TaxTMI 
TaxTMI 
2026 (8) TMI 1803
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.... up to June, 2017. The department has also come in appeal against certain OIOs passed to the extent in favour of M/s Green Ivy Ventures Pvt Ltd. The details of these appeals filed by the appellant, as also by the department are, as under: S. No. Appeal No. Appeal filed by OIO No. & Date Issue 1. ST/22164/2015 Appellant VIZ-EXCUS- 003-COM-003- 2015-16 dt.07.05.2015 Short payment of service tax on the gross amount charged and collected during the year 2012-13 2. ST/22245/2015 Department Non-payment of service tax on the gross amount charged and collected during the year 2012-13 3. ST/30524/2019 Department GUN-EXCUS000-COM-026- 18-19-S.Tax dt.22.02.2019 Non-payment of service tax on the gross amount charged and collected during the year 2003-04 to 2007-18 and 2009-10 4. ST/30682/2018 Appellant GUN-EXCUS- 000-COM-007- 17-18-ST dt.16.02.2018 Service Tax liability on the amount collected towards sale of applications, additional income, reservation fee, exam fee, hostel fee and miscellaneous income for the period 2011-12 to 2014-15 5. ST/ST/30545/2022 Appellant 42/2013-ST dt.16.12.2013 Non-p....
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.... appellant that hostel fee is not relatable to CTCS and that there is no nexus between hostel fee and services rendered by them and hence, no service tax can be charged, is not correct. The department felt that tax payable on the said CTCS is on the gross amount charged and collected in terms of section 67 of the Finance Act, 1994, and there is no provision for deduction or exclusion by way of hostel fee, mess fee, study materials, etc. It was also noticed that as per Rule 4A of the Service Tax Rules, 1994 and as per Point of Taxation Rules, 2011 w.e.f. 01.04.2011, the point of taxation shall be the time when the invoice for the service (provided or agreed to be provided) is issued and therefore, the fact of billing/booking the amount under the heads 'tuition fee', 'other fee' and 'study material' in their books of accounts and reflecting the same in their Profit & Loss account in the same year establish that there is a contract for service provided or agreed to be provided and that the service is continuous. Thus, as per Rule 3 of the Valuation Rules, the amounts billed and taken in their books of accounts towards the service provided or agreed to be provided are subject to servic....
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....2. It was also submitted that separate value of books, invoices/bills are issued. For the period post 01.07.2012, the same gets excluded in terms of section 65B(44)(a) of the Finance Act. In this regard, they have submitted that the Ministry, vide their Education Guide at para 2.6.4, has clarified that rescinding of notification 12/2003 in the negative tax regime has already been given effect by way of exclusion from the purview, the value of goods, which are being sold by a service provider for which there is documentary proof as to make the sale distinct and separate transaction. 5. Insofar as service tax on mess fee is concerned, it was essentially argued that mess service is not a service in relation to CTCS and there has to be a nexus between amount collected and service rendered. It was also pointed out that for the period up to 2011, the service tax department themselves have concluded that activity of mess is not having any nexus with the output service of coaching. Insofar as service tax on other fee (hostel fee) is concerned, again the same argument was taken and also relied on the earlier judgment of the department where it was held that activity of providing accommod....
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....the concept of 'sale' has been pleaded only in order to cover their case within the ambit of notification 12/2003 as an afterthought that there is nothing on record indicting that study materials are standard textbooks and the materials and were priced and sold item-wise separately and that the VAT was paid thereon. He relied on certain judgments including Fiit Jee Ltd Vs CST, Delhi [2012 (25) STR 24 (Tri-Del)], Career Launcher India Ltd Vs CST, Delhi [2012 (26) STR 55 (Tri-Del)] & Sayaji Hotels Ltd Vs Commissioner [2011 (24) STR 177 (Tri)] and distinguished the case laws relied upon by the appellant on the grounds that the facts are distinguishable as in such cases, there was independent sale of books. For the period beyond 01.07.2012, the said notification was not available and therefore the study materials would form integral part of the commercial coaching service as no independent sale was involved. As regard liability on amount collected towards 'mess fee', he, inter alia, observed that this issue was already decided by his predecessor vide OIO No. 42/2013-ST dt.16.12.2013 in respect of previous SCN for earlier period pertaining to same appellant, wherein, it was, inter alia,....
