2018 (10) TMI 1208 - AT - Service Tax

Valuation of taxable services - inclusion of amount of concession in the name of scholarship given by the appellant to its various students in assessable value - Department has entertained a view that the amount of concession in the name of scholarship given by the appellant to its various students is in a way a non-monetary consideration and as per Section 67 of the Finance act, 1994 read with Rule 3 of Service Tax Valuation Rules, 2006. Held that - The matter is no longer res integra and it has already been decided by this Tribunal in the case of M/S RESONANCE EDUVENTURES PVT. LTD., SHRI R.K. VERMA, MANAGING DIRECTOR, M/S ALIEN CAREER INSTITUTE VERSUS CCE & ST, JAIPUR 2017 (11) TMI 1276 - CESTAT NEW DELHI , where it was held that there are no reason to consider the concessional portion of fee which is as per the pre-declared publicity material, as part of non-monetary consideration requiring addition to the monetary consideration to arrive at the gross value. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Valuation of taxable service for service tax liability based on scholarship concession in course fee.

Analysis:
The case involved the valuation of taxable service for service tax liability concerning scholarship concessions in the course fee provided by an institute offering commercial coaching for competitive examinations. The appellants advertised their courses and offered scholarships as part of promotional schemes, providing a percentage concession in the course fee to meritorious students. The Department contended that the scholarship amount should be considered a non-monetary consideration, requiring service tax payment on the normal fee charged, even for students receiving scholarships. A Show Cause Notice was issued, leading to a demand confirmation against the appellant under Section 73 of the Finance Act, 1994, along with penalties imposed under Sections 76 and 77(2).

The appellant argued that the gross amount charged from students entitled to scholarships constituted the primary fee received, with no additional consideration received, monetary or otherwise. They contended that the scholarship concession was universally available to all qualifying students, as mentioned in the prospectus. Referring to a previous Tribunal order in their favor, the appellant maintained that the matter was not res integra.

The Tribunal examined the arguments and the previous order, emphasizing that the scholarship program was part of a pre-notified scheme aimed at attracting candidates and promoting the institute's business. The Tribunal found that the scholarship concession, as per the declared policy, did not involve non-monetary consideration and was a bonafide business transaction. It noted that the service tax liability would arise on the gross value, which, in this case, did not include the concessional portion of the fee. The Tribunal concluded that the appellants were correct in discharging service tax only on the amount received from students, without considering the concessional portion as part of the gross value, as long as it was a bonafide trade practice.

Consequently, the Tribunal held that the Order-in-Original lacked merit and set it aside, allowing the appeal in favor of the appellants.