2019 (2) TMI 1031 - AT - Service Tax

Valuation - commercial training and coaching services - inclusion of amount of scholarship / discount concession provided by them to the students at the time of seeking admission to its Coaching Institute in assessable value - Held that - The issue decided in appellant own case M/S. CARRIER POINT INFOSYSTEMS LTD. VERSUS C.C.E., JAIPUR-I 2017 (4) TMI 1338 - CESTAT NEW DELHI , where it was held that Offering of discount/rebate by the coaching institutes is an accepted trade practice. Thus, the tuition fees actually charged by the appellant, after providing eligible discount/rebate, will only be considered as the gross value for payment of service tax - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Assessment of service tax on discounts provided by coaching institute to students.

Analysis:
The appellant, a coaching institute providing commercial coaching to students for engineering and medical entrance exams, offered discounts and fee concessions to students. A show cause notice was issued, asserting that service tax was payable on the discounts provided as they were considered a part of the assessable value for tax purposes. The appellant contended that service tax should only be levied on the consideration actually received, citing Section 67 of the Finance Act, 1994. The adjudicating authority confirmed the service tax liability and imposed a penalty, deeming the discounts as a means to enhance the institute's brand value in the market.

The appellant argued that service tax should not be imposed on the discounts offered, referencing a previous order by a Division Bench of the Tribunal in their favor for an earlier period. The department's representative defended the impugned order. The key issue was whether the appellant was liable to pay service tax on the discounts provided to students during admission. The Tribunal, based on the appellant's promotional material and practices, concluded that the discounts were transparently communicated to students beforehand and were not solely for brand enhancement. The Tribunal held that the tuition fees charged after applying eligible discounts should be the gross value for service tax calculation.

In alignment with the Tribunal's previous decision and reasoning, the impugned order demanding service tax, interest, and penalty was set aside. The appeal was allowed, ruling in favor of the appellant and relieving them from the service tax liability amounting to Rs. 97,94,663.