New Delhi, June 5, 2025 

In a ruling benefiting thousands of students and educational service providers, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that hostel accommodation services provided by coaching centres are exempt from service tax.

The decision came from the Allahabad Bench of CESTAT in response to an appeal filed by a coaching institute against a service tax demand raised on the grounds that hostel facilities were being operated as a commercial venture.

The Tribunal observed that the hostel services are incidental and ancillary to education and primarily intended to support students enrolled in coaching programs. Therefore, they fall within the exemption granted under the Ministry of Finance’s notifications concerning services related to education and student welfare.

“Hostel services provided by coaching institutes are not in the nature of a commercial hospitality service but are essential to the academic infrastructure. Hence, they are not liable to service tax,” the bench stated.

The ruling is expected to provide relief to private tutorial centres and coaching academies, particularly in education hubs such as Kota, Hyderabad, and Delhi, where hostel facilities are commonly bundled with educational coaching.

This judgment reiterates that the intention behind taxation policies is not to burden essential services connected with education, especially when those services are not intended for profit maximization.