No Service Tax on Hostel Fees Received for Non-Residential Courses in Coaching Institute: CESTAT [Read Order]
The Tribunal further stated that since the assessee's optional library membership was not used to provide any commercial coaching or training services under section 65(105)(zzc) of the Finance Act or any taxable service subject to service tax under the Finance Act until July 1, 2012, it may be revoked
![No Service Tax on Hostel Fees Received for Non-Residential Courses in Coaching Institute: CESTAT [Read Order]](https://images.taxscan.in/h-upload/2025/06/09/2041774-no-service-tax-2.webp "No Service Tax on Hostel Fees Received for Non-Residential Courses in Coaching Institute: CESTAT [Read Order]")
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that service tax is not applicable to dormitory fees paid for courses at non-residential coaching institutes.The assessee/appellant, Roy's Institute of Competitive Examination Private Limited, offered both residential and non-residential training options. Students who chose to enroll in...
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that service tax is not applicable to dormitory fees paid for courses at non-residential coaching institutes.
The assessee/appellant, Roy's Institute of Competitive Examination Private Limited, offered both residential and non-residential training options. Students who chose to enroll in "Residential Courses" were required to remain in the hostel accommodations that the assessee provided, and hostel fees were included in the course tuition.
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The assessor assessed service tax on the full amount billed for the course fee and hostel charges.Regarding non-residential courses, the course cost does not cover these accommodations; instead, they are optional and contingent on availability.
The assessee did not apply service tax to the amount billed for the aforementioned accommodation facility because the facilities offered to students choosing non-residential courses are comparable to residential accommodations. Due to the failure to pay service tax under commercial training and coaching services on hostel fees collected for non-residential courses, the department verified the service tax claim.
The assessee argued that there is no connection between commercial training and coaching services and the separate hostel fees paid for non-residential courses. According to section 65(105)(zzc) of the Finance Act, the issue of service tax payment does not come up because students who choose not to use this service would still be able to enroll in the assessee's course.
According to the Tribunal, the exclusion clause under section 65(90a) of the Finance Act, which deals with the rental of immovable property services, would apply directly to standalone accommodation services in a hostel for residential purposes.
The two-member bench consisting of Ashok Jindal, a judicial member, and K. Anpazhakan, a technical member, has noted that "the stand-alone hostel charges collected for non-residential courses, have no connection with Commercial Training and Coaching services as defined under section 65(105)(zzc) of the Finance Act, in that even if any student, who do not avail themselves of this service, would continue to avail themselves of the course offered by the assessee and there is no question of service taxpayment."
The bench noted that any training or coaching offered by a commercial training or coaching center is considered commercial training or coaching services under Section 65(26) of the Finance Act, 1994. Furthermore, any organization or business offering commercial coaching or training for the purpose of imparting information, skills, or lessons on any subject or field other than sports is defined as a commercial training or coaching center under Section 65(27) of the aforementioned act.
The Tribunal further stated that since the assessee's optional library membership was not used to provide any commercial coaching or training services under section 65(105)(zzc) of the Finance Act or any taxable service subject to service tax under the Finance Act until July 1, 2012, it may be revoked. The Tribunal allowed the appeal.
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