Service tax on educational institution

This query is : Resolved

Subhash (Querist)
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28 March 2019 The service tax department is taxing an educational institute (senior secondary school) for the Hostel (Boarding) facility provided BY the school to its students for the period 1-4-2013 to 11-7-2014 under the head “Auxiliary Education Service” on the basis of Notification 3/2013 dated 1-3-2013.

But the department had exempted the transportation service provided BY the education institute on the basis of some decided case law. But they are not exempting the hostel service provided BY the school for the period 1-4-13 to 11-7-14 in the absence of any clear notification or decided case law.

The hostel boarding charges are also well below 1000/- per day and the school is also up to 12th standard.

There should be same justification as in case of transportation service to exempt the Boarding (Hostel) facility provided by the school but he department is demanding service tax along with interest and penalty.

My query is whether there is any judgement on this matter or any notification in this regard so as to fight with the department?

Thanks in Advance.

Subhash

Subhash (Querist)
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23 April 2019 Is there any case law or clarification from the department that Hostel (Boarding) Facilities provided by the school is not liable to service tax.

Department is taking advantage of no case laws or clarification in this matter.

They are issuing show cause notices and demanding tax interest and penalty for the period 1-4-2013 to 10-7-2014 as auxiliary education services provided BY the school.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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11 July 2024 In your situation, the issue revolves around the taxation of hostel (boarding) facilities provided by an educational institute, specifically a senior secondary school, under the Service Tax regime applicable during the period from 1st April 2013 to 11th July 2014. Here’s a detailed response to address your query:

### Applicability of Service Tax on Hostel (Boarding) Facilities:

1. **Notification 3/2013**: This notification from 1st March 2013 exempted certain services provided by educational institutions. However, the specific exemption for hostel facilities under auxiliary education services might not have been clearly defined.

2. **Judicial Precedents and Case Law**:
- It's crucial to cite specific case laws or judicial precedents where similar hostel (boarding) facilities provided by educational institutions were considered exempt from service tax.
- In the absence of a clear notification exempting hostel services during the period in question, reliance on judicial precedents becomes essential to establish the exemption.

3. **Comparable Treatment for Transportation Services**:
- You mentioned that transportation services provided by educational institutions were exempt based on decided case law. This sets a precedent for arguing that similar educational services, like hostel facilities integral to educational activities, should also be exempt.

### Steps to Address the Issue:

1. **Legal Consultation**: Engage a tax consultant or legal expert specializing in indirect taxation who can:
- Review the specifics of your case and documentation.
- Identify relevant judicial precedents or case laws supporting exemption of hostel (boarding) facilities provided by educational institutions.

2. **Documentation and Evidence**:
- Gather all relevant documents, including invoices, agreements, circulars, and any correspondence with the tax authorities.
- Highlight the educational nature of the hostel facilities and their integral role in supporting educational activities.

3. **Representation to Tax Authorities**:
- Present a well-structured argument citing case laws where hostel facilities were exempted.
- Request for a reconsideration of the tax demand based on these precedents and the educational nature of the services provided.

4. **Appeal and Litigation (if necessary)**:
- If the initial representation is not successful, consider filing an appeal before the appropriate appellate authority.
- Ensure all legal requirements and timelines for appeal are adhered to.

### Conclusion:

To effectively challenge the service tax demand on hostel (boarding) facilities provided by your senior secondary school, you need to establish a strong case based on judicial precedents and legal interpretation of relevant notifications. Engaging with a qualified tax professional will be crucial in navigating this matter and securing a favorable outcome.

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