Fee concession under a disclosed scholarship scheme was not non-monetary consideration for service tax valuation.

A pre-declared scholarship or fee concession, disclosed in the prospectus and extended to specified student categories on stated criteria, was treated as a bona fide business practice to promote the coaching business. It was not regarded as separate non-monetary consideration over and above the fee actually charged and received, so section 67 and rule 3 of the Service Tax Valuation Rules, 2006 did not justify adding the foregone concession to taxable value. The taxable value was confined to the gross amount charged from students, and the departmental valuation approach was held unsustainable, with the demand, penalty and impugned order set aside in favour of the assessee.

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Issues: Whether the scholarship or fee concession offered to students could be treated as non-monetary consideration requiring addition to the taxable value under section 67 and rule 3 of the Service Tax Valuation Rules, 2006.

Analysis: The concession was part of a pre-declared scholarship scheme disclosed in the prospectus and available to identified categories of students on stated criteria. The concession represented a bona fide business practice adopted to promote the coaching business and did not amount to any separate consideration received over and above the fee actually charged and received. In such circumstances, the taxable value remained the gross amount charged from the students, and there was no basis to add the foregone concession as non-monetary consideration or to invoke the valuation rules.

Conclusion: The valuation adopted by the department was unsustainable and the demand, penalty, and impugned order were set aside in favour of the assessee.

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