2010 (8) TMI 401 - AT - Service Tax

Commercial Training or Coaching Institute - service tax on any coaching or training provided by an institution on commercial basis - regular colleges affiliated to University are exempted from paying service tax for imparting training for the competitive examinations and various entrance tests - Held that - no reason for not extending the benefit of being outside the purview of the service tax under the category of Commercial Training or Coaching to the appellant - Adjudicating Authority s order in respect of dropping the demand on Commercial Training or Coaching Service is correct - Appeal is rejected

Issues Involved:
1. Applicability of service tax under the category "Commercial Training or Coaching Service."
2. Interpretation and applicability of CBEC's Circular No. 59/8/2003-S.T., dated 20-6-2003.
3. Applicability of the Kerala High Court's judgment in the case of Mallapuram District Parallel College Association v. UOI.
4. Limitation period for raising the demand.

Issue-wise Detailed Analysis:

1. Applicability of Service Tax under "Commercial Training or Coaching Service":
The Revenue filed an appeal against the Order-in-Original which dropped the proceedings for the recovery of service tax under the heading "Commercial Training or Coaching Service." The respondents were providing coaching for various courses and entrance examinations but were not fully discharging their service tax liability. The Adjudicating Authority dropped the demand under "Commercial Training or Coaching Service" but confirmed the demand under "franchise service." The Revenue contended that the respondent's activities fall within the domain of "Commercial Training or Coaching Service" as they are not issuing any recognized degree or diploma and are collecting full fees from students.

2. Interpretation and Applicability of CBEC's Circular No. 59/8/2003-S.T., dated 20-6-2003:
The Revenue argued that the Adjudicating Authority wrongly extended the benefit of the CBEC Circular. According to Para 2.2.2 and 2.2.3 of the Circular, exemptions are granted to recognized institutes and colleges issuing degrees or diplomas. The Revenue contended that the respondent does not qualify for these exemptions as they do not issue recognized degrees or diplomas. The Circular clarifies that institutes providing training for competitive exams in addition to recognized degrees are exempt from service tax. The respondents argued that they should be considered as parallel colleges and thus should be eligible for the same benefits as regular colleges.

3. Applicability of Kerala High Court's Judgment in Mallapuram District Parallel College Association v. UOI:
The respondents cited the Kerala High Court's judgment, which held that parallel colleges should be treated at par with regular affiliated colleges and thus should be exempt from service tax. The High Court found no distinction between students of affiliated colleges and parallel colleges, stating that imposing service tax on parallel colleges is discriminatory and violates Article 14 of the Constitution of India. The Tribunal agreed with this judgment, stating that the respondent, being a parallel college in Kerala, should be accorded the same benefits as regular colleges.

4. Limitation Period for Raising the Demand:
The respondents argued that the entire demand is barred by limitation as they have been filing S.T.-3 Returns and there was a dispute regarding the applicability of the CBEC Circular. However, since the Tribunal disposed of the appeal on merits, no findings were recorded on the limitation issue.

Conclusion:
The Tribunal concluded that the respondent's activities as a parallel college in Kerala fall outside the purview of "Commercial Training or Coaching Service" based on the Kerala High Court's judgment and the CBEC Circular. The Tribunal upheld the Adjudicating Authority's decision to drop the demand for service tax under this category. The Revenue's appeal challenging the dropping of the proceedings was rejected.

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