2020 (2) TMI 759 - AT - Service Tax

Commercial training or coaching service - Nature of activity - sale or service - sale of books - provisions of hostel facility and sale of books - naturally bundled services or not - exemption on hostel facility. Whether sale of books is service? - HELD THAT - It was not compulsory that books cannot be sold to any other person than the one who was receiving the commercial training or coaching service. The books were published by M/s MKC Publication and were available on flipkart for purchase by anybody. The separate invoice were issued for sale of books and cash receipts out of sale on books were separately maintained in the book of account - the value of the books cannot be ascertained on the basis of the cost of paper used and cost of printing - sale of books was not taxable activity and therefore, there was no service tax leviable on the sales value of books. Whether provisions of hostel facility and sale of books are to be combined with provisions of commercial training or coaching service as bundled service? - HELD THAT - Revenue has not brought forward any evidence that majority of service providers in the field of commercial coaching or training service provided hostel facility. In terms of the criteria stated in the manner of determining if the services are bundled as clarified by Central Board of Excise Customs it is not possible to bundle service of provisions of hostel facility with commercial training or coaching in the present case - the provisions of commercial training or coaching service and provisions of hostel cannot be bundled under the provisions of Section 66F of the Finance Act, 1994. Whether service tax was exempted on hostel facility? - HELD THAT - The hostel facility is provided for less than ₹ 100/- per day and therefore, it is entitled for exemption under Notification No.31/2011 dated 25 April, 2011 and Serial No.18 of Notification No.25/2012-ST - confirmation of service tax on hostel charges set aside. Penalties - HELD THAT - Since the demand on service provider do not sustain, the penalty on the other appellant does not sustain. We set aside penalties imposed on Shri Saurabh Singh, the appellant. Except for the service tax, interest and penalty paid by the appellant before issue of show cause notice, the impugned order is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the sale of books is a service.
2. Whether the provision of hostel facilities and sale of books are to be combined with the provision of commercial training or coaching service as bundled service.
3. Whether service tax was exempted on hostel facilities.

Issue-wise Detailed Analysis:

1. Whether the sale of books is a service:
The appellants argued that the books and forms sold were goods, not services, and were available to anyone, not just those receiving training or coaching services. They issued independent invoices for the sale of books, and the sales were maintained separately in the books of account. The Tribunal noted that the books were published by M/s MKC Publication and were available on Flipkart for purchase by anyone. The Tribunal referred to the case of Rubic’s Rostrum Coaching Pvt. Ltd. and concluded that the sale of books was not a taxable activity, and no service tax was leviable on the sales value of books. The Tribunal also dismissed the Revenue's claim of an 800% profit on book sales due to a lack of evidence.

2. Whether the provision of hostel facilities and sale of books are to be combined with the provision of commercial training or coaching service as bundled service:
The Tribunal examined Para 9.2.4 of the "Taxation of Services: An Education Guide" by the Central Board of Excise & Customs, which outlines criteria for determining if services are bundled. The Tribunal found no evidence that a large number of service receivers expected hostel facilities as part of the commercial training or coaching service package. Furthermore, there was no evidence that the majority of service providers in the field offered similar bundles. Thus, the Tribunal held that the services of commercial training or coaching and hostel facilities could not be bundled under Section 66F of the Finance Act, 1994.

3. Whether service tax was exempted on hostel facilities:
The Tribunal noted that the hostel facility was provided for less than ?100 per day, qualifying for exemption under Notification No.31/2011 dated 25 April 2011, and Serial No.18 of Notification No.25/2012-ST. Consequently, the confirmation of service tax on hostel charges was set aside. Additionally, the Tribunal found no evidence to support the confirmation of service tax of ?45,761 on taxi services and set aside this demand as well.

Conclusion:
The Tribunal set aside the confirmation of service tax on the sale of books and hostel charges. Since the demands were set aside, the confirmation of interest and the imposition of all penalties were also set aside. Consequently, the penalties imposed on the Director were annulled. The Tribunal allowed both appeals, except for the service tax, interest, and penalty already paid by the appellant before the issue of the show cause notice.

Order Pronounced:
The order was pronounced in the open Court on 05 February 2020.