Service tax on trainning teachers to use activity kits

This query is : Resolved

susheel (Querist)
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26 June 2012 Dear Expert

Background:

Our company makes student kits which enable activity based learning, the kits help students to understand concepts in science. We also train the teachers to explain the concepts using our activity kits and we also monitor the kids and the teachers performance and report the same to the principal. We charge for the kits as well as for the service(Training and monitoring).

My Queries:

1) are services chargable to service tax, if yes under what taxable service

2) is the kit subject to sales tax (APVAT/CST)
3) are there any benefits (like grants, subsidies,tax waivers etc.) for an educational company like ours.

Thank You,
Regards.....Susheel.

CA Chitta Ranjan Das

CA Chitta Ranjan Das (Expert)
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26 June 2012 Dear Susheel,
Studying the above case, it may be clarified that providing kits to students for improving knowledge in science can be termed as a "job work" for and on behalf of school for which a fee is charged.

Having putting it in job work, it can be brought under Business Auxilliary services. Now the job work done in education sector is exempted from service tax as per the notification no. 14/ 2004-ST dated 10.09.2004.

Hence, supplying kits for education of students/teachers are not chargable to service tax as per the aforesaid notification.

ii) Since some consideration is charged for the supply of kits and the property within the kits are transfered to the school immediately on transfer,hence, it is sale under sale of goods Act. Therefore, sales tax is payable on the sale.

iii) The provisions for the grants, subsidies, tax waivers etc., will be stated here after studing the latest provisions as i am not sure for the existance of current provisions regarding this.

susheel

susheel (Querist)
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26 June 2012 Thanks for the reply!!

I would also like to make it clear that we are not job workers. The schools choose kits that they require from the list supplied by us. We do not supply kits on behalf of the school rather we supply the kits to the schools and raise an invoice in the schools' name

Kindly consider the above and please reply.

Thanks in advance.

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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24 July 2025 Hi Susheel! Thanks for sharing detailed info about your business. Here’s a clear response to your queries on service tax and sales tax related to your activity kits and training services:

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### 1) **Is service tax applicable on training and monitoring teachers?**

* **Yes, service tax is applicable on the training and monitoring services** you provide to schools/teachers.
* These services would typically fall under **"Commercial Training or Coaching Services"** (Section 65(105)(zzzza) of Finance Act) or **"Education Services"** depending on exact nature.
* Since your training is specific to using your own kits and monitoring performance (a service separate from sale of goods), service tax applies on the **service portion** of your invoice (training + monitoring fees).

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### 2) **Is the activity kit subject to sales tax (VAT/CST)?**

* **Yes, the kits are goods**, so sale of these kits would attract **Sales Tax / VAT / CST** depending on where the sale happens.
* The rate and applicability depend on your State VAT laws (APVAT if in Andhra Pradesh, or CST for interstate sales).
* The kits are not services, so they fall under goods taxation.

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### 3) **Are there any benefits (grants, subsidies, tax waivers) for educational companies?**

* Educational institutions themselves (like schools, colleges) often enjoy exemptions.
* But **companies manufacturing/selling educational products and providing training are treated as commercial entities** for tax purposes.
* You may explore:

* **R\&D grants** if you develop innovative educational kits.
* **State government subsidies or incentives** for educational tools manufacturing.
* **Central government schemes** related to education or innovation.
* But these benefits are **not automatic and require applications/fulfilling criteria**.
* Service tax exemptions on educational services apply mainly to formal education (schools, colleges), **not to commercial training or goods supply**.

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### Additional Notes:

* Since you raise separate invoices for kits and services, **ensure proper bifurcation of value between goods and services** to avoid tax disputes.
* If you bundle kits and training in one invoice without splitting, it may attract service tax on entire value under “composite supply,” so be careful.
* Always maintain clear contracts/agreements with schools specifying the nature of supply.

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If you want, I can help draft sample invoices showing how to bifurcate charges or advise on compliance steps. Would you like that?

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