CESTAT MUMBAI BENCH:VALUE OF PURCHASED STUDY MATERIAL SUPPLIED TO STUDENTS NOT INCLUDIBLE IN THE VALUE OF COMMERCIAL COACHING SERVICES (In favour of assessee)

In its judgment dated 2^nd April, 2012 CESTAT, MUMBAI BENCH in the case of Chate Coaching Classes (P.) Ltd. vs. Commissioner of Central Excise, Aurangabad held that value of study material supplied by coaching institutes shall not be included in value of taxable services i.e shall not be included in the value of coaching services.

Facts of the Case

• The appellant is engaged in providing the service of “commercial training and coaching”.

• Appellant is providing study material to students and the value of the said material has not been included in the assessable value of the services. By virtue of the benefit provided by Notification NO.12/2003-ST dated 20.6.2003.

• As per Notification No. 12/2003-ST “Goods and materials sold by service provider to recipient of service – Value thereof, exempts so much of the value of all taxable services, as is equals to value of goods and materials sold by the service provider to the recipient of service from the service leviable thereon under section 66 of the said Act, subject to condition that there is documentary proof specifically indicating the value of the said goods and materials.

• And for the condition of documentary proof specifically indicating the value of the said goods and materials, appellant has shown the value of the material supplied in the invoice separately, therefore they have fulfilled the second condition of Notification 12/2003.

• But a show cause notice was issued on the basis of circular No.59/8/2003 dated 20.6.2003 according to that the appellant is not entitled for exemption under Notification 12/2003 dated 20.6.2003 and exemption is available only in case the commercial coaching and training classes makes available the standard textbooks.

• Since this study material is provided by the institute as part of their service, therefore the value of this service material is includible in the value of taxable service.

Issue for Consideration

The issue arises here is whether    the study material provided by commercial training and coaching centers to their student is exempt from service tax or not.

Observation of Tribunal

In this case Tribunal was held that the appellant is entitled for the benefit of Notification NO.12/2003-ST dated 20.6.2003 on the basis of followings:-

• The Circular No.59/8/2003 dated 20.6.2003 of CBEC quoted by the learned DR states that such exemption will be applicable only if material sold is ‘standard textbooks’.

• The question as to what is a ‘standard textbook’ can lead to disputes.

• Since the expression is not used in the notification and the fact that the books sold are of another entity namely “Bulls Eye’, we do not find any reason to deny the benefits of the Notification No.l2/2003-ST.”

Regards
CA. Mona Singhal
Partner

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