Why 18 percent GST on DNB course fee: SC asks NMC, NBE

The Association of DNB Doctors in their plea before the Apex Court challenged the imposition of 18% GST on DNB course fees and also sought a direction upon NMC to conduct Practical Theory Exams of 2 consecutive sessions December 2020 & June, 2021 with gap of minimum one month.

After taking note of the submissions made by the counsel for the petitioners, the Apex Court bench comprising of Justice DY Chandrachud and Justice MR Shah issued notices in this regard and listed the matter to be next heard on September 3.

The plea filed by the Association of DNB Doctors pointed out how-

(i) GST at the rate of 18% is being charged on the course fee payable by candidates for the DNB course conducted under the auspices of the National Board of Examinations; and

(ii) The fee of Rs 1.25 lakhs which was enhanced on 3 April 2019 is by virtue of a clarification dated 15 February 2021 being applied to all ongoing broad specialty, special specialty and fellowship courses, irrespective of the year of joining.

The association submitted before the Court that the Union Ministry of Finance in the Department of Revenue in the notification dated 17 June 2021 had clarified that GST would be exempted for the courses conducted by NBE.

Medical Dialogues had earlier reported that the Central Board of Indirect Taxes and Customs (CBIC) had previously clarified that fee paid to the various education boards including the National Board of Examinations (NBE) would not be subject to goods and services tax (GST) anymore.

This no GST policy, however, would be applicable only for the purpose of conducting entrance examination or admission process. CBIC has clarified that 18% GST would be applicable for services provided by these boards such as granting accreditation to an institution or to a professional.

Following such clarifications from CBIC, the Association of DNB Doctors along with the Federation of Resident Doctors Association (FORDA) had written to the NBE regarding the matter and they questioned the inclusion of GST charges in the annual course fees of DNB candidates.

NBE, allegedly directed the candidates to deposit the annual course fee of Rs 1,47,500 (including 18% GST) to NBEMS account within 05.08.2021 and warned that failing to submit the fees within the deadline might lead to the cancellation of the candidature of the NBEMS trainee.

Also Read: Doctors Demand GST Exemption on DNB Fees

Now, the Association of DNB Doctors took the matter to the Apex Court and the Court after hearing the submission made by Mr. A N S Nadkarni, the counsel appearing on behalf of the petitioners, has issued notice in the matter.

As per the latest media report by Live Law, the DNB doctors have sought quashing of the notification imposing 18% GST on DNB candidates on the basis of the following grounds-

1. After considering several factors of different states including operating costs, salary, stipends etc. the fees for DNB and FNB candidates get fixed.

2. In order to ensure that DNB candidates do not face unnecessary financial difficulty, NBE has set a maximum limit for charging of fees.

3. Introducing 18% GST on DNB/ DrNV and FNB courses is unreasonable and unfounded. As these 2-3 year lengthy professional courses are recognized by NMC as recognized PG medical qualifications registrable for practicing medicine in India, they come in the category of Central Tax notification dated 28th June 2016 and are exempted from GST.

4. Even after the clarification from CBIC, NBE is forcefully imposing extra GST charges on Education/ Tuition fees by way of threatening mails saying that if fee is not paid till August 5th them candidature will be cancelled.

Mr. Nadkarni, during the hearing of the case on Monday, submitted that NBE itself had fixed the fees upto Rs 80,000. He further pointed out that even when the notification by NBE stated that the fees cannot be increased by more than 5%, the same has been increased from 80,000 to 1 lakh.

"Amount of 80,000 was fixed in 2018 and it will apply to even students passing in 2021. That is their own regulation. The fee is increased to 1.25 lakh in 2019, so 2019-22 this will apply. Now what is sought to be done through the impugned notification GST is sought to be added. It says payment of GST is mandatory according to Government which is not true, it is the contrary." the counsel was quoted saying.

At this outset, the bench opined that the fees of Rs 1.20 lakh is for the exam along with the entire course and noted,

"What they are charging for exams may not be subject to GST, but the course fee is subject to the 18% GST."

Responding to this, the counsel for the petitioner submitted, "The idea is that educational institution shouldn't be charged. It's not a service. It is something that the State provides."

"The Respondent conducts DNB exams for broad speciality, super speciality courses. I'm doubtful if this notification will apply to these institutions charging fees for courses", the bench noted in this context.

"It is an important issue, anyway we should consider it" Justice Chandrachud was quoted saying.

Meanwhile Justice Shah observed, "They have not increased the fee, it is due to GST that it has come to more than 1 lakh" and questioned Mr. Nadkarni about how could he challenge levy of 2019 now.

To this, the counsel for the petitioner replied that in 2019 it was clarified that the increase in fee would be applicable only for the students from that year onwards. However, contrary to that, when they have imposed GST on the fee, they have levied it on all the students including the 2018 batch students.

The Association has also sought a direction upon NMC for conducting Practical theory Exams of 2 consecutive sessions December 2020 & June, 2021 with gap of minimum one month. They have contended that the idea of having the exams in different months is so people can appear in both.

However, the bench observed denied that and noted "That we may not get into. The schedule is already out and Exams are already going on for DNB." To this, Mr. Nadkarni submitted that he may seek a general observation regarding this later stating that these examinations cannot be combined.

The Court has listed the matter to be next heard on September 3, 2021.