Service tax on Educational Institution

[subhash jain]

Recently the service tax department is asking us to pay service tax on hostel fee received by the school during the period 1.4.2013 to 10.07.2014 by referring to the Notification where the word 'Provided By: is replaced to 'Provided to' on account Auxiliary Education Services.

They are taking the benefit of lacuna in the notification no. 3/2013-ST dated 1.3.2013 (W.e.f. 1.4.2013) where only services provided TO educational institution in relation to education remained exempted by way of auxiliary educational services.

Sir, please guide in this matter.

Thanks in Advance.

 

[DR.MARIAPPAN GOVINDARAJAN]

The interpretation of the Department may be correct when analyzing the entry No.9 relating to exemption to Educational Services.

[Ganeshan Kalyani]

9. Services provided,-

(a) by an educational institution to its students, faculty and staff;

(b) to an educational institution, by way of,-

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Government;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution; ]

Provided that nothing contained in clause (b) of this entry shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent; ]

[Ganeshan Kalyani]

Reproduced the relevant point from the notification for reference.

AI Summary

Service Tax Demand on Hostel Fees: Interpretation of 'Provided To' in Education Services Exemption, Entry No.9 Discussed A discussion on a forum addresses a query about the service tax department demanding payment of service tax on hostel fees received by a school from April 1, 2013, to July 10, 2014. This demand is based on a change in wording from 'provided by' to 'provided to' in a notification regarding auxiliary education services. The replies suggest that the department's interpretation might be correct, referencing entry No.9, which details exemptions for educational services, and clarifying that certain services provided to educational institutions remain exempt.