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....emed sale within the meaning of clause (29A) of article 366 of the Constitution. We also find that as per section 2(16) of the APVAT Act, the activity of sale of books is covered within the ambit of APVAT Act and the same are liable to sales tax/VAT. We also find that as per the appellant, sale of study material is specifically exempt from VAT vide S.No.5 of Schedule-I of APVAT Act. We have perused the said schedule and we find that books, periodicals and journals, charts, etc., are exempted from VAT under section 7. Therefore, there is no dispute that the books are leviable to VAT but exempted in terms of applicable VAT laws. Therefore, obviously when the goods are leviable to VAT then, even though exempted, they cannot be brought under the category of service. For the period prior to negative tax regime, exemption notification 12/2003 was available to exclude the value of such goods from gross value of service. In this case, the appellants were providing study materials, books, etc., and have claimed that they issue bills indicating separately for tuition fee, study material fee, mess fee and other fee. Insofar as non-meeting of condition to the effect that credit on duty paid on....
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.... and contrary to the statutory exemption notification 12/2003-ST dt.20.06.2003. Reliance has been placed by the appellant on the judgment of Cerabral Learning Solutions Pvt Ltd Vs CCE, Indore [2013 (32) STR 379 (Tri-Del)]. We find that in this case, the coordinate bench, while examining the scope of exemption notification 12/2003 also considered circular dt.20.06.2003, keeping in view the judgments of other coordinate benches in the case of Chate Coaching Classes Pvt Ltd Vs CCE, Aurangabad [2013 (29) STR 138 (Tri-Mum)], Pinnacle Vs CCE, Chandigarh [2011 (24) STR 453 (Tri-Del)], as also the case of Sayaji Hotels Ltd Vs CCE, Indore (supra), inter alia, held that the value of goods and materials sold is exempted from gross value of taxable service. This judgment was taken to Hon'ble Supreme Court by the department reported at [2022 (1) Centax 7 (SC)], wherein, the Hon'ble Supreme Court, inter alia, observed that they were in complete agreement with the view taken by the learned Tribunal. We also find that sale of study material to the students is distinct activity as compared to the provision of coaching and training and even though it may have certain remote nexus with the training i....
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....lasses. Accordingly, as per adjudicating authority, out of total amount, gross charges collected for tuition fee alone would have nexus with the taxable service of CTCS and the amount collected towards food/ accommodation or for supply of other provisions cannot be part of taxable value. Therefore, insofar as issue of providing food i.e., mess charges and accommodation i.e., hostel charges is concerned, the department has already considered that they are not having nexus with the CTCS and the amount for these cannot be clubbed with the tuition fee for the purpose of charging service tax. We also find that even the Commissioner, vide his order dt.22.02.2019, on re-adjudication, dropped the demand on account of study material holding that the appellant has satisfied the condition of Notification 12/2003-ST and as against that, department is in appeal, vide Appeal No.ST/30524/2019. We also find that appellants have relied on catena of judgments, as under, on the ground that mess charges and hostel fee are not consideration received for rendering service of CTCS. a) Aditya College of Competitive Exam Vs CCE, Visakhapatnam [2009 (16) STR 154 (Tri-Bang)] b) Scott Wilson....
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....be sustained 19. Insofar as service tax on appellant's declared income of Rs.10 crores is concerned, the explanation given by the learned Advocate is that in fact, they had actually suffered a loss during the relevant period, however, due to insistence of Income Tax department, they had declared additional income of Rs.10 crores for the said period and showed profit of Rs.8,10,80,206/- and on that they had paid applicable income tax, which was reflected as other income. The adjudicating authority has not accepted this explanation as there is no evidence that this was not on account of provision of taxable service CTCS. The appellants have mostly contended that onus is on the department to prove the taxability of any activity or transaction and in the present case, there is no activity that pertains to provision of any taxable service. Reliance has been placed on the following case laws. a) CCE, Ludhiana Vs Mayfair Resorts [2011 (21) STR 589 (Tri-Del)] b) Kipps Education Centre Vs CCE, Ludhiana [2009 (13) STR 422 (Tri- Del)] 20. We find that, be the case as it may, this amount has been reflected as income, which the appellants have not been able to explain as....
