2011 (2) TMI 518 - AT - Service Tax

Commercial Training or Coaching - addition of hostel and mess facility while calculating the liability of Service Tax - Held that - This issue is now settled by the Tribunal in the case of Aditya College of Competitive Exam (2009 (4) TMI 134 - CESTAT, BANGALORE) wherein held that mess charges collected for availing mess facility as mess is meant for providing food to the trainees hence, mess charges cannot be considered as receipt for rendering Commercial Training or Coaching service.

Summary

Issues:
1. Whether charges for hostel and mess facilities should be included in the calculation of Service Tax liability for providing commercial training or coaching service.

Analysis:
The appellant filed an appeal against an order confirming a demand for Service Tax of Rs. 52,39,960, along with interest and penalties. The appellant provided commercial training or coaching service and also offered optional hostel and mess facilities, charging students separately for these services. The Revenue contended that these charges should be included in the Service Tax liability. The appellant relied on a Tribunal decision in a similar case to support their argument that hostel and mess charges should not be considered part of the taxable service. The Revenue argued that the appellants had not paid appropriate tax since 2004, leading to the demand. The Tribunal confirmed that the appellants provided commercial training or coaching service and that the optional hostel and mess charges should not be included in the gross receipts for calculating Service Tax liability. The Tribunal referred to a previous case where it was held that mess charges for providing food to trainees should not be considered part of the training service. Therefore, the Tribunal found merit in the appellant's contention that these charges should not be included in the Service Tax calculation.

The Revenue contended that the appellant had not paid the appropriate Service Tax, but the Tribunal held that the hostel and mess charges should not be included in the calculation of the liability for providing commercial training or coaching service. However, any outstanding dues for the services provided would still be recoverable along with interest and penalties. The appeal was disposed of based on these findings.