Commissioner of Central Excise vs Pinnacle

Hemant Gupta, J.—The challenge in the present appeal filed u/s 35G of the Central Excise Act, 1944 is to an order dated August 30, 2011 (Pinnacle v. CCE [2012] 53 VST 433 (Trib.-Del)) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, whereby the Tribunal has excluded the cost of the study material from the taxable quantum of services. The assessee has claimed the cost of books sold at the prices decided by the publisher and printed by M/s. Bull Eye, Pune, from the quantification of the services provided by the assessee. The claim of the Revenue is based on Notification No. 12/2003-ST, dated June 20, 2003, which reads as under:

Notification No. 12/2003-ST, dated June 20, 2003

In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts so much of the value of all the taxable services, as is equal to the value of goods and material sold by the service provider to the recipient of service, from the service tax leviable thereon u/s 66 of the said Act, subject to condition that there is documentary proof specifically indicating the value of the said goods and materials.

This notification shall come into force on 1st day of July, 2003.

The learned counsel for the appellant has vehemently argued that the Central Board of Excise and Customs has issued a circular on June 20, 2003. Paragraph 2.9.1 contemplates that the exclusion of the cost of the books in terms of the above notification shall apply only to the sale value of standard textbooks, which are priced. Any study material or written text provided by the assessee is part of service, and will be subject to service tax.

The relevant extract from the circular reads as under:

. . . This exemption would be available only in cases where the sale of such goods is evidenced and the sale value is quantified and shows separately in the invoice. It is also clarified that 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.

We find that the order of the Tribunal to exclude the cost of such material from the quantification of the service tax provided by the assessee have been rightly allowed. The study material supplied by Bulls Eye is quantifiable separately. The condition in the circular relates to the services of reading material and textbooks provided by the assessee-institute and not books purchased from another supplier. Such goods can be quantified by the price paid. Therefore, the amount of such goods have been rightly excluded in terms of Notification No. 12/2003-ST, dated June 20, 2003.

Consequently, we do not find that any substantial question of law arises for consideration in the present appeal. Dismissed.