Service Tax applicability on fees charged for computer hardware & software subjects

[sunil mehta]

A company registered under section 25 of companies act,1956,imparts education in the field of computer hardware & software subjects.It charges fees for the same.It gets benefit under income tax provisions also for the reasons that it carries out educational activities. a)Whether the above services will be covered under 'commercial coaching or training centre'? b)Is the company eligible for exemption as it is regd. under section 25 of companies act,1956?(non profit motive)

[Madhukar N Hiregange]

The use of the wrod commercial in my view clearly indicates that the purpose should be for profit. You may provide the Income & expenditure/ audit financials to prove the non profit motive. However dept has been stating that the word commercial is not attached to the establishment but only for the activity whcih in my opinion is too narrow an interpretation.

[Vijay Chitte]

Company cannot claim exemption from service tax u/s 25, but it can claim exemption on following grounds - (a) It is not 'commercial' since there is no profit motive. (b) It is 'teaching' and not 'coaching'.

AI Summary

Commercial activity determines service tax liability for computer education fees; nonprofit status or teaching classification may exempt. Service tax applicability for fees charged for computer hardware and software instruction depends on whether the activity is characterised as commercial coaching or as exempt teaching and on demonstrable nonprofit motive; registration alone does not automatically exempt the company, so financial records should be produced to substantiate noncommercial status and classification as teaching may support an exemption.