No service tax is to be imposed on hostel fees received for non-residential courses conducted by the coaching institute, the Kolkata Bench of the CESTAT has held.
The Bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has cited that “the stand-alone hostel charges collected for non-residential courses, have no connection with Commercial Training and Coaching services as defined under section 65(105)(zzc) of the Finance Act, in as much as, even if any student, who do not avail this service, would continue to avail the course offered by the assessee and therefore, the question of payment of service tax does not arise.”
Residential and non-residential are the two types of courses that the taxpayer/applicant is providing. The students must be required to stay in the hostel accommodation given by the taxpayer who has chosen the residential Courses, and the course fees are included in the Hostel charges.
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The whole amount billed towards Course Fee and Hostel Charges was being charged by the taxpayer as a service tax. The accommodation facility is optional for the non-residential courses and is subject to availability, and the course fee does not include the accommodation charges.
As the taxpayer’s furnished facility to the students opting for Non-Residential courses is similar to residential accommodation, the taxpayer did not levy service tax on the amount billed for the said accommodation facility.
For not filing service tax, the department confirmed the demand under commercial training and coaching services on hostel fees obtained for non-residential courses.
There is no relation between the stand-alone hostel charges collected for non-residential courses with Commercial Training and Coaching services u/s 65(105) (zzc) of the Finance Act, to the extent that even when any student who do not take the same service shall carry on to take the course of the taxpayer and hence no question of service tax payment arises taxpayer quoted.
Under the exclusion clause given under the renting of immovable property services stipulated u/s 65(90a) of the Finance Act, Standalone accommodation service in a hostel for residential purposes has been counted, the tribunal mentioned.
Section 65(26) of the Finance Act, 1994 describes commercial training or coaching services as any training or coaching furnished through a commercial training or coaching centre. Also, Section 65(27) of the cited act specifies the commercial training or coaching centre as any institute or establishment furnishing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field, excluding sports, the bench mentioned.
The tribunal quoted that the taxpayer that furnishes the optional library membership does not furnish any Commercial training or coaching services u/s 65(105)(zzc) of the Finance Act or under any taxable service obligated to service tax under the Finance Act till 01.07.2012, and therefore it is obligated to be dropped.
The tribunal for the above-mentioned permitted the appeal.
| Case Title | M/s. Roy’s Institute of Competitive Examination Pvt Ltd vs. Principal Commissioner of Service Tax-I |
| Case No. | Service Tax Appeal No. 75230 of 2016 |
| For Petitioner | Mr. Rajarshi Dasgupta |
| For Respondent | Shri R. K. Agarwal |
| Kolkata CESTAT | Read Order |
