2007 (9) TMI 658 - AT - Service Tax

Summary

Issues involved: Demand of service tax u/s 65(27) of the Finance Act, 1994 for the period July'03-March'05 on coaching classes conducted by a trust, applicability of exemption under Income-tax Act, reliance on judgments of Kerala High Court and Gujarat High Court.

Demand of Service Tax:
The Appellate Tribunal found that the lower authorities had demanded service tax of Rs. 71,200 from the appellants, who were conducting coaching classes for students of Alagappa University. The demand was based on the total amount of fees collected from the students attending the coaching program. The Tribunal directed the appellants to pre-deposit the service tax amount within 8 weeks from the date of the order, failing which there would be no waiver of pre-deposit and stay of recovery in respect of the penalties.

Exemption under Income-tax Act:
The appellants claimed exemption from payment of income tax under the Income-tax Act as they were a charitable trust. However, the counsel did not cite any exemption notification in respect of service tax. The Tribunal noted that the exemption under the Income-tax Act did not automatically extend to service tax liabilities unless specifically provided for.

Judgments of Kerala High Court and Gujarat High Court:
The counsel for the appellants referred to the Kerala High Court's judgment in the case of Malappuram District Parallel College Association v. Union of India, where discrimination between regular and parallel colleges in Kerala regarding levy of service tax was highlighted. The Tribunal clarified that this judgment was specific to the facts of parallel colleges in Kerala and not meant to be a precedent for educational institutions outside Kerala. Additionally, the counsel mentioned the Gujarat High Court's judgment in Noble Institute (Education) (P.) Ltd. v. Union of India, which dealt with the levy of service tax on educational institutions prior to 1-7-2003, whereas the present case involved a demand for tax from 1-7-2003 onwards.

Compliance and Reporting:
The Tribunal directed the appellants to report compliance on 2-11-2007, emphasizing the importance of pre-depositing the service tax amount within the stipulated timeframe to avail waiver and stay of recovery in relation to the penalties imposed under various provisions of the Finance Act.