No Service Tax on Hostel Fees Received for Non-Residential Courses in Coaching Institute: CESTAT

The Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that service tax is not applicable on hostel fees collected by a coaching institute for courses that are non-residential in nature. The case involved an institute that provided coaching for competitive exams and also offered optional hostel accommodation to its outstation students. The revenue department had sought to levy service tax on the hostel fees. However, the tribunal observed that the primary service being provided was coaching, which was already subject to service tax. The hostel accommodation was an optional and separate facility, not an integral part of the main educational service. Since the coaching was not a residential program, the hostel service could not be bundled with it for tax purposes. This ruling provides important relief to educational institutions offering ancillary accommodation services, clarifying that such optional services are not taxable under the coaching services category.