2014 (8) TMI 1097 - AT - Service Tax

Commercial Training or Coaching Service - Imparting training to the construction workers for upgradation of their skills - whether the activity is exempt from Service Tax under N/N. 23/2001-S.T., dated 29-4-2001 and also under N/N. 24/2004-S.T., dated 10-9-2004? - Held that - The exclusion clause in the definition of commercial training or coaching centre in Section 65(27) was deleted by Finance Act, 2011 w.e.f. 8-4-2011. Thus, during the period of dispute, the term commercial training or coaching centre did not include a training centre or any institute or establishment which issued any certificate or diploma or degree or any educational qualification recognized by law for the time being in force - Since, the impugned order passed by the Commissioner mentions that the skill upgradation programmes being conducted by the appellant were recognized by IGNOU for certification purposes, the appellant company would not be covered by the definition of commercial training or coaching centre , as given in Section 65(27) - training organized by them would not attract Service Tax under Section 65(105)(zzc). These training programmes enable the trainees to seek employment or undertake self-employment directly after such training and, hence, the appellant for the purpose of this notification have to be treated as vocational training institute and they would be covered by the exemption N/N. 24/2004-S.T. - service tax demand not sustainable. As regards the Service Tax demand of ₹ 6,09,621/-, this Service Tax demand is on the amount received by the appellant from CIDC for development of cost index and upgradation of cost data base and costing software of ONGC - it would not be correct to charge Service Tax once again from the appellant on the amount received by them when on the same amount ONGC have paid the Service Tax - demand set aside. As regards the Service Tax demand of ₹ 41,668/- on alleged renting of immovable property by the appellant company - as it is not disputed that the renting of the property was for commercial purposes, demand confirmed. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues Involved:
1. Taxability of training fees under Commercial Training or Coaching Service.
2. Taxability of amount received for development of cost index and upgradation of cost data under Consulting Engineer's Service.
3. Taxability of rent received from renting of immovable property for commercial purposes.

Issue-wise Detailed Analysis:

1. Taxability of Training Fees under Commercial Training or Coaching Service:
The appellant provided training to construction workers for skill upgradation in association with CIDC and IGNOU, collecting fees through CIDC. The Department argued that this training fee is taxable under Section 65(105)(zzc) read with Section 65(27) as Commercial Training or Coaching Service. The appellant contended that their activity is exempt under Notification No. 24/2004-S.T., dated 10-9-2004, as vocational training. The Tribunal noted that during the dispute period, the definition of "commercial training or coaching centre" excluded institutes issuing certificates recognized by law. Since the training resulted in certificates recognized by IGNOU, the appellant's training did not fall under the taxable category of commercial training or coaching centre. Furthermore, the Tribunal found that the training qualifies as vocational training, exempt under Notification No. 24/2004-S.T. Hence, the demand of Rs. 1,17,02,437/- was deemed unsustainable.

2. Taxability of Amount Received for Development of Cost Index and Upgradation of Cost Data under Consulting Engineer's Service:
The appellant received 90% of the amount from CIDC, which had an agreement with ONGC for developing cost index and upgradation of cost data. CIDC paid service tax on the full amount received from ONGC. The Department demanded service tax from the appellant on the amount received from CIDC. The Tribunal held that since CIDC already paid service tax on the full amount, charging the appellant again would result in double taxation. Thus, the demand of Rs. 6,09,621/- was considered incorrect, and the appellant had a prima facie case in their favor.

3. Taxability of Rent Received from Renting of Immovable Property for Commercial Purposes:
The appellant received Rs. 4,04,540/- as rent for commercial property but did not pay service tax of Rs. 41,668/-. The appellant argued that the property was not owned by them and was sublet. The Tribunal held that the subletting for commercial purposes attracts service tax under Section 65(105)(zzzz) read with Section 65(90a), regardless of ownership. Therefore, the appellant did not have a prima facie case for this demand.

Conclusion:
The Tribunal directed the appellant to deposit Rs. 1,00,000/- within four weeks and reported compliance by 30-7-2014. Upon compliance, the requirement for pre-deposit of the remaining service tax demand, interest, and penalty would be waived, and recovery stayed. The stay application was disposed of accordingly.

Pronouncement:
The judgment was pronounced in the open Court on 22-8-2014.