell within the scope of Entry No. 1 of Chapter 99, as they held a certificate of exemption under Section 12AA of the Income Tax Act, 1961. However, the impugned notice dated September 26, 2024, determining the petitioners’ tax liability under Paragraph 6.2, made no reference to this exemption.

The petitioner further argued that Section 13(5) of the IGST Act referred specifically to an "educational event" and not to education in the broader sense, which the petitioners claimed was the nature of their operations. It was emphasized that the school's activity did not qualify as “business” under the definition of "supply" under Section 2(21) of the IGST Act, read with Section 7 of the Central Goods and Services Tax (CGST) Act, 2017. Hence, according to them, education as imparted by their institution was not subject to IGST.

It also submitted that no consideration was paid for the import of services from the International Baccalaureate.

Additionally, the petitioners highlighted a perceived inconsistency; while they were being asked to pay tax under the IGST Act, no input tax credit was made available to them, which they argued was legally incongruous.

The bench directed the counsel for the opposite parties to seek instructions and address the court on these issues, especially concerning the exemption claimed under the 2017 notification. The matter was listed for further hearing on July 4, 2025.

For Petitioners: Advocates Aprajita Bansal, Anilesh Tewari and Gursimran Kaur

For Respondent: ASGI, Kuldeepak Nag, Adv. Paavan Awasthi

Case Title: Modern School v Union (WRIT - C No. 4962 of 2025)