Separately priced study material supplied with coaching can qualify for service tax exemption when distinctly identifiable and no Cenvat credit is taken.

Exemption under Notification No. 12/03-ST was held available for the separately valued supply of study material and kits provided alongside coaching services, because the material formed a separately identifiable transaction and was not inseparable from the coaching supply. The Tribunal relied on separate receipts, distinct pricing in the prospectus, sale of material to non-registered students, and the fact that no Cenvat credit had been taken on the material. On that basis, denial of exemption merely because the material was supplied in connection with coaching was unsustainable, and the assessee's claim succeeded with consequential relief.

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Issues: Whether the appellant was entitled to exemption under Notification No. 12/03-ST dated 20.06.2003 in respect of the value collected towards supply of study material and kits along with coaching services.

Analysis: The dispute turned on whether the supply of books, study material and kits formed a separately identifiable transaction or an inseparable part of the coaching service. The Tribunal noted that the appellant maintained separate receipts for study material, indicated separate pricing in its prospectus, and also sold such material to non-registered students. It further noted that no cenvat credit had been availed on the material. In these circumstances, the benefit of the exemption notification could not be denied merely on the footing that coaching and supply of material were part of a composite arrangement.

Conclusion: The claim for exemption under Notification No. 12/03-ST was allowable and the denial of the benefit was unsustainable, in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where study material is separately priced and separately identifiable, and no cenvat credit is taken, exemption for the value of such material cannot be denied merely because it is supplied in connection with coaching services.

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