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TMI Blog2023 (5) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Baccalaureate of Geneva, Switzerland for IB Diploma Programme for Classes XI and XII. 3. The appellant, with respect to the boarding school, receives hostel fees from the students, in addition to the tuition fee and other charges. A small portion of the students are day scholars who do not opt for the hostel facility and thus, no hostel fees is collected from such day scholars. 4. The appellant has also rented out a building to M/s. Mody University of Science and Technology [Mody University] and has received rent for the period 2014-15. The appellant has also provided transportation services to its students and staff. The appellant has also received goods transport agency services [GTA Services]. 5. An investigation was initiated against the appellant whereafter it was observed that the appellant had failed to pay service tax in respect of various services provided/received by it. 6. A show cause notice dated 20.09.2016 was, therefore, issued to the appellant proposing a demand of service tax of Rs. 02,02,01,879/- with interest and penalties. The allegations made against the appellant in the show cause notice are as follows: (i) The hostel services provided by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. hostel services and education services are naturally bundled in the ordinary course of business, in accordance with the provisions of section 66F(3)(a) of the Finance Act, the essential character of this bundle is education services, which is covered under section 66D(1) of the Finance Act; (iii) Explanation to section 66F of the Finance Act which defines bundled services, provides that for a service to be a bundled service, an element of provision of one service needs to be combined with an element of provision of another service and there should be a nexus between the two services; (iv) In the present case, the hostel services and education services provided by a boarding school are naturally bundled in the ordinary course of business, and it is the education service that gives the essential character to such a bundle. This apart, as hostel services cannot be provided on a stand alone basis without the provision of education services by a boarding school, there is a clear nexus between the two services; (v) Even otherwise, the hostel services rendered by the appellant are covered under section 66D(m) of the Finance Act and hostel services rendered by the appellant are e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment of course content or any other knowledge - enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution; 2. Between 01.04.2013 to 10.07.2014 9. Services provided to an educational institution in respect of education exempted from service tax, by way of, - (a) auxiliary educational services; or (b) renting of immovable property; 2. Definitions. - For the purpose of this notification, unless the context otherwise requires, - (f) "auxiliary educational services" means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge - enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 10.07.2014 on the Hostel Services provided by the noticee to the students of Mody School. The demand has been issued on the ground that during the said period, Service Tax was leviable by virtue of an amendment made in Notification No. 25/2012- ST dated 20.06.2012. This amendment was made vide Notification No. 3/2013 - ST dated 01.03.2013 (effective from 01.04.2013) in which the Auxiliary Education Services provided by an educational institution became taxable. The noticee during the said period had collected Rs. 15,34,92,200/- [Rs. 10,17,60,700/- in FY 2013-14 + Rs. 5,17,31,500/- in 01.04.2014 to 10.07.2014] as hostel fees (boarding & lodging charges). 4.4.2 The noticee has mainly contended that the Show Cause Notice has not discussed the Para 4.12.4 of the CBEC's Education Guide properly as in the said Para, hostel fees has been clarified as being part of Negative List - clause (m) as service of providing residential dwelling covered as a separate entry in this clause. Hence, no Service Tax is payable on hostel fees charged by them form the students of Mody School. 4.4.3 I observe that by virtue of Notification No. 3/2013 - ST dated 01.03.2013, an amendment was made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attract the provisions of Section 66F of the Finance Act, 1994. I therefore, find that Para 4.12.4 of CBEC Education Guide has explained a situation which is totally different from the facts and circumstance of the present case and the boarding / lodging or hostel service provided by the noticee cannot be bundled with education service provided by them." 17. The first issue that arises for consideration in this appeal is whether the two services, namely hostel services and education services, are naturally bundled in the ordinary course of business and for this it would be necessary to reproduce the relevant provisions of section 66F of the Finance Act and they are as follows: "66F. Principles of interpretation of specified descriptions of services or bundled services. 66F. (1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not included reference to a service which is used for providing main service. xxxxxxxxx (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. (3) Subject to the provisions of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction reference can also be made to paragraph 4.12.4 of the CBIC Education Guide dated 20.06.2012 and the relevant paragraph is reproduced below: "4.12.4 Are services provided by boarding schools covered in this entry? Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service." (emphasis supplied) 21. Section 66D of the Finance Act provides for the negative list of services and it includes service by way of pre- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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