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TMI Blog2023 (5) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. In other words, there should be a nexus between the two services. The appellant has a boarding school and it receives hostel fees from students in addition to the tuition fee and other charges. However, students who are day scholars and who do not opt to pay the hostel facility are not required to pay the hostel fees. The hostel facility cannot be provided without the provision of education services by a boarding school as it is not the case of the department and it cannot be that students who are not receiving education services can also avail hostel services - There is, therefore, a nexus between the two services. It cannot, therefore, be doubted that the hostel services and education services provided by a boarding school are naturally bundled in the ordinary course of business, and the education service is the service which gives the essential character to such bundle. Section 66D of the Finance Act provides for the negative list of services and it includes service by way of pre-school education and education up to higher secondary school or equivalent. Thus, education service would be covered within the purview of negative list contained in section 66D of the Finance Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA Services]. 5. An investigation was initiated against the appellant whereafter it was observed that the appellant had failed to pay service tax in respect of various services provided/received by it. 6. A show cause notice dated 20.09.2016 was, therefore, issued to the appellant proposing a demand of service tax of Rs. 02,02,01,879/- with interest and penalties. The allegations made against the appellant in the show cause notice are as follows: (i) The hostel services provided by the appellant to the students, being an auxiliary education services, was not exempted under Serial No. 9 of the Notification dated 20.06.2012 during the period 01.04.2013 to 10.07.2014 and thus, taxable; (ii) The hostel services are not naturally bundled with education services; (iii) The hostel services are not in the nature of renting of residential dwelling for use as residence covered under section 66D(m) of the Finance Act, 1994 [the Finance Act]; (iv) The appellant is liable to pay service tax on the rent received from Mody University from July 2014 to March 2015; (v) The transportation services provided by the appellant to the students, faculty and staff, being an auxiliary educatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e naturally bundled in the ordinary course of business, and it is the education service that gives the essential character to such a bundle. This apart, as hostel services cannot be provided on a stand alone basis without the provision of education services by a boarding school, there is a clear nexus between the two services; (v) Even otherwise, the hostel services rendered by the appellant are covered under section 66D(m) of the Finance Act and hostel services rendered by the appellant are exempted under serial no. 18 of notification dated 20.06.2012; (vi) In any case, the exemption given at serial no. 9 of the notification dated 20.06.2012 was available even during the period 01.04.2013 to 10.07.2014; (vii) Demand of service tax on the rent received from Mody University is required to be recomputed after extending the threshold exemption; and (viii) The extended period of limitation is not invokable. 11. Shri Harshvardhan, learned authorized representative appearing for the Department has, however, supported the impugned order and made the following submissions: (i) The hostel services is a distinct service provided by the appellant and is not bundled together with ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of immovable property; 2. Definitions. - For the purpose of this notification, unless the context otherwise requires, - (f) "auxiliary educational services" means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge - enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution; 3. From 11.07.2014 to 31.03.2017 9. Services provides, - (a) by an educational institution to its students, faculty and staff; (b) to an educational institution, by way of, - (i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Government; (iii) security or cleaning or house-keeping services performed in such educational institution; (iv) services relating to admission to, or condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Show Cause Notice has not discussed the Para 4.12.4 of the CBEC's Education Guide properly as in the said Para, hostel fees has been clarified as being part of Negative List - clause (m) as service of providing residential dwelling covered as a separate entry in this clause. Hence, no Service Tax is payable on hostel fees charged by them form the students of Mody School. 4.4.3 I observe that by virtue of Notification No. 3/2013 - ST dated 01.03.2013, an amendment was made in entry no. 9 of the Notification No. 25/2012- ST dated 20.06.2012 w.e.f. 01.04.2013 and for the words "provided to or by", the words "provided to" were substituted. After the said amendment, the entry no. 9 of the Notification No. 25/2012- ST dated 20.06.2012 read as under: 9. services provided to an educational institution in respect of education exempted from service tax, by way of, - (a) Auxiliary educational services; or (b) Renting of immovable property; 4.4.4 Hence, it is clear that from 01.04.2013, the auxiliary educational services provided by an educational institution ceased to be exempted and came within the purview of Service Tax. However, the entry no. 9 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are as follows: "66F. Principles of interpretation of specified descriptions of services or bundled services. 66F. (1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not included reference to a service which is used for providing main service. xxxxxxxxx (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. (3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:- (a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character; (b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax. Explanation.- For the purposes of sub-section (3), the expression "bundled service" means a bundle of provision of various services wherein an elemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service." (emphasis supplied) 21. Section 66D of the Finance Act provides for the negative list of services and it includes service by way of pre-school education and education up to higher secondary school or equivalent. Thus, education service would be covered within the purview of negative list contained in section 66D of the Finance Act. It would, therefore, not be taxable. 22. Even in the Goods and Service Tax regime, the views expressed earlier by the CBIC continue to operate as in the pre-Goods and Service Tax regime. This would be clear from the CBEC Press Release dated 13.07.2017 and the relevant portion is reproduced below: "2. It may be mentioned that services provided by an educational institution to students, faculty and staff are fully exempt. Educational institution has been defined as an ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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