2014 (4) TMI 253 - HC - Service Tax

Exemption in service tax - Scope of the term vocational training - Whether the computer training institute providing vocational training would be entitled to benefit of exemption Not. No. 24/2004-ST dated 10th Sept. 2004 as amended for the period from 10/09/2004 to 15/06/2005 - Held that - in the matter of interpreting the Notification dated 10th September, 2004, one has to read only the words used in that Notification and cannot borrow any words from any other Notification. - It said that a vocational training institute shall mean a commercial training or coaching centre, which provides vocational training or coaching that imparts skill to enable the trainee to seek employment or undertake self-employment directly after such training or coaching. In absence of statutory definition, we have to proceed on the basis of the ordinary meaning of the word vocational , which means relating to an occupation or employment; directed at a particular occupation and its skills . It cannot be questioned that skill pertaining to computer software and hardware is required to be acquired and, at the same time, it cannot be disputed that once such a skill is acquired, it throws open the door of an occupation relating to computer software and hardware, which entails employment or self-employment. Inasmuch as nothing was mentioned in the Notification dated 10th September, 2004 as regards computer training institutes, it cannot be said that the 10th September, 2004 Notification made any distinction in between a vocational training institute and a computer training institute, as was made on 20th June, 2003. In that background, we find that the Tribunal cannot be said to have erred by holding out that the respondent assessee was a vocational training institute, but we make it clear that it was so in terms of the Notification dated 10th September, 2004 until 16th June, 2005, i.e. when the concept of computer training institute was introduced for the first time in the Notification dated 10th September, 2004 - Decided against Revenue.

Summary

Issues:
1. Tax obligation of the respondent post 30th June, 2004.
2. Exemption claimed by the respondent in service tax payment.
3. Classification of the respondent as a vocational training institute or a computer training institute.
4. Interpretation of Notifications dated 20th June, 2003, 10th September, 2004, and 4th February, 2006.

Analysis:
1. The case revolved around the tax liability of the respondent after 30th June, 2004. The respondent sought exemption in service tax payment, which was initially denied by the Assessing Officer, leading to appeals before the Appellate Authority and the Tribunal.

2. The core issue was whether the respondent qualified as a vocational training institute during the relevant period for students trained to establish themselves in their careers. The Tribunal ruled in favor of the respondent, considering it a vocational training institute providing computer-related vocational training.

3. The Notification dated 20th June, 2003, defined vocational training institutes as centers providing coaching to enable trainees to seek employment or self-employment directly. It also distinguished computer training institutes as those offering coaching in computer software or hardware, not necessarily for immediate employment.

4. The benefit of exemption under the Notification of 20th June, 2003, ended on 30th June, 2004, and subsequent Notifications did not cover computer training institutes until 16th June, 2005. The Notification of 10th September, 2004, exempted vocational training institutes but not computer training institutes explicitly.

5. The Court emphasized that the Notification of 10th September, 2004, did not differentiate between vocational and computer training institutes as the earlier Notification had. It concluded that the respondent was considered a vocational training institute only until the introduction of the concept of computer training institutes in the later Notification.

6. The judgment clarified that acquiring skills in computer software or hardware does not automatically classify an institute as a vocational training center, as the distinction between vocational and computer training institutes was clearly outlined in the Notifications.

7. Ultimately, the Tribunal's decision to consider the respondent as a vocational training institute until the specific inclusion of computer training institutes in the Notification was upheld, leading to the dismissal of the appeal.

This detailed analysis of the judgment highlights the key legal issues, interpretations of relevant Notifications, and the rationale behind the Court's decision regarding the tax obligation and classification of the training institute involved in the case.