(A) Date of Introduction: 01.07.2003 vide Notification
No.07/2003-ST dated 20.06.2003.
(B) Definition
and scope of service:
"Commercial
Training or Coaching Centre" means any institute or establishment
providing commercial training or coaching for imparting skill or knowledge or
lessons on any subject or field other than the sports, with or without issuance
of a certificate and includes coaching or tutorial classes but does not include
preschool coaching and training centre or any institute or establishment which
issues any certificate or diploma or degree or any educational
qualification recognised by law for the time being in force;
(Section
65(27) of the Finance Act, 1994)
“Taxable Service” means any service provided or to be
provided to any person, by a commercial training or coaching
centre in relation to commercial training or coaching;
(Section 65 (105) (zzc) of the Finance Act,
1994)
(C) Rate
of Tax & Accounting Code:
|
|
Rate of Tax
|
Accounting Code
|
|
Service Tax
|
10% of the value of services
|
00440229
|
|
Education Cess
|
2% of the service tax payable
|
00440298
|
|
Secondary and Higher Educationcess
|
1% of the service tax payable.
|
00440426
|
|
Other –Penalty/interest
|
As levied or applicable
|
00440230
|
(Rate
of tax is effective from 24.02.2009.)
(
D ) Classification of Taxable Services:
(1) The
classification of taxable services shall be determined according to the terms
of the sub-clauses (105) of section 65;
(2) When for any reason,
a taxable service is prima facie, classifiable under two or more sub-clauses of
clause (105) of section 65, classification shall be
effected as
follows :-
(a) the sub-clause
which provides the most specific description shall be preferred to sub-clauses
providing a more general description;
(b) composite services
consisting of a combination of different services which cannot be classified in
the manner specified in clause (a), shall be classified as if they consisted of
a service which gives them their essential character, in so far as this
criterion is applicable;
(c) when a
service cannot be classified in the manner specified in clause (a) or clause
(b), it shall be classified under the sub-clause which occurs first among the
sub-clauses which equally merits consideration.
(Section
65A of Finance Act, 1994)
(E) Valuation of taxable
services for charging Service tax
(1) Service
tax chargeable on any taxable service with reference to its value shall,—
(i) in a case where the provision of service is
for a consideration in money, be the gross amount charged by the service
provider for such service provided or to be provided by him;
(ii) in a case where the provision of service is
for a consideration not wholly or partly consisting of money, be such amount in
money, with the addition of service tax charged, is equivalent to the
consideration;
(iii) in a case where the provision of
service is for a consideration which is not ascertainable, be the amount as may
be determined in the prescribed manner.
(2) Where the gross amount charged by a service
provider, for the service provided or to be provided is inclusive of service
tax payable, the value of such taxable service shall be such amount as, with
the addition of tax payable, is equal to the gross amount charged.
(3) The gross amount charged for the taxable
service shall include any amount received towards the taxable service before,
during or after provision of such service.
(4) Subject to the provisions of sub-sections
(1), (2) and (3), the value shall be determined in such manner as may be
prescribed.
Explanation.—For the purposes of this
section,—
(a) “consideration” includes any amount that is
payable for the taxable services provided or to be provided;
(b) “money” includes any currency, cheque,
promissory note, letter of credit, draft, pay
order, travellers cheque, money order, postal remittance and other
similar instruments but does not include currency that is held for its
numismatic value;
(c) “gross amount charged” includes payment
by cheque, credit card, deduction from account and any form of payment by
issue of credit notes or debit notes and ‘book adjustment, and any amount credited or
debited, as the case may be, to any account, whether called “Suspense account”
or by any other name, in the books of account of a person liable to pay service
tax, where the transaction of taxable service is with any associated enterprise.
(Section
67 of Finance Act, 1994)
Inclusion in or
Exclusion from value of certain expenditure or cost:
(1) Where
any expenditure or costs are incurred by the service provider in the course of
providing taxable service, all such expenditure or costs shall be treated as
consideration for the taxable service provided or to be provided and shall be
included in the value for the purpose of charging service tax on the said
service.
