2016 (3) TMI 524 - AT - Service Tax

Liability of Service tax and exclusion - Provider of commercial training or coaching service taxable under section 65 (105) (zzc) - Held that - this issue has been made amply clear in Great Lakes Institute of Management Ltd & oths Versus CST, Chennai & Oths 2013 (10) TMI 433 - CESTAT NEW DELHI - LB . The contention of the appellant that they are the providers of education and not a commercial coaching or training institution is not correct - The appellant does not have a claim to be included in the exclusionary provision therefore, they are liable to service tax. - Decided against the appellant

Issues:
1. Challenge to the order confirming demand of tax for commercial training or coaching service.
2. Interpretation of statutory provisions and amendments regarding tax liability.
3. Claim of appellant as an educational institution using online medium.
4. Analysis of taxability of commercial training or coaching entities by Larger Bench.
5. Distinction between educational institution and training or coaching center.
6. Appellant's contention for exclusion from tax liability based on recognition by AICTE.
7. Reference to Circulars/Notifications for statutory provisions interpretation.
8. Scope of the word "commercial" in the definition of commercial training or coaching center.

Analysis:
1. The judgment involves a challenge by M/s Dewsoft Overseas Pvt Ltd against the order confirming a demand of tax for providing commercial training or coaching services. The liability was found to subsist due to statutory provisions and amendments specifying taxability under section 65(105)(zzc) for the relevant periods. Penalties were imposed for non-payment of tax, and the appellant contested the characterization of their services as commercial training or coaching.

2. The adjudicating authority based its decision on the statutory provisions and amendments related to tax liability. The exemption for vocational training was considered, with amendments excluding certain activities like computer training from the purview of vocational training. Interest on unpaid tax and penalties under section 77 and 78 of the Finance Act, 1994 were also imposed. The appellant disputed the classification of their online education services as commercial training or coaching.

3. The appellant argued that they function as an educational institution using online methods, not as a commercial training or coaching center. They contended that online education is distinct from personal coaching or training, emphasizing the lack of individual attention in online learning. The inclusion of online resources like storage space and software in the taxable value was also challenged.

4. A Larger Bench analyzed the taxability of commercial training or coaching entities, considering previous judgments and legislative intent. The conclusion highlighted that activities involving imparting skill or knowledge on any subject fall within the taxable activity of commercial training or coaching centers. The exclusionary clause was examined to determine the scope of training and coaching defined in section 65(27).

5. The judgment addressed the distinction between educational institutions and training or coaching centers. It clarified that the provision in section 65(27) does not recognize such a distinction. The reference to Circulars/Notifications was made to explain the interpretation of statutory provisions over time, emphasizing the Tribunal's authority in interpreting legislative provisions.

6. The appellant's claim for exclusion from tax liability based on recognition by AICTE was considered. However, the judgment declined to entertain the argument, stating that the provision in section 65(27) does not make a distinction between educational institutions and training or coaching centers for tax purposes. The appeal was dismissed based on the existing legislative framework.

7. The judgment also discussed the scope of the word "commercial" in the definition of commercial training or coaching centers, emphasizing the legislative authority to define expressions as deemed fit. The analysis provided clarity on the taxable activity of commercial training or coaching centers, irrespective of the nomenclature or description of the institution.

This detailed analysis covers the key issues addressed in the judgment, providing insights into the interpretation of statutory provisions, tax liability, and the distinction between educational institutions and commercial training or coaching centers.

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