2024 (11) TMI 1222 - AT - Service Tax

Demand of Service Tax on sale of books provided for training and coaching of students, under the category of commercial training and coaching service - HELD THAT - We observe that the Appellant has been rendering commercial training and coaching services. As a part of this service, they were also selling books/study materials to the students. The prices of the books were printed on the said books. We also find that these books were available for sale not only to students enrolled with the Appellant, but also to other students who were not enrolled. The only difference is that the books are being sold at a concessional rate to the enrolled students. We find that the Appellant is liable for payment of VAT for the sale of such books. However, as the sale of books was exempt from levy of VAT in the State of West Bengal during the impugned period, they were not paying VAT thereon. Accordingly, we find that the Appellant is eligible for the benefit of Notification No.12/2003-S.T. dated 20.06.2003 which excludes the value of books/study materials sold from the taxable value. As per Notification No. 12/2003-S.T., dated 20-6-2003 we observe that the value of materials supplied on which VAT is paid or payable, is not includable in the assessable value for the purpose of computing the service tax liability. In this case, it is not in dispute that VAT is payable on the books sold by the appellant, even though it is exempted in the state of West Bengal. Accordingly, as per the Notification 12/2003-ST dated 20.06.2003, we hold that the value of books sold is not includable in the assessable value for the purpose of computing the service tax liability of the appellant. We also find that the issue is no longer res integra as the Tribunal, New Delhi has already decided the issue in favour of the Appellant in the case of FIITJEE Ltd. 2017 (1) TMI 1602 - CESTAT, NEW DELHI Thus we hold that the Appellant is not liable to pay Service Tax on the sale value of the books/study materials sold, under the category of commercial training and coaching service .

Summary

Issues:
1. Whether the sale of books provided for training and coaching of students is liable for Service Tax under the category of 'commercial training and coaching service'?
2. Whether the value of books sold to students should be included in the taxable value of coaching and training services rendered by the Appellant?
3. Whether the Appellant is eligible for the benefit of Notification No. 12/2003-S.T. dated 20.06.2003, which excludes the value of books/study materials sold from the taxable value?

Analysis:
Issue 1: The Appellant appealed against the confirmation of Service Tax on the sale of books provided for training and coaching of students. The Department considered the value of books sold by the Appellant as includable in the taxable value for coaching services. The Appellant argued that Service Tax was charged only on tuition fees, not on the price of books/study materials. The Tribunal observed that the Appellant provided coaching services and sold books/study materials to students, with prices indicated. The Tribunal held that the Appellant is liable for VAT on book sales but exempted as VAT was not payable in West Bengal during the period. Therefore, the Appellant is not liable for Service Tax on book sales under 'commercial training and coaching service'.

Issue 2: The Tribunal referred to Notification No. 12/2003-S.T., which exempts the value of goods and materials sold by the service provider from service tax if VAT is paid or payable on those goods. As VAT was payable on book sales, even though exempted in West Bengal, the Tribunal held that the value of books sold is not includable in the assessable value for computing service tax liability. The Tribunal also cited a decision by the Tribunal, New Delhi, in favor of the Appellant regarding the exemption under Notification No. 12/2003-S.T.

Issue 3: The Appellant contended that they were discharging Service Tax on tuition fees and claimed exemption under Notification No. 12/2003-S.T. for the sale value of study materials or books. The Tribunal upheld the Appellant's contention, stating that the demand for Service Tax on book sales is not sustainable. Relying on the decision cited, the Tribunal held that the Appellant is not liable to pay Service Tax on the sale value of books/study materials under 'commercial training and coaching service'. Consequently, the demand confirmed in the impugned order was set aside, and the appeal by the Appellant was allowed with consequential relief, if any, as per law.