Service tax on educational institution

This query is : Resolved

Subhash (Querist)
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08 June 2019 The department has levied service tax with interest and penalty on hostel fee received by the school for the period 1-4-2013 to 10-7-2014 and issued the order.

What is the procedure to file appeal and Is there any case law to defend the case in appeal.

Thanks.

Subhash

Subhash (Querist)
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28 June 2019 What is the procedure to file an appeal against the order of Asst.Comm. CGST ?

Rajesh Kumar

Rajesh Kumar (Expert)
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28 June 2019 No service tax is payable on this transaction.
File appeal to the Commissioner of Service Tax (Appeal). The appeal is required to be filed within 60 days, and only 45 days delay can be condoned by the Commissioner. make sure that you file appeal within the prescribed timeline.

Subhash

Subhash (Querist)
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22 July 2019 Sir,
I need to file appeal against the service tax levied on hostel fee received by the school.

I need to deposit 7.5% of duty demanded and submit the challan along with ST-4.

But since the school is not registered under service tax or gst,
How can i deposit the 7.5% as mandatory pre-deposit . . ?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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24 July 2025 Here’s how you can approach the appeal against the service tax demand on hostel fees:

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### 1. **Is Service Tax Payable on Hostel Fees by Educational Institutions?**

* According to service tax law and multiple rulings, **educational institutions providing education up to higher secondary or equivalent are exempt from service tax on education-related services**.
* Also, **hostel fees charged by recognized educational institutions are generally exempt from service tax**.
* So, you have strong grounds to challenge the demand.

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### 2. **Filing the Appeal**

* The appeal against the order passed by the Assistant Commissioner of Service Tax (or equivalent authority) is filed before the **Commissioner (Appeals)** under the Service Tax Appeal rules.
* **Time limit:** Appeal must be filed within **60 days** from the date of the order.
* If delayed, you can request condonation of delay for up to 45 days with proper reasons.

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### 3. **Mandatory Pre-deposit**

* Under the **Finance Act**, while filing the appeal, you are required to make a **pre-deposit of 7.5% of the disputed tax** amount (including interest and penalty).
* The pre-deposit is made through a challan using **ST-4 challan** (Service Tax Payment challan).
* This pre-deposit amount has to be deposited even if the educational institution is not registered under service tax or GST.

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### 4. **How to Deposit Pre-deposit if Not Registered**

* Even if the school is not registered under service tax or GST, you can **obtain a temporary Service Tax Registration Number** (by applying for registration under service tax portal) just for the purpose of deposit and appeal.
* After registration, generate and pay the **ST-4 challan** for the required amount.
* Then, file the appeal attaching the payment proof.
* After the case is resolved, you can apply for **cancellation of registration** if no other taxable services are rendered.

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### 5. **Case Law References**

* Several rulings hold that service tax is **not leviable on education or hostel services** provided by recognized institutions, e.g.:

* **CBEC Circular No. 152/4/2004-ST** on education services
* **K.C. George & Co. Ltd. vs. CCE (2012)** (CESTAT)
* **Various High Court judgments** affirming the exemption on educational and hostel fees.

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### Summary of Action Steps:

| Step | Action |
| ----------------------------------------- | ------------------------------------------------------ |
| 1. Register under service tax temporarily | File for service tax registration online |
| 2. Deposit 7.5% pre-deposit | Use ST-4 challan for payment |
| 3. File appeal | File appeal with Commissioner (Appeals) within 60 days |
| 4. Attach proof of pre-deposit | Attach challan copy with appeal |
| 5. Prepare case citing exemptions | Reference circulars and case laws |

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If you want, I can help draft the appeal or guide you through the registration and payment steps. Would you like that?

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