2007 (8) TMI 71 - AT - Service Tax

Department contended that appellant is liable for service tax under Commercial training & coaching centre on the ground of the exemption provided under Notification No.10/2003-S.T. is not applicable Demand and penalty not sustainable and waiver of pre-deposit and stay of recovery granted

Summary

Issues:
Waiver of pre-deposit and stay of recovery sought by M/s. Thanjai Study Centre and M/s. Trichy Institute of Management Studies (P) Limited.

Analysis:
1. Nature of Services Provided by the Institutes:
The applicants are engaged in coaching individuals for examinations conducted by Alagappa University, offering courses like B.A., B.Com., M.B.A., etc., similar to regular colleges affiliated with the University. The study centers operate under Memoranda of Understanding with the University, responsible for infrastructure and faculty provision. Fees collected by the institutes are shared with the University, with students paying amounts directly to both the University and the institute.

2. Service Tax Demands and Exemption Claim:
After issuing notices, service tax demands were made on fees collected by the institutes under "Commercial Training and Coaching." The demands were based on the argument that the exemption under Notification No. 10/2003-S.T. does not apply if charges are paid directly to the training center by the students. The appellants contended they should be exempted, citing similarity to regular colleges exempted under the same notification. Reference was made to a Kerala High Court judgment highlighting discriminatory treatment of parallel colleges regarding service tax.

3. Arguments and Findings:
The ld. Consultant argued for exemption based on similarities with regular colleges, emphasizing the unfairness of denying exemption. The ld. DR reiterated the findings in the impugned order. The Tribunal examined the case records and submissions, noting that the institutes provided services akin to regular colleges or parallel colleges mentioned in the Kerala High Court judgment. The distinction made by the lower authority to deny the exemption was deemed improper, as the exemption extends to colleges collecting fees directly. Despite the institutes collecting fees entirely from students, a portion was payable directly to the University, with the balance going to the institutes per the MOU.

4. Decision and Rationale:
Considering the facts and circumstances, the Tribunal found the demands of tax and penalties not sustainable. Consequently, a complete waiver of pre-deposit and stay of recovery of tax and penalties was granted until the appeals were disposed of. The judgment was dictated and pronounced in open court, emphasizing the prima facie merit in favor of the appellants' case, aligning with the exemption granted to regular colleges under Notification No. 10/2003-S.T.