[Rule 5(1) of Service
Tax (Determination of Value) Rules, 2006)]
(2) The
expenditure or costs incurred by the service provider as a pure agent of the
recipient of service, shall be excluded from the value of the
taxable service if all the following conditions are satisfied, namely:-
(i) the service
provider acts as a pure agent of the recipient of service when he makes payment
to third party for the goods or services procured;
(ii) the recipient
of service receives and uses the goods or services so procured by the service
provider in his capacity as pure agent of the recipient of service;
(iii) the recipient
of service is liable to make payment to the third party;
(iv) the recipient
of service authorizes the service provider to make payment on his behalf;
(v) the recipient
of service knows that the goods and services for which payment has been made by
the service provider shall be provided by the third party;
(vi) The payment
made by the service provider on behalf of the recipient of service has been
separately indicated in the invoice issued by the service provider to the
recipient of service;
(vii)
The service provider recovers from the recipient of service only
such amount as has been paid by him to the third party; and
(viii)
The goods or services procured by the service provider from the third
party as a pure agent of the recipient of service are in addition to the
services he provides on his own account.
[Rule
5(2) of Service Tax (Determination of Value) Rules, 2006)]
(F) Clarifications
issued by the Board:
(G) Exemption
& Exclusion:
1. Exemption to Small
Scale Service Providers:Notification No. 33/2012 - Service Tax
Exempts taxable services of aggregate value not exceeding ten lakh
rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the said
Finance Act:
Provided that
nothing contained in this notification shall apply to,-
(i) taxable services
provided by a person under a brand name or trade name, whether registered or
not, of another person; or
(ii) such value
of taxable services in respect of which service tax shall be paid by such
person and in such manner as specified under sub-section (2) of section 68 of
the said Finance Act read with Service Tax Rules,1994.
2. The exemption
contained in this notification shall apply subject to the following conditions,
namely:-
(i) the provider of
taxable service has the option not to avail the exemption contained in this
notification and pay service tax on the taxable services provided by him and
such option, once exercised in a financial year, shall not be withdrawn during
the remaining part of such financial year;
(ii) the provider of
taxable service shall not avail the CENVAT credit of service tax paid on any
input services, under rule 3 or rule 13 of the CENVAT Credit Rules, 2004
(herein after referred to as the said rules), used for providing the said
taxable service, for which exemption from payment of service tax under this
notification is availed of;
(iii)the provider of
taxable service shall not avail the CENVAT credit under rule 3 of the said
rules, on capital goods received, during the period in which the service
provider avails exemption from payment of service tax under this notification;
(iv) the provider of
taxable service shall avail the CENVAT credit only on such inputs or input
services received, on or after the date on which the service provider starts
paying service tax, and used for the provision of taxable services
for which service tax is payable;
(v) the provider of
taxable service who starts availing exemption under this notification shall be
required to pay an amount equivalent to the CENVAT credit taken by him, if any,
in respect of such inputs lying in stock or in process on the date on which the
provider of taxable service starts availing exemption under this notification;
(vi) the balance of
CENVAT credit lying unutilised in the account of the taxable service provider
after deducting the amount referred to in sub-paragraph (v), if any, shall not
be utilised in terms of provision under sub-rule (4) of rule 3 of the said
rules and shall lapse on the day such service provider starts availing the
exemption under this notification;
(vii) where a taxable
service provider provides one or more taxable services from one or more
premises, the exemption under this notification shall apply to the aggregate
value of all such taxable services and from all such premises and not
separately for each premises or each services; and
(viii) the aggregate
value of taxable services rendered by a provider of taxable service from one or
more premises, does not exceed ten lakh rupees in the preceding financial year.
3. For the purposes of
determining aggregate value not exceeding ten lakh rupees, to avail exemption
under this notification, in relation to taxable service provided by a goods
transport agency, the payment received towards the gross amount charged by such
goods transport agency under section 67 of the said Finance Act for which the
person liable for paying service tax is as specified under sub-section
(2) of section 68 of the said Finance Act read with Service Tax Rules, 1994,
shall not be taken into account.
