Value Of Sale Of Books Cannot Be Included In The Value Of Coaching Services, No Service Tax Payable: CESTAT

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the value of the sale of books cannot be included in the value of coaching services and service tax is not payable.

The bench of P.K. Choudhary (Judicial Member) and K. Anpazhakan (Technical Member) has observed that since the value of the sale of books is separately identifiable from the audited financial statements of the Appellant and there are documents to show that such sale was also made not to the students but to third parties also, the question of levy of service tax on such value from the sale of books/publication cannot be sustained.

The appellant/assessee is engaged in providing coaching services to aspiring students for qualifying for the competitive entrance examinations into the engineering/medical institutes. It is registered under the service tax regime.

Based on an investigation conducted by the DGGI team, the Appellant was issued with a show cause notice dated 24.09.2018 alleging non/short payment of service tax on coaching services on the basis of the documents seized by the department.

The department alleged that the appellant has artificially bifurcated the consideration received towards coaching services into other categories such as Income from Bag trade, Sale of I Card, Sale of Prospectus/Form, and Publication Section L. Thus, it was alleged that the Appellant is also liable to pay service tax on consideration received towards Publication Section L, major being the income from the sale of publication section L. The Appellant has reported less turnover in their audited financial statement for certain years. Thus the demand came to be calculated on the basis of the documents seized by the department by ignoring the audited financial statements.

The appellant stated that the value of the sale of books cannot be included in the value of coaching services as it was the sale of goods and cannot be taxed as per Notification No. 12/2003-ST dated 20.06.2003.

The issue raised was whether income from the sale or publication of books has to be added to the consideration for coaching services provided by the Appellant.

The tribunal set aside the order imposing the service tax and allowed the appeal of the assessee.

Case Title: M/s. Kanhaiya Singh Vision Classes Private Limited Versus Commissioner of CGST & CX, Patna-I Commissionerate

Case No.: Service Tax Appeal No.75767 of 2021

Date: 18/05/2023

Counsel For Appellant: Ankit Kanodia

Counsel For Respondent: J.Chattopadhyay

Click Here To Read The Order