2023 (5) TMI 769 - AT - Service Tax

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

Kanhaiya Singh Vision Classes Private Limited Versus Commissioner of CGST & CX, Patna-I Commissionerate

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. ... Valuation - income from sale of publication of books has to be added in the consideration for coaching services provided by the Appellant or not - HELD THAT:- The issue is no longer res integra as the Tribunal in various decisions held that the value of books cannot be included in the consideration for coaching services. Tribunal in the case of M/S CEREBRAL LEARNING SOLUTIONS PVT. LTD. VERSUS CCE, INDORE [2013 (4) TMI 527 - CESTAT NEW DELHI] wherein it was held that that part of the clarification of the CBEC which engrafts a condition that the exemption notification is applicable only where the value of the course material (sold by a commercial or training institute) answers the description of standard text books which are priced, is illegal, un-authorised and of no effect. No notice or cognition can be taken by any authority or such un-authorised exertions by the CBEC. If this illegal and un-authorised condition, imposed on the generality of exemption granted by the Central Government vide Notification No. 12/2003-S.T., dated 20-6- 2003 is ignored, as it must, the assessee/appellant is clearly entitles to the benefit of the exemption. Since the value of sale of books is separately identifiable from the audited financial statements of the Appellant and there are documents to show that such sale was also made not to the students but to third parties also, the question of levy of service tax on such value from sale of books/publication cannot be sustained. The appeal filed by the Appellant is allowed. 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.