Sale of Printed Materials and Library Charges by Coaching Institutes Not Taxable Under Commercial Training Services: CESTAT

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the sale of printed materials such as forms, prospectuses, newspapers, and magazines, as well as optional library services provided by a coaching institute, are not taxable under commercial training and coaching services.

Roy’s Institute of Competitive Examination Pvt. Ltd., the appellant, was issued a demand of Rs. 60.97 lakhs in service tax on amounts received from the sale of printed materials and collection of library-related charges. The department classified these under the taxable category of commercial training and coaching services, arguing that they were part of the overall educational service package.

The appellant’s counsel argued that the sale of items like newspapers, prospectuses, and magazines constituted a sale of goods, which is outside the scope of service tax. They further argued that the library services were optional and available to students independently of the coaching programs. These services were billed separately and did not form part of any compulsory academic curriculum.

The revenue counsel argued that the sale of printed materials and the provision of library access were associated with the coaching activities and thus taxable as part of the composite service offered by the institute.

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The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that the sale of goods, including forms and publications, cannot be subjected to service tax. The tribunal further observed that the library services were akin to those offered by standalone libraries and were not integral to the coaching programs. Since they were optional and separately charged, they lacked the necessary nexus with commercial training services to attract tax.

Referring to previous rulings, including Aditya College of Competitive Exam v. CCE, the tribunal held that unless a clear connection is established between the amount charged and the service rendered, taxability cannot be presumed.

The tribunal ruled that neither the sale of printed materials nor the optional library services provided by the appellant could be taxed under the category of commercial training and coaching services. The demand was set aside, and the appeal on this issue was allowed.

CESTAT held that the sale of printed materials and optional library services by coaching institutes are not taxable under commercial training and coaching services

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