2016 (1) TMI 1016 - AT - Service Tax

Valuation - inclusion of amount charged towards Study Material Package (SMP) supplied to students - coaching centre and Franchise service - Held that - It is not disputed that the appellant has shown the sale of value of study material separately in the invoice. The only argument raised is that these textbooks do not qualify as Standard Textbooks as clarified in the Board s circular. The Tribunal in the case of M/s. Cerebral Learning Solutions Pvt.Ltd. 2013 (4) TMI 527 - CESTAT NEW DELHI had occasion to consider similar issue and held that the clarification issued by the Board s circular No.59/8/2003 dt.20.6.2003 is illegal and contrary to the statutory exemption granted by the notification. The said judgement squarely covers the issue in the present case. - Decided in favor of assessee.

Summary

Issues:
Whether the appellant is liable to pay service tax on study material supplied to students in coaching centers.

Analysis:
The appellant, engaged in providing coaching services, was alleged to have short-paid service tax on various items, including study material supplied to students. Initially, the demand for service tax on study material was dropped, citing the sale of study materials to students with invoices raised and eligibility for a specific notification. However, the department filed a revision, leading to the Commissioner confirming the demand. The appellant challenged this before the Tribunal.

The appellant's counsel argued that the study material was sold by the appellant, with invoices raised reflecting the value, and that the materials were sold to students as part of their institute services. The counsel contended that the denial of the benefit of a particular notification was erroneous, citing a relevant decision by CESTAT. On the other hand, the Revenue supported the Commissioner's decision, asserting that the study material did not qualify as standard textbooks as per a specific circular.

After hearing both sides, the Tribunal noted that the study material's sale value was separately shown in the invoices. The crucial point of contention was whether the materials qualified as standard textbooks based on the Board's circular. Referring to a previous judgment on a similar issue, the Tribunal held that the Board's circular was illegal and contrary to the statutory exemption granted by the notification. Consequently, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax on study material. The appeal was allowed with any consequential relief.

In conclusion, the Tribunal's decision clarified the issue of liability for service tax on study material supplied by coaching centers to students. The judgment emphasized the importance of statutory exemptions and held that the demand for service tax on study material was not sustainable in this case, based on a previous relevant judgment.