Section 66B of Finance Act 1994 plays a vital role in understanding the term Service Tax levy on “Services” other than services enumerated in the Negative List. Section 93 of the Finance Act also confers power to the Central Government to grant exemption from Service Tax for any service, which may not be on the negative list, may be exempted by prior notification in the Official Gazette or special order as the case may be.

SERVICE :
Service is an “activity carried out by a person for another for consideration”.

In the context of educational courses and services the Central Board of Excise and Customs, under Department of Revenue (Ministry of Finance), has explained the meaning of ‘activity for consideration’ as follows-

“The concept of ‘activity for consideration’ involves an element of contractual relationship wherein the person doing an activity does so at the desire of the person for whom the activity is done in exchange for consideration. An activity is done without such a relationship would not be an ‘activity for consideration’ even though such activity may lead to accrual of gains to the person carrying out the activity”

Taxability of service has been specified in section 66B of the Act to be Taxable a service should be – a. Provided or agreed to be provided by a person to another;
b. In the taxable territory and ;
c. Should not be specified in the negative list.
Provided or agreed to be provided by a person to another ,- 1.Services which have only been agreed to be provided but are yet to be provided are taxable.
2. Receipt of advances for services agreed to be provided become taxable before the actual provision of services.
3. Advances that are retained by the service provider in the event of cancellation of contract of service by the service receiver become taxable as this represent consideration for a service that was agreed to be provided .
Taxation- 1. The time when the invoice for the service provided or agreed to be provided ;
2. If invoice is not issued within prescribed time period of completion of provision of service then the ;
3. Date of completion of service ;
4.The date of receipt of payment where payment is received before issuance of invoice or completion of service .

The taxable territory – To which Act applies is whole of India excluding Jammu & Kashmir .
Service should not be specified in the negative list.- To be taxable a service should not be specified in negative list .The negative list of service has been specified in section 66D of the Act.

INFLUENCE OF TAXATION TO EDUCATIONAL SERVICES:
As per Chapter V Finance Act 1994 on the education sector gets effected –
1. Section 66D( l ) of Finance Act, 1994 .(Negative List)
2. Deleted by Finance Bill 2016 and incorporated in Notification No. 25/2012 ST ( known as mega exemption ) with effect from its enactment . Issued by the Government of India through Department of Revenue

The important point to note in this regard is that the Finance Act, 2016 (No. 28 of 2016), by section 149, has omitted Section 66D(l) of Finance Act, 1994, but the definition provided therein has been retained in amendment Notification NO-10/2017-Service Tax.

Therefore the effect remains intact by entry 9 in the Notification 25/2012-ST, which in its updated version provides-
“9. Services provided,-
1. By an educational institution to its student, faculty, and staff;
2. To an educational institution, by way of,-
1. Transportation of student, faculty, and staff;
2. catering, including any mid-day meals scheme sponsored by the Government;
3. security or cleaning or housekeeping services performed in such educational institution;
4. services relating to admission to, or conduct of examination by, such institution

Provided that nothing contained in clause (b) of this entry shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.

The term “educational institution” is defined by amended notification NO-10/20117-Service Tax issued on 08/03/2017, under its paragraph 1(b)(ii). It provides that-
“(ii) for clause (oa), the following shall be substituted with effect from such date on which the Finance Bill, 2016, receives the assent of the President of India, namely: –
“(oa) “educational institution” means an institution providing services by way of:
• pre-school education and education up to higher secondary school or equivalent;
• education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
• education as a part of an approved vocational education course;”

Therefore it can be concluded that any service related to education other than those covered under Mega Exemption and the Negative list will be subject to service tax. But it is worthwhile to note that under Entry 8 of the Mega exemption (Notification No.25/2012-ST) services by way of training or coaching in recreational activities relating to arts, culture or sports are also exempted from service tax.

EDUCATIONAL INSTITUTION :
An educational institution is a place where people from all aspects of age gain various forms of learning ,including preschools ,childcare, primary – elementary schools ,secondary – high schools ,and universities ,they provide a variety of learning environment and learning spaces.

Further the definition can be understood as follows-
1) Pre- school Education- Pre-school is an early childhood development program in which children learn to combine learning with play in a program run by professionally qualified adults. Children are most commonly enrolled in preschool between the ages of three and five.
2) Higher secondary or equivalent – The Higher secondary pass certificate ,also known as HSC ,is a public examination taken by students of intermediate college. The term equivalent denotes that even if an International school providing international certificate is operating in India, it will be included as subject to service tax.
3) Education as a part of curriculum leading to recognized qualification – means various courses offered after the completion of schooling (Class 12th) or HSC, the services are exempted only if certain requirements are fulfilled, i.e.,
• Education has to be imparted as a part of curriculum
• such education should be in regard to obtaining a qualification (say a degree, diploma, certificate, etc.)
• such qualification has to be recognized by any law (Indian law only) for the time being in force.

As the education service to gain the benefit of being in the negative list the above requirements have to be necessarily fulfilled, only then can they can claim any exemption.

The implication of words “law for the time being in force” implies that aforesaid laws as are applicable in India at that point of time. Education services rendering foreign qualifications shall be liable to the payment of Service Tax. It may be noted that in India recognition to and permission to start a new degree or diploma courses is granted by bodies such as University Grants Commission (UGC), All India Council for Technical Education (AICTE), etc.

• Education as part of an approved vocational education course- As per the Notification No.9/2016-ST, issued by the Central Board for Excise and Customs, Cl. (ba), under paragraph 2 of Notification No.25/2012-ST (Mega Exemption), shall provide the definition for ‘approved vocational education course’, which says-
“(ba) “approved vocational education course” means, –

1. a course run by an industrial training institute or an industrial training center affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or
2. a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship

It is, therefore, clear that the term ‘Educational institutions’ includes a wide variety of educational courses and services offered at various levels of academics. It is to be interpreted in an abroad sense.

Not many people realize that the tuition fees of your children are also eligible for deduction under Section 80C .Therefore before investing in Section 80C ,calculate your children’s tuition fess amount and invest accordingly

CONCLUSION:
A country’s pride is uplifted by the economic power of that country and the economic power of that country blooms with the intellectual people it consists ,And education plays a pivotal role in that aspect. There should be more emphasis in spreading the awareness of education in proper and affordable way.

It is very much appreciable that school education and recognized degree/ diploma/ certificate courses are excluded from service tax. However tuitions or coaching classes, other than those provided for under Entry 8 of Notification No.25/2012-ST, are chargeable to service tax.

As we can see that central government has been taking steps to omit the negative list from the Finance Act, 1994, and provide for the same in the exemption notification (No.25/2012-ST). Although no reasons have been given by the Ministry of Finance or the Central Board of Excise and Customs, it is easily understandable that any change to a provision in the Finance Act would require an amendment by the Parliament, which in turn is a long procedure. In regard to the notifications like the present exemption notification is open to modification or withdrawn by the government at any time.

Reference-
1. Section 65B(44) of the Finance Act 1994.
2. Taxation of Services: An Education Guide, CBEC, June 20, 2012, Para. 2.3, pg 8.
3. http://taxindiaupdates.in/mega-exemptions-notification/ dated- January 12/17
4. As available on http://www.cbec.gov.in/resources//htdocs-servicetax/st-notifications/st-notifications-2016/st09-2016.pdf, last accessed on 30/06/2016.
5. blog.ipleaders.in

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