Explanation- For
the purposes of this notification,-
(A) “brand name” or
“trade name” means a brand name or a trade name, whether registered or not,
that is to say, a name or a mark, such as symbol, monogram, logo, label,
signature, or invented word or writing which is used in relation to such
specified services for the purpose of indicating, or so as to indicate a
connection in the course of trade between such specified services and some
person using such name or mark with or without any indication of the identity
of that person;
(B) “aggregate value”
means the sum total of value of taxable services charged in the first
consecutive invoices issued during a financial year but does not include value
charged in invoices issued towards such services which are exempt from whole of
service tax leviable thereon under section 66B of the said Finance
Act under any other notification.”
4. This notification
shall come into force on the 1st day of July, 2012.
2. Services to UN Agencies
Services provided to United Nations or an International
Organizations are exempt. Notification
No. 25/2012-Service
Tax
3. Export of service: Any service which is taxable under clause 105
of Section 65 may be exported without payment of service tax.
(Rule 4 of Export of Services Rules, 2005)
4. Exemption to services provided to a developer
of SEZ or a unit of SEZ:
Exempts the taxable services specified in clause (105) of section
65 of the said Finance Act, which are provided in relation to the authorized
operations in a Special Economic Zone, and received by a developer or units of
a Special Economic Zone, whether or not the said taxable services are
provided inside the Special Economic Zone, from the whole of the
service tax leviable thereon under section 66 of the said Finance Act
subject to certain conditions. (Refer notification for details)
Notification No. 40 / 2012-Service Tax
5. Exemption to taxable services provided by TBI and
STEP: G.S.R….. (E).- In exercise of the powers conferred by
sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) and in
supersession of the Government of India in the Ministry of Finance (Department
of Revenue) notification number 9/2007-ST, dated the 1st March,2007, published in the Gazette
of India, Extraordinary, vide
number G.S.R. 163 (E), dated the 1st March,2007, except as respects things
done or omitted to be done before such supersession, the Central Government, on
being satisfied that it is necessary in the public interest so to do, hereby
exempts taxable services, provided or to be provided, by a Technology Business
Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP)
recognized by the National Science and Technology Entrepreneurship Development
Board (NSTEDB) of the Department of Science and Technology, Government of
India, from the whole of the service tax leviable thereon
under section 66B of the said Finance Act, subject to conditions.
Notification No. 32/2012-
Service Tax
6. services provided to Foreign Diplomatic Missions or Consular Post
in India: All services provided by
any person, for the official use of a Foreign Diplomatic Mission or Consular
Post in India are liable to service tax .(earlier
it was exempt from service tax before 1 July 2012).
7. Exemption to services provided for personal use of a
family member of Diplomatic Agent or Career Consular Officers posted in Foreign
Diplomatic Mission/Consular Post in India: All services provided by any person, for personal
use of family member of Diplomatic Agents or Career Consular officers posted in
a Foreign Diplomatic Mission or Consular Post in India are liable to service tax .(earlier it was exempt from
service tax before 1 July 2012).
Subject: service tax –
vocational education/training course -- regarding.Circular No.
164/15/2012-ST
Clarification has been sought in
respect of levy of service tax on certain vocational education/training/ skill development
courses (VEC) offered by the Government (Central Government or State
Government) or local authority themselves or by an entity independently
established by the Government under the law, as a society or any other similar
body.
2. The issue has been examined. When a
VEC is offered by an institution of the Government or a local authority,
question of service tax does not arise. In terms of section 66D (a), only
specified services provided by the Government are liable to tax and VEC is excluded
from the service tax.
3. When the VEC is offered by an
institution, as an independent entity in the form of society or any other
similar body, service tax treatment is determinable by the application of
either sub-clause (ii) or (iii) of clause (l) of section 66D of the Finance
Act, 1994. Sub-clause (ii) refers to “qualification recognized by any law” and
sub-clause (iii) refers to “approved VEC”. In the context of VEC, qualification
implies a Certificate, Diploma, Degree or any other similar Certificate. The
words “recognized by any law” will include such courses as are approved or
recognized by any entity established under a central or state law including
delegated legislation, for the purpose of granting recognition to any education
course including a VEC.
