TaxTMI 
TaxTMI 
2023 (5) TMI 609
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....ation Board for Education and Training. The school is also affiliated to the International Baccalaureate of Geneva, Switzerland for IB Diploma Programme for Classes XI and XII. 3. The appellant, with respect to the boarding school, receives hostel fees from the students, in addition to the tuition fee and other charges. A small portion of the students are day scholars who do not opt for the hostel facility and thus, no hostel fees is collected from such day scholars. 4. The appellant has also rented out a building to M/s. Mody University of Science and Technology [Mody University] and has received rent for the period 2014-15. The appellant has also provided transportation services to its students and staff. The appellant has also received goods transport agency services [GTA Services]. 5. An investigation was initiated against the appellant whereafter it was observed that the appellant had failed to pay service tax in respect of various services provided/received by it. 6. A show cause notice dated 20.09.2016 was, therefore, issued to the appellant proposing a demand of service tax of Rs. 02,02,01,879/- with interest and penalties. The allegation....
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....issions: (i) Service tax is not leviable on the hostel fees received by the appellant from the students; (ii) Hostel services are naturally bundled with education services, which is covered under section 66D(l) of the Finance Act. As the two services i.e. hostel services and education services are naturally bundled in the ordinary course of business, in accordance with the provisions of section 66F(3)(a) of the Finance Act, the essential character of this bundle is education services, which is covered under section 66D(1) of the Finance Act; (iii) Explanation to section 66F of the Finance Act which defines bundled services, provides that for a service to be a bundled service, an element of provision of one service needs to be combined with an element of provision of another service and there should be a nexus between the two services; (iv) In the present case, the hostel services and education services provided by a boarding school are naturally bundled in the ordinary course of business, and it is the education service that gives the essential character to such a bundle. This apart, as hostel services cannot be provided on a stand alone basis wi....
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....l institution in respect of education exempted from service tax, by way of, - (a) auxiliary educational services; or (b) renting of immovable property; 2. Definitions. - For the purpose of this notification, unless the context otherwise requires, - (f) "auxiliary educational services" means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge - enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution; 2. Between 01.04.2013 to 10.07.2014 9. Services provided to an educational institution in respect of education exempted from service tax, by way of, - (a) auxiliary educational services; or (b) renting of immovable property; 2. Definitions. - For the purpose of this notification, unless the context ot....
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.... an education institution' went on to observe that because of the amendment the auxiliary education services by the appellant would be subjected to levy of service tax for the period from 01.04.2013 to 10.07.2014. The relevant portions of the order passed by the Commissioner are reproduced below: "4.4 Hostel Services provided to students 4.4.1 A demand of Service Tax amounting to Rs. 1,89,71,637/- has been made for the period stretching from 01.04.2013 to 10.07.2014 on the Hostel Services provided by the noticee to the students of Mody School. The demand has been issued on the ground that during the said period, Service Tax was leviable by virtue of an amendment made in Notification No. 25/2012- ST dated 20.06.2012. This amendment was made vide Notification No. 3/2013 - ST dated 01.03.2013 (effective from 01.04.2013) in which the Auxiliary Education Services provided by an educational institution became taxable. The noticee during the said period had collected Rs. 15,34,92,200/- [Rs. 10,17,60,700/- in FY 2013-14 + Rs. 5,17,31,500/- in 01.04.2014 to 10.07.2014] as hostel fees (boarding & lodging charges). 4.4.2 The noticee has mainly contended that the Sho....
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....d from the students. I find that in the fee receipts, these charges have been shown separately by the noticee. These charges have been given a separate treatment in books of account as "boarding & lodging charges". This service has been rendered purely as hostel service against boarding / lodging and is independently identifiable at the end of service provider as well as service recipient. Hence, I am of the view that in this case, the hostel services rendered by the noticee are not a subject of bundled services so as to attract the provisions of Section 66F of the Finance Act, 1994. I therefore, find that Para 4.12.4 of CBEC Education Guide has explained a situation which is totally different from the facts and circumstance of the present case and the boarding / lodging or hostel service provided by the noticee cannot be bundled with education service provided by them." 17. The first issue that arises for consideration in this appeal is whether the two services, namely hostel services and education services, are naturally bundled in the ordinary course of business and for this it would be necessary to reproduce the relevant provisions of section 66F of the Finance Act and they ....
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.... it is not the case of the department and it cannot be that students who are not receiving education services can also avail hostel services. On the other hand, the students who are receiving education services, may or may not opt for hostel services. There is, therefore, a nexus between the two services. It cannot, therefore, be doubted that the hostel services and education services provided by a boarding school are naturally bundled in the ordinary course of business, and the education service is the service which gives the essential character to such bundle. 20. In this connection reference can also be made to paragraph 4.12.4 of the CBIC Education Guide dated 20.06.2012 and the relevant paragraph is reproduced below: "4.12.4 Are services provided by boarding schools covered in this entry? Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boardin....