2008 (8) TMI 143 - AT - Service Tax

Appellant imparting PGDM or PGDBA - evidence has been produced to show that the degrees conferred on the students taking the courses given by the appellants are recognized by law by the Universities - appellants registered under Societies of Registration Act- exempted from Income Tax no profit motive - Education has a larger scope. Education may include coaching or training and not vice versa - difficult to establish or to hold that the appellants imparted commercial coaching or training.

Summary

Issues:
1. Appeal against Order-in-Original No. 2/2007 dated 28.3.2007 for duty demand.
2. Appeal against Order-in-Appeal No. 33/2007(H-II) dated 31.7.2007 for penalty.

Issue 1: Appeal against Order-in-Original No. 2/2007 dated 28.3.2007 for duty demand

The appellants, M/s. Magnus Society, Hyderabad, were challenged for rendering services falling under "Commercial Training or Coaching" services. The Revenue demanded Service Tax of Rs. 69,80,491/- for the period from September 2003 to July 2005, along with interest and penalties under Section 76, 77 & 78 of the Finance Act. The Adjudicating Authority confirmed the demands and imposed penalties. The appellants contended that they were imparting education, not commercial training, and the students received degrees recognized by law. They argued that being a non-profit organization, they did not have a profit motive. The Tribunal analyzed the evidence presented, highlighting that the degrees conferred were recognized by the University of Mysore and Tilak Maharashtra Vidyapeeth. The Tribunal referenced the decision of the Hon'ble Tribunal of Chennai Bench in a similar case, emphasizing that institutions imparting education cannot be considered as commercial training or coaching centers. Various authorities' decisions were also cited to support the appellants' position. The Tribunal ruled in favor of the appellants, rejecting the Revenue's contentions and upholding the appeal.

Issue 2: Appeal against Order-in-Appeal No. 33/2007(H-II) dated 31.7.2007 for penalty

The Revenue filed an appeal against the Order-in-Appeal No. 33/2007 (H-II) passed by the Commissioner of Central Excise (Appeals), wherein the proceedings against M/s. Magnus School of Business were dropped. The Revenue argued that the institution provided commercial coaching or training and should not be covered by the exclusion clause, despite receiving income tax exemption. The Tribunal, after discussing the party's appeal, found no merit in the Revenue's contentions. The Tribunal upheld the Commissioner's decision to drop the proceedings, emphasizing that the institution's activities did not fall under commercial training or coaching. The Tribunal concluded that institutions offering recognized degrees could not be classified as commercial training or coaching centers. Therefore, the Revenue's appeal was rejected, and the Commissioner's order was upheld.

In conclusion, the Tribunal analyzed the cases comprehensively, emphasizing the distinction between imparting education and providing commercial training or coaching services. The judgments highlighted the recognition of degrees by law and the absence of profit motives in the institutions' activities. Ultimately, the Tribunal ruled in favor of the appellants, rejecting the Revenue's claims and upholding the decisions in both appeals.