Subject: Education services – clarification --
reg.Circular No.172/7/2013 – ST
The
following representations have been received seeking clarifications regarding
the levy of service tax on certain services relating to the education sector:
1.
Private Schools Correspondents
Confederation, Madurai.
2.
Tamil Nadu Nursery, Primary, matriculation
and Higher Secondary Schools Association, Chennai.
3.
Punjab Association, Chennai.
4.
Association of Self-financing Universities
of Rajasthan
5.
Unaided Schools’ Forum, Mumbai.
6.
VedavalliVidyalaya, Wallajapet.
7.
Independent Schools Associations,
Chandigarh.
8.
Mother Teresa Public School, New Delhi.
9.
BVM Global, Chennai.
10.
Sastra University, Tanjavur
11.
HLC International, Chennai
12.
Sodexo Food Solutions, Mumbai
13.
Federation of Associations of Maharastra,
Mumbai.
2. The
matter is covered by two provisions of the Finance Act, 1994. Section 66D of
the Finance Act contains a negative list of services and
clause (l) thereof reads as under:
“Services by way of
–
(i) Pre-school education
and education up to higher secondary school or equivalent;
(ii) Education as
a part of a curriculum for obtaining a qualification recognized by any law for
the time being in force;
(iii) Education as
a part of an approved vocational education course;”.
Further
section 93(1) of the Finance Act, 1994, enables the Government to exempt
generally or subject to such conditions taxable service of specified
description. By virtue of the said power, Government has issued a notification
No.25/2012-ST dated 20th June, 2012, exempting certain
services. Sl.no.9 thereof reads as follows:
“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;”.
As
defined in the said notification, "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 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.
3. By
virtue of the entry in the negative list and by virtue of the
portion of the exemption notification, it will be clear that all
services relating to education are exempt from service tax. There are many
services provided to an educational institution. These have
been described as “auxiliary educational services” and they have been defined
in the exemption notification. Such services provided to an
educational institution are exempt from service tax. For example, if a school
hires a bus from a transport operator in order to ferry students to and from
school, the transport services provided by the transport operator to the school
are exempt by virtue of the exemption notification.
4. In
addition to the services mentioned in the definition of “auxiliary educational
services”, other examples would be hostels, housekeeping, security services,
canteen, etc.
5. Thus
the apprehensions conveyed in the representations submitted by certain
educational institutions and organizations have no basis whatsoever. These
institutions and organizations are requested not to give credence to rumours or
mischievous suggestions. If there is any doubt they are requested to approach
the Chief Commissioner concerned.
CASE STUDIES
·
Training courses in fields like
journalism, media management, dramatic arts, direction and script writing,
television production, T.V. and Radio anchoring etc. are eligible for exemption
in respect of 'vocational training IILM Film & Media School (CESTAT, NEW
DELHI BENCH)
·
Providing study materials, test
papers etc. is a part of coaching services and is includible in taxable value;
however, sale of purchased books is not includible Soni Classes (CESTAT, NEW
DELHI BENCH) 2013
·
Sale of CD ROMs containing
"live virtual class" provided to enhance skill or impart knowledge on
certain subjects to buyers of CDs and imparting "online
learning/e-learning" to certain customers not covered under Commercial
Training or Coaching Services. Sun Microsystems (I) (P.)Ltd(CESTAT,
BANGALORE BENCH)2014
·
Service Tax - Training and coaching
in field of flying of aircraft for obtaining Commercial Pilot License from
Director General Civil Aviation and training for obtaining Basic Aircraft
Maintenance Engineering License are exempt, as they are qualifications
recognized by law Garg Aviations Ltd (HIGH COURT OF ALLAHABAD)2014
·
Aircraft Maintenance Engineering
training provided by Aircraft Maintenance Engineering Training Schools approved
by Directorate General of Civil Aviation is a course recognized by Aircrafts
Act/Rules and directions issued thereunder and is exempt from service tax Indian Institute of Aircraft Engineering(H.C.
Delhi)2013.
Mail at info@caindelhiindia.com or
contact us at 011-23343333 in order to take help on the able said matter.
