2017 (4) TMI 1338 - AT - Service Tax

Valuation - commercial training and coaching service - inclusion of the amount of scholarship / fee concession in the taxable value - whether the concessional rate of tuition fee collected from certain category of candidates should be considered for inclusion in the gross value for payment of Service Tax under Section 67 of the Act read with Rule 3 of the Rules? Held that - the appellant publishes the names and photographs of those meritorious student s, who achieve merits in various entrance examinations. since on the basis of better performance in the entrance examination, the successful candidates names and photos were published in the advertisement, it cannot be said that by providing the concession in fee structure, the appellant creates its brand name or goodwill in the market. Offering of discount/rebate by the coaching institutes is an accepted trade practice. Thus, the tuition fees actually charged by the appellant, after providing eligible discount/rebate, will only be considered as the gross value for payment of service tax. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether scholarship/fee concessions provided by the appellant to students should be included in the taxable value for the purpose of Service Tax payment.

Analysis:
The appeal was against an order passed by the Commissioner of Central Excise & Service Tax, Jaipur, regarding the inclusion of scholarship/fee concessions in the taxable value for Service Tax payment. The appellant, engaged in commercial coaching for engineering and medical entrance exams, provided concessions to students based on academic performance and economic status. The Service Tax Department argued that these concessions should be included in the taxable value as they attracted students and enhanced the institute's brand. The Department initiated proceedings resulting in a Service Tax demand of ?4,65,86,010/- and imposed penalties under relevant sections.

The appellant's advocate contended that concessions were not solely for meritorious students and were known in advance, not affecting the gross value of tuition fees. The advocate argued that the concessions should not be included in the taxable value for Service Tax purposes. The Revenue's representative supported the findings in the impugned order.

The Tribunal considered whether the concessional tuition fee collected from certain candidates should be part of the gross value for Service Tax payment. It was noted that the appellant offered concessions to meritorious and economically diverse students based on pre-declared publicity material. The Revenue did not claim that only concession-receiving students were publicized. The Tribunal found that the appellant's brand was not solely created through fee concessions, as names and photos of successful students were published based on exam performance. The available discounts/rebates were known in advance, and offering such concessions was a common trade practice. Therefore, only the tuition fees charged after providing eligible discounts/rebates should be considered the gross value for Service Tax payment.

Consequently, the Tribunal found no merit in the impugned order, allowing the appeal in favor of the appellant and setting aside the previous decision.