2026 (1) TMI 518 - AT - Service Tax

Coaching institute's separately invoiced study materials/books: can their sale value be excluded from coaching service tax under Notification 12/2003-ST? Appeal allowed

The dominant issue was whether the value of study material/books sold by a coaching institute could be included in the taxable value of Commercial ... Classification of services - Commercial Training or Coaching Service or not - sale of books by the appellant, when the sale value of books are separately identified, documented and recorded in the invoice issued - HELD THAT:- The Department has mainly relied on Circular No. 12/2003ST to include the value of the books and materials sold in the gross value for charging service tax under the category of CTCS. In this case, admittedly, the books and materials were being sold to various students and there is a separate billing for the same as well as it’s accountal in the Profit & Loss Account of the appellant. There is nothing on record that the said materials and books were being compulsorily sold to students and it was an option to the students, who may purchase and use such materials. No doubt, these materials were not any standard text books or for that matter carrying any specific price thereon and were not procured from any independent publisher etc. It is also an admitted fact that said books were prepared by their group company and have not been basically purchased from any other agency etc. Reliance placed by the appellant on the judgment of Cerebral Learning Solutions Pvt Ltd., Vs Commr of C.Ex, Indore [2013 (4) TMI 527 - CESTAT NEW DELHI] is applicable to the facts of the case. In this case, the Tribunal was dealing with similar factual matrix where the appellant was running institute for providing the coaching and paying service tax thereon and was also engaged in selling the printed materials. There is a force in the argument that the scope of notification cannot be curtailed by the Circular dated 20.06.2003 and that the notification cannot restrict exemption only to standard textbooks or which are priced etc. - the fact remains that Notification No. 12/2003-ST allows exclusion of value of certain goods which are forming part of the service, subject to compliance with certain conditions. In this case, the appellants have clearly established that they were billing separately and once they were billing the same, obviously there was a price attributable to such materials, even though they might not have been independently or specifically stamped or mentioned on the said books or materials. Thus, relying on various judgments including the Cerebral Learning Solutions Pvt Ltd. as upheld by the Hon’ble Supreme Court, and the factual matrix, it is found that in these appeals, the appellants would be entitled for the benefit of Notification No. 12/2003-ST for exclusion of value pertaining to study material etc., sold by the appellant under the cover of separate invoice. The orders passed by the Adjudicating Authority, as well as Commissioner (Appeals) are liable to be set aside - Appeal allowed. Issues: (i) Whether the sale of books and study material by an institute is includable in the gross value of Commercial Training or Coaching Service (CTCS) when the sale value is separately identified, documented and invoiced; and whether the appellant is entitled to exclusion of such value under Notification No. 12/2003-ST.Analysis: The issue turns on whether the transactions in question constitute a sale of goods distinct from the provision of CTCS and whether the statutory/notification framework permits exclusion of the value of such goods. The legal framework includes Notification No. 12/2003-ST which permits exclusion of value of certain goods when documentary proof of separate value exists, Section 65B(44) of the Finance Act, 1994 which excludes transfers of title in goods from service taxation, and relevant Cenvat Credit Rules considerations regarding credit claims. The facts establish that the books and materials were billed separately, accounted for separately as trading income, and sold optionally to students rather than being compulsorily supplied as part of the coaching. The absence of evidence that CENVAT credit was availed on those goods removes the secondary disqualification under the notification. The cited administrative circular cannot expand or contract the statutory/notification entitlement where the documentary and accounting conditions for exclusion are met. Reliance on precedents where tribunals and courts applied Notification No. 12/2003-ST to set aside inclusion of separately invoiced study material supports entitlement to exclusion where the conditions are satisfied.Conclusion: Issue (i): The sale value of books and study material that is separately invoiced and separately accounted for is excludable from the gross value of CTCS under Notification No. 12/2003-ST; the appellant is entitled to the benefit of the notification and the impugned demands are not sustainable.