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.... that in this regard, the appellant had already clarified that this was done inadvertently and that there is no bar on taking input credit on service and that cannot be the basis for alleging suppression, especially when they have produced CA certificate and other evidence in support that this was an inadvertent mistake. 22. The adjudicating authority has distinguished the case of Nizam Sugar Factory (supra) by observing that in the present appeal, the notices which were issued are based on information/financial record furnished by the noticee themselves from time to time and also the fact that noticee themselves have accepted that their financial records were not free from discrepancies and have even declared additional taxable income of Rs.10 Crores before Income Tax authorities during the year 2013-14 and discharged income tax liability. It was also observed that the entries in the books of account appear to have been camouflaged under different heads rather than in their appropriate heads/entries. The adjudicating authority also noted that in the earlier SCNs, the issue was non-inclusion of certain amount viz., value of study material, mess fee in the taxable value based on ....
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....mponent of the gross value was a matter of prolonged litigation and demand, both before 01.07.2012 and thereafter. The change in provision of law is only with regard to the definition of 'service' and some related provisions but the fact remains that the core issue was that if there is any sale of goods or if there is any deemed sale, the same cannot be subjected to service tax, both before negative tax regime and thereafter. The concept of gross value has remained more or less same, both before negative tax regime and thereafter. Hence, when the whole issue was subject matter of litigation prior to 01.07.2012, then it cannot be considered as if it was a new issue and therefore, not part of litigation. It is also to be noted that the disclosure of Rs.10 Crores to the income tax authorities was made by the appellant themselves and it was not withheld or suppressed by them. We also find that this issue also involves issue of interpretation as to whether certain activities for which amounts were being collected can be considered as sale of goods or otherwise. We do not find any cogent and specific grounds exists for invoking extended period in the impugned orders where extended period....
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....ved during 2013-14, appellants have submitted that the property has been rented to M/s Narayana Education Society, which is an educational institution and hence not covered under service tax in terms of section 66D(1) of the Finance Act and in terms of S.No.9(6) of Notification 25/2012ST dt.20.06.2012. They have further clarified that Narayana Senior College was being operated by M/s Narayana Education Society. We note that this premises was rented out to an educational institution and hence, the same cannot be subjected to service tax in terms of statutory provisions and notifications, cited supra. 28. To sum up, a) Demand of service tax on books and study material is not sustainable both before 30.06.2012 and under negative tax regime. b) Demand of service tax on hostel fee is not sustainable. c) Demand of service tax on other fee is not sustainable to the extent it is relatable to study material, hostel fee, mess fee or to the extent there is no nexus of such fee with the core activity of coaching provided by the appellant. d) Demand of service tax on mess fee is not sustainable. e) Demand of service tax on sale of applications, ma....
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.... tax keeping in view the decision of his predecessor, vide OIO No. 42/2013-ST dt.16.12.2013 and even for the period post 01.07.2012, they have no nexus with commercial coaching. It is only as an additional observation, he has mentioned that there are no allegations in the SCN that food was supplied in air conditioned mess and as such, mess charges are exempted from levy of service tax. Therefore, essentially, it was not included in the gross value as it was not held to be having any nexus with the activity of commercial coaching. Therefore, we do not find any merit in the appeal filed by the department and the appeal is dismissed. The observations are only further arguments to support that no service tax can be levied on mess bill. ST/30524/2019:- 30. In this case, the department has come against dropping of demand of service tax on the study material for the period 2009-10. This was on the ground that the exemption notification 12/2003-ST dt.20.06.2003, as amended, was conditional and certain conditions were not fulfilled. We find that the issue of eligibility of notification in the facts of the case has already been discussed in detail in the foregoing paras, while examinin....