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10 Oct 2016

Sigh of relief to educational institutions w.r.t. transportation services provided during 1st April 2013 to 10th July 2014

In current scenario, services provided by an educational institution to its students, staff and faculty is exempt from the levy of service tax vide clause 9(a) of Mega Exemption Notification No. 25/2012-ST as amended by Notification No. 06/2014-ST dated 11th July 2014. The situation was same even prior to 1st April 2013 until an amendment in above entry was made vide Notification No. 03/2013-ST dated 1st March 2013. This amendment unintentionally removed the word “or by” from the traditional exemption entry due to which literal interpretations were made by the department, tending them to issue notices to various educational institutions providing services other than educational services, which were still out of the service tax ambit vide Negative list of services specified under section 66D of the Finance Act, 1994. Aggrieved by the above amendment, representations were submitted by various educational institutions in order to clarify the tax implications in case where educational institutes provides services other than educational services which are undoubtedly incidental to educational services, to its students, staff or faculty.

Although, the above apprehensions of educational institutions were relaxed vide notification No. 06/2014-ST dated 11th July 2014 which restored the position prevailing prior to 1st April 2013, however no relaxation was provided for the services provided during the interregnum period i.e. 1st April, 2013 to 10th July, 2014.

Now, to remove difficulties faced by educational institutions, Central Government has exempted the services of transportation, by an educational institution to its students, faculty and staff from the leviability of Service Tax for the period 1st April, 2013 to 10th July, 2014.

Here, it is worthwhile to mention that educational institutions, who have earlier discharged service tax liability on these services, can file refund claim within six months from 30th September, 2016 subject to other conditions mentioned in Section 11B of the Central Excise Act, 1944.