2008 (7) TMI 133 - AT - Service Tax

Applicants providing training & coaching for getting admission in engineering institute taxable service - prima facie it is not a fit case for total waiver of pre-deposit of amount of service tax. Keeping in view the facts and circumstances and financial hardship applicants are directed to deposit 50% of the amount - dismissal of appeal by commissioner for non-compliance with stay order - Commissioner (Appeals) has not decided the issue on merit - matter is remanded to the Commissioner

Summary

Issues:
1. Whether the applicants providing commercial training and coaching services are liable to pay service tax.
2. Whether the applicants being a charitable institute registered under the Cooperative Societies Act are exempt from paying service tax.

Analysis:

Issue 1: Liability for Service Tax on Commercial Training and Coaching Services
The Applicants sought a waiver of pre-deposit of service tax amounting to Rs. 25,07,717, contending that as a charitable institute registered under the Cooperative Societies Act, they are not liable to pay service tax. The Revenue argued that as per the definition of 'Commercial training and Coaching' under Section 65 of the Finance Act, any institute providing commercial training or coaching for imparting skill or knowledge on any subject is liable for service tax. The Tribunal noted that the Applicants were providing training for students to gain admission in engineering institutes on a commercial basis. Relying on a previous decision, the Tribunal concluded that the Applicants were indeed providing commercial training and coaching services, making them liable for service tax. Consequently, the Tribunal directed the Applicants to deposit 50% of the service tax amount within 8 weeks.

Issue 2: Exemption for Charitable Institutes
The Applicants argued that being a charitable institute registered under the Cooperative Societies Act, they should be exempt from paying service tax. However, the Tribunal found that the nature of the training and coaching provided by the Applicants for engineering institute admissions fell within the definition of commercial training and coaching as per the Act. The Tribunal differentiated the present case from a previous decision involving a post-graduate program, emphasizing that the Applicants were engaged in providing commercial training for a specific purpose. As a result, the Tribunal did not grant a total waiver of the pre-deposit amount but allowed for a partial waiver upon depositing 50% of the service tax.

Judgment Outcome
The Commissioner (Appeals) was directed to reconsider the case after the Applicants deposited the required amount. The appeal was allowed for remand, providing an opportunity for the Applicants to present proof of deposit and be heard on the matter. The Tribunal set aside the previous decision of the Commissioner (Appeals) due to non-compliance with the conditions of the stay order, emphasizing the need for a fresh decision based on the new circumstances.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi highlights the issues surrounding the liability of the Applicants for service tax on commercial training and coaching services and their claim for exemption as a charitable institute.