Service Tax - Taxability of the Schools providing Buses – CBEC clarifies.
Nearly two years ago vide letter F. No. - CX4 dated 26.04.2007, CBEC had clarified that
Schools do not fall in the category of tour operator with regard to operation of buses in view of the facts that
(i) schools are not engaged in the business of planning and scheduling of tours/travel;(ii) the value attributable to planning and scheduling undertaken for transport of students is ‘nil'; and
(iii) the service of planning and scheduling is not provided to any particular student. It is done for operation of their own buses.
The Board had also informed the DGST that Chairman (CBEC) has desired that these instructions may quickly be brought to the notice of all Chief Commissioner of Central Excise and Service Tax to avoid any harassment to the schools. It is therefore requested that these instructions may please be circulated on priority.
We don't know whether the DGST communicated the Board's views, but Commissioner, Jaipur informed the DGST that in spite of the Board clarification, SCNs were being issued in some Commissionerates. He wanted to know whether there has been a change in the Department's stand.
The DGST made another reference to the Board and the Board has now clarified once again that
(i) There has been no change in the stand taken by the Board.
(ii) the activity of schools to transport children from and back to the School on the cabs owned and run by them does not constitute renting a cab and schools do not fall in the category of rent-a cab operator.
(iii) As regards hiring a cab by school from outside, the same has specifically been excluded from the scope of taxable service.
(iv) Hence, activity of transportation of school children on cabs owned by school or hired by school does not attract service tax.
Board has once again requested the DGST to issue suitable instructions to the filed formations on priority to avoid any harassment to schools.
Obviously the Board is very much concerned about harassment to schools. We hope this concern is shared in the field.
CBEC's F.No.137 /26/2007- CX.4 Dated: 15th December, 2008