Tribunal excludes textbook sales from taxable services, citing unauthorized circular. Appellants granted exemption.

The Tribunal held that the value of study material/textbooks sold by the appellants is not includible in the value of commercial training/coaching service for service tax purposes. It found that the Board Circular attempting to include such value was unauthorized and of no effect, emphasizing that only the Central Government has the power to grant exemptions. The appellants were deemed entitled to exemption under Notification No. 12/2003-ST, leading to a waiver of pre-deposit and stay of recovery of adjudicated liabilities during the appeal process.

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Issues:
Whether the value of study material/text books sold by the appellants is includible in the value of commercial training or coaching service.

Analysis:
The appellants filed a stay application along with an appeal against an Order-in-Original. The main issue was the inclusion of the value of study material/text books in the assessable value for charging service tax. The appellants argued for exemption under Notification No. 12/2003-ST. The adjudicating authority referred to a Board Circular stating that the exemption applies only to the sale value of standard text books, not other study material. The authority held that the amount received for study material/text books would be included in the assessable value for service tax.

The appellants contended that the Notification No. 12/2003-ST applied to them, and Board circulars cannot alter the scope of the notification. The issue was compared to a CESTAT decision in another case where the Board Circular was deemed misconceived and contrary to the exemption notification. The decision highlighted that the value of books or course material supplied by the assesses should be included in the taxable service value, subject to specific conditions of the exemption notification.

The Tribunal analyzed the situation and found the Board Circular to be illegal and contrary to the statutory exemption notification. It emphasized that the Central Government, not the CBEC, has the power to grant exemptions from tax liability. The Tribunal concluded that the part of the clarification in the Circular imposing conditions on the exemption was unauthorized and of no effect. Therefore, the appellants were entitled to the benefit of the exemption under Notification No. 12/2003-ST. Consequently, the Tribunal waived the pre-deposit and stayed the recovery of the adjudicated liabilities during the appeal process.

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