Services like hostels, housekeeping, security, canteen and transport services to ferry students are exempted from service tax if provided to an educational institution. These services are exempted if the same are provided in respect to service which is exempt/not liable to service tax.
CBE&C Circular No. 172/7/2013-ST, dated 19-9-2013, clarifying the issue, states that apprehensions of certain educational institutions and organizations, regarding levy of service tax on certain services relating to the education sector, have no basis whatsoever and that all services relating to education are exempt from service tax. It quotes Section 66D(l) of the Finance Act, 1994, along with Sl. No. 9 of exemption under Notification No. 25/2012-ST and the definition of “auxiliary educational services” as provided in the exemption notification.
Section 66D specifies the negative list of services which are not liable to tax and Sl. No. 9 of notification ibid grants exemption to auxiliary educational services when such service is provided to an educational institution in respect of education exempted from service tax.