By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Whether value of study material deductible from gross amount received against coaching services?
Facts:
The appellant was registered with the service tax department as provider of taxable services under the category “commercial training or coaching centre”. They supplied study material to its students and cost of such material was 50% of the fees charged to students. The appellant purchased the study material from the Institute run by the Appellant’s wife on the same premises. The Revenue contended that the consideration for running the coaching centre was artificially divided into two parts, one for providing coaching and the other showing sale of text books in the name of the Institute. The appellant relying on Notification No.12/2003-ST dated 20-06-2003 for exclusion of the value of the goods and materials, contended that the study material, test papers, magazines like competition success review etc. which was sold by the Institute was not forming part of the value of coaching services.
Held:
It was observed that only with a malafide view to save the service tax, bifurcation of the consideration was made into two different parts and diverted a part of the consideration to the sale of the study material. Providing study material, text books was a part of coaching service and was required to be included in the value. It was observed that it was only the extra text books or extra material, which was admittedly being sold to the students and which was also available for sale to outsiders would not form part of the taxable coaching services. Since the appellant consciously diverted part of the value of the services to M/s. Soni Patrachar and as such indulged in misstatement and suppression of facts with intent to evade payment of duty, the appeal for allowing benefit of Notification No.12/2003-ST including plea for longer period was rejected.
