By TIOL News Service

NEW DELHI, JUNE 04, 2013: THE appellant is engaged in providing Commercial Training or Coaching service. The Adjudicating Authority confirmed the demand of service tax for the period December 2004 to June 2006. It was the assessee's case that the study material was separately billed and the receipts accounted. The adjudicating authority held that notwithstanding the distinctness of the transaction of supply of course material and collection of the value thereof, the course material being integral to the taxable service Commercial Training and Coaching, the value of the course material supplied to the assessee's students should be included in the gross value of the service rendered, and that the assessee's claim for exemption based on Notification No.12 /2003-ST dated 20.06.2003, issued under Section 93(1) of the Act, was misconceived. The Commissioner (Appeals) also denied the benefit of Notification No 12/2003 ST and aggrieved by the same, the appellant are before the CESTAT .

The benefit of Notification No 12/2003 ST was denied by relying on the CBEC Circular No.59 /8/2003-ST dated 20.06.2003 according to which, "in case of commercial training and coaching institutes, the exclusion shall apply only to the sale value of standard textbooks, which are priced. Any study material or written text provided by such institute as a part of service which does not satisfy the above criteria will be subjected to service tax".

Since the material sold by the appellant does not satisfy the above description of material, the benefit was denied.

After hearing both sides, the Tribunal held:

The clarification in the Board Circular dated 20.06.2003 is misconceived, clearly illegal and contrary to the statutory exemption Notification dated 20.06.2003. Where the legislature has spoken or in exercise of its statutory power exemption is granted by the Central Government under Section 93 of the Act, the CBEC has no manner of power, authority or jurisdiction to deflect the course of an enactment or the exemption granted. Grant of exemption from the liability to tax is a power exclusively authorised to the Central Government under Section 93 of the Act. This statutory provision accommodates no participatory role to the Board. In seeking to engraft restrictions on the generality and plenitude of the exemption granted by the Central Government, the CBEC transgressed into the domain of the Central Government under Section 93 of the Act, a course of action clearly prohibited. On the above analysis, that part of the clarification of the CBEC which engrafts a condition that the exemption notification is applicable only where the value of the course material (sold by a commercial or training institute) answerers the description of standard text books which are priced, is illegal, unauthorised and of no effect. No notice or cognition can be taken by any authority or such unauthorised exertions by the CBEC . If this illegal and unauthorised condition, imposed on the generality of exemption granted by the Central Government vide Notification No.12 /2003-ST dated 20.06.2003 is ignored, as it must, the assessee /appellant is clearly entitled to the benefit of the exemption.

(See 2013-TIOL-834-CESTAT-DEL)