Service Tax Not Leviable On Hostel Fees Received For Non-Residential Courses In Coaching Institute: CESTAT
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax is not leviable on hostel fees received for non-residential courses in coaching institute. The Bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed that “the stand-alone hostel charges collected for non-residential courses, have...
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax is not leviable on hostel fees received for non-residential courses in coaching institute.
The Bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed 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.”
In this case, the assessee/appellant provided two types of courses namely– residential and non-residential. Students opting for “Residential Courses” had to compulsorily stay in the hostel accommodation provided by the assessee and the course fee includes Hostel Charges.
Service tax was charged by the assessee on the entire amount billed towards Course Fee and Hostel Charges. So far as Non-Residential courses are concerned, the accommodation facility is optional and subject to availability and the course fee does not include such accommodational charges.
Since the facility provided by the assessee to the students opting for Non-Residential courses are akin to residential accommodation, the assessee did not charge service tax on the amount billed for the said accommodation facility.
The department confirmed the demand of service tax on account of non-payment of service tax under commercial training and coaching services on hostel fees received for non-residential courses.
The assessee submitted that the stand-alone hostel charges collected for non-residential courses, have no connection with Commercial Training and Coaching services 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.
The Tribunal opined that Standalone accommodation service in a hostel for residential purposes would squarely fall under the exclusion clause provided under renting of immoveable property services defined under section 65(90a) of the Finance Act.
The bench observed that Section 65(26) of the Finance Act, 1994 defines commercial training or coaching services as any training or coaching provided by a commercial training or coaching centre. Further, Section 65(27) of the said act defined commercial training or coaching centre as any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than sports.
The library membership (optional) given by the assessee is not towards providing any Commercial training or coaching services under section 65(105)(zzc) of the Finance Act or under any taxable service liable to service tax under the Finance Act till 01.07.2012 and hence the same is liable to be dropped, added the Tribunal.
In view of the above, the Tribunal allowed the appeal.
Case Title: M/s. Roy's Institute of Competitive Examination Private Limited v. Principal Commissioner of Service Tax-I, Kolkata
Case Number: Service Tax Appeal No. 75230 of 2016
Counsel for Appellant/ Assessee: Rajarshi Dasgupta
Counsel for Respondent/ Department: R. K. Agarwal