Service Tax on Commercial Trainig or Coaching Institute

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CA Kushal Agrawal (Querist)
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28 May 2009 Dear Experts,
I have a query regarding service tax applicability on commercial training or coaching centers.
Will Service Tax be applicable on study material sold by a computer trainig institute to its students, is there any other tax applicability if books are sold in such a manner... like VAT etc.????
Can the overall tax liability be reduced by modifying the fees structure in anyway????

SIDDHARTHA SANKAR ROY

SIDDHARTHA SANKAR ROY (Expert)
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03 June 2009 According to the Notification 12/2003-ST dt 20.06.2003, exempts that part of the value of taxable services from service tax, which represents the cost of goods or material sold by the service provider to the receiver of such services, during the course of the provision of taxable services. But in case of Commercial Training or Coaching service the exclusion would be restricted to the sale of Standard Textbooks which are priced. Any study material or written text provided by such institute as a part of service which does not satisfy the criteria of text books would be subjected to service tax. This was the view of the Department circulated vide circular no 59/8/2003 but in the case of Chate Coaching Classes Vs CCE Aurangabad, the Tribunal had struck down the demand issued on this ground. Also, ever since the service tax valuation rule has come into effect this circular has lost it's relevance.

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