2015 (11) TMI 843 - HC - Service Tax

Challenge to the notices seeking information - Commercial Training or Coaching Services - Revenue contends that omission of Computer Training Institutes in the subsequent notification clearly indicated the legislative intention of not providing an exemption to such Institutes, and therefore, the petitioners would also not be entitled to claim the benefit of the said exemption. - Held that - even if the stand of the respondents, which is based on the decision of the Supreme Court in Commissioner of Central Excise v. Sunwin Technosolution P. Ltd. - 2010 (9) TMI 71 - SUPREME COURT OF INDIA is accepted, the petitioners still have a case that the Institutes run by the petitioners fall within the exclusion in the definition of commercial training or coaching centre which excludes an institute or establishment which issues a certificate that is recognised by law from the purview of tax under the head of commercial training or coaching centre . This is an aspect that will have to be considered by the adjudicating authorities when determining the applicability of the levy of service tax to the services rendered by the petitioners. I note that, in some of these writ petitions, the Commissioners of Central Excise of the Thiruvananthapuram, Ernakulam and Calicut Divisions have been made parties. - no coercive steps will be taken till such time as the adjudication is complete. - Matter remanded back - Appeal disposed of.

Summary

Issues involved:
1. Applicability of service tax on services provided by franchisees of a computer education institute.
2. Interpretation of the term "Commercial Training or Coaching Services" under the Finance Act, 1994.
3. Exemption notification for vocational training institutes and computer training institutes.
4. Legislative intention behind the exemption and its applicability to computer training institutes.

Detailed Analysis:
1. The petitioners, franchisees of a computer education institute, challenged notices from the Central Excise Department to register as service providers under the Finance Act, 1994. They argued they were not service providers under "Commercial Training and Coaching Services" and sought a declaration of non-liability for service tax. The respondents contended that the services provided fell under the scope of commercial training or coaching services, citing a Supreme Court decision. An interim order restrained further action by the authorities.

2. The dispute centered on whether the petitioners' services qualified as "Commercial Training or Coaching Services" under the Finance Act, 1994. The definition included training provided by a commercial training center, excluding institutes issuing recognized certificates. The petitioners argued that since their courses led to recognized certificates, they did not fall under this definition. The respondents referred to an exemption notification initially covering computer training institutes but later withdrawn by the government, indicating the legislative intent to exclude such institutes from the exemption.

3. Despite the Supreme Court decision cited by the respondents, the petitioners contended that their institutes were excluded from the definition due to issuing recognized certificates. The court directed the Central Excise Commissioners of relevant divisions to assess the petitioners' cases, issue show cause notices if necessary, and refrain from coercive action until formal adjudication. The petitioners were instructed to provide requested details promptly for expeditious adjudication.

4. The judgment emphasized the need for adjudicating authorities to consider whether the petitioners' institutes fell within the exclusion of the definition of commercial training or coaching centers due to issuing recognized certificates. The court directed a formal assessment process by the Central Excise Commissioners, ensuring no coercive measures until completion of adjudication. The decision highlighted the importance of considering legislative intent and exemption notifications in determining the applicability of service tax to computer training institutes.