Salary received for imparting coaching services to other institute could not be taxed under service tax

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As per CESTAT Bangalore bench ,Notification No. 12/2003-ST, dated 20-6-2003 ,Where assessee, engaged in running coaching center, received an amount as salary/remuneration for imparting coaching services to other coaching institute, impugned amount received could not be taxed under Service Tax Commercial Training or Coaching Services  for Period 1-7-2003 to 31-3-2005 .Assessee, running a commercial training or coaching center, rendered coaching services to another coaching center named CC by way of imparting coaching to latter’s students and providing them with study material . Assessee received an amount by way of salary/remuneration for classes taken in CC and an amount by way of cost of books/study materials supplied by him . Assessee had shown both receipts separately in its profit and loss account .

Department argued that son-in-law of assessee had started CC as an extension of assessee and that study material was supplied with sole purpose of import and trading and, thus, cost of study material could not be excluded from taxable income .Further professional charges by way of salary/remuneration were not towards classes conducted by assessee in CC .Whether it was for department to show that professional charges were not towards classes conducted by assessee, and since department failed to do so, amount received by assessee was to be treated as salary or remuneration and same could not be taxed under service tax  Held, yes .Whether, further, since receipts from sale of study material was shown separately by assessee, same was exempt from service tax under Notification No. 12/2003-ST – Held, yes 

Citation : [2018] 96 taxmann.com 161 (Bangalore – CESTAT)

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