A commercial coaching centre supplies books developed by its own content developers/faculty. The cost of study material supplied is not charged seperately but the fee charged is inclusive of this cost.
Whether the cost of such study material may be deducted from the amount of fee to arrive at the taxable services and Service Tax is leviable on the net amount of Fee?
If this is a composite billing service tax is applicable on the whole of the billing.
Book can also be sold separately, by fixing MRP.
Vide Notification No. 12/2003-ST, value of taxable service shall not be included the value of goods or materials sold by service provider. Accordingly, a commercial coaching centre (CCC) can claim deduction the price of the standard text books from the gross amount charged. But any study materials/papers supplied by the institute will not get this deduction. Accordingly, the present CCC is not entitled for deduction towards study material supplied from the fee charged. Of course, as suggested by Mr.Srinivasaraghvan, if the study material is supplied separately at a certain MRP, your service tax liability will get reduced.
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Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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