2023 (5) TMI 769 - AT - Service Tax

Tribunal excludes book sale income from coaching services consideration, grants service tax relief.

The Tribunal held that the income from the sale of books should not be included in the consideration for coaching services provided by the Appellant. ... Inclusion of sale of course material in consideration for taxable coaching services - exemption for sale of books/study material from service tax - reliance on audited financial statements versus seized records for determination of taxable turnover - scope and effect of Notification No. 12/2003 ST (exemption for education related supply)Inclusion of sale of course material in consideration for taxable coaching services - exemption for sale of books/study material from service tax - scope and effect of Notification No. 12/2003 ST (exemption for education related supply) - Sale of publications/books cannot be included in the taxable consideration for coaching services where such sale is separately identifiable and constitutes sale of goods. - HELD THAT: - The Tribunal examined whether receipts from sale of publications/books formed part of the consideration for taxable coaching services. Noting consistent precedent of the Tribunal that the value of books/study material, when separately identifiable, is not includible in the consideration for coaching services, the Tribunal held that the exemption regime (as reflected in theNotification dated 20.06.2003) does not permit engrafting restrictive conditions by administrative circulars so as to bring bona fide sales of study material within taxable service. Applying that principle to the facts, the Tribunal found that the appellant's audited financial statements separately identified income from sale of publications and that documentary evidence showed such sales were also made to third parties; on that basis the receipts constituted sale of goods and were covered by the exemption. The Tribunal therefore rejected the revenue's approach of disregarding the audited figures and treating the seized records as establishing an assessable service turnover in respect of book sales. The appellant was accordingly entitled to relief. [Paras 8, 9, 10, 11]Impugned order confirming service tax demand on sale of publications set aside; appeal allowed and appellant entitled to consequential relief.Final Conclusion: The Tribunal allowed the appeal, holding that receipts from sale of books/publications, being separately identifiable and constituting sale of goods (including sales to third parties), are not includible in the consideration for taxable coaching services for the period April 2013 to 31st December, 2016; the adjudication confirming service tax demand on that account was set aside. Issues:The judgment involves the confirmation of demand for service tax along with penalty and interest, based on alleged non/short payment of service tax by the Appellant for the period from April 2013 to 31st December 2016. The key issue is whether the income from the sale of publication of books should be added to the consideration for coaching services provided by the Appellant.Confirmation of Demand:The Appellant, engaged in providing coaching services, received a show cause notice alleging non/short payment of service tax on coaching services. The department claimed that the Appellant artificially bifurcated consideration received towards coaching services, including income from the sale of publication section L, to pay less service tax. The Appellant defended by stating that the sale of books should not be included in the value of coaching services as it falls under the sale of goods and is not taxable. The Adjudicating authority confirmed the demand, stating that the Appellant misdeclared values in audited balance sheets, justifying the levy of service tax based on seized records.Appellant's Defense:The Appellant argued that the value of books should not be included in the consideration for coaching services, citing various Tribunal decisions in their favor. They referenced cases such as CHATE COACHING CLASSES PVT. LTD. v. COMMR. OF C. EX., CEREBRAL LEARNING SOLUTIONS PVT. LTD. v. COMMR. OF C. EX., and others, where it was held that the value of books cannot be included in the consideration for coaching services.Tribunal's Decision:The Tribunal, considering the precedents and legal provisions, held that the value of books should not be included in the consideration for coaching services. Referring to the case of CEREBRAL LEARNING SOLUTIONS PVT. LTD. v. COMMR. OF C. EX., the Tribunal emphasized that the exemption notification admits no restrictive clauses, entitling the assessee to relief. As the value of sale of books was separately identifiable and not solely to students but also to third parties, the levy of service tax on such value was deemed unsustainable. Consequently, the impugned order was set aside, and the appeal by the Appellant was allowed with any consequential relief.Conclusion:The Tribunal's decision in this case clarified that the income from the sale of publication of books should not be added to the consideration for coaching services provided by the Appellant. The judgment relied on legal precedents and statutory provisions to support the Appellant's position, ultimately setting aside the demand for service tax and granting relief to the Appellant.