2014 (12) TMI 1135 - AT - Service Tax

Commercial Training or Coaching Service and Technical Testing and Analysis Service - exemption Notification No. 6/2006-Service Tax, dated 1-3-2006 - Held that - Prior to introduction of Explanation to clause (zzc) of Section 65(105), by provisions of the Finance Act, 2010, there was considerable conflict as to whether an institute/establishment could be said to have provided Commercial Training or Coaching or where such coaching or training was provided without any commercial purpose or a profit motive. To clarify the issue legislature intervened and introduced the Explanation which clarifies that the expression Commercial or Coaching Centre includes any Centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force and is carrying on its activity with or without any profit motive. The provision enjoins that the expression commercial training or coaching shall be accordingly construed. This Explanation was introduced with retrospective effect, from 1-7-2003 i.e. the nativity of the relevant taxing provision. No prima facie case in favour of the petitioner/appellant insofar as its assessed liability to service tax under the category of Commercial Training or Coaching is concerned. As the assessed liability to service tax under the head Technical Testing and Analysis is directed to be recomputed de novo, by the order of the Appellate Commissioner, the levy of this component of service tax is at present in eclipse - Conditional stay granted.

Summary

Issues:
1. Liability of service tax for Commercial Training or Coaching Service and Technical Testing and Analysis Service.
2. Exemption claim for Technical Testing and Analysis service.
3. Interpretation of the term "Commercial Training or Coaching Center."
4. Assessment of liability for service tax under Commercial Training or Coaching Service.

Analysis:
1. The appellant, an institute established by the Government of Andhra Pradesh, appealed against an order confirming a demand for service tax for providing Commercial Training or Coaching Service and Technical Testing and Analysis Service. The appellate authority accepted the exemption claim for Technical Testing and Analysis under Notification No. 6/2006-Service Tax. However, it rejected the claim that the appellant was not a Commercial Training or Coaching Center, citing the retrospective introduction of an Explanation clarifying the definition of "commercial training or coaching."

2. The legislative intervention through the Explanation clarified that the term "Commercial or Coaching Centre" includes any institute where training is imparted for consideration, irrespective of profit motive, with retrospective effect from 1-7-2003. The Tribunal concluded that the appellant, despite its genesis in a government department, could not escape being considered a commercial coaching or training center under the clarified definition.

3. The Tribunal found no prima facie case in favor of the appellant regarding its liability for service tax under the category of Commercial Training or Coaching. While the liability for Technical Testing and Analysis was directed to be recomputed, the levy of service tax under this category was temporarily suspended pending the reevaluation.

4. A waiver of pre-deposit was granted, and further proceedings were stayed on the condition that the appellant remit the assessed service tax amount within a specified timeline. Failure to comply would result in the rejection of the appeal. The stay application was disposed of accordingly, with the appellant being duly informed of its obligations under the order.