2017 (1) TMI 37 - AT - Service Tax

Coaching services - denial of benefit of N/N. 24/2004-ST, dated 10.09.2004 - appellant claims to be entitled to the benefit of Notification for the reason that the trainings imparted is in the nature of vocational training or coaching, which is covered under the said exemption Notification - Held that - the term Vocational Training Institute has been defined as one which provides vocational training, which will enable the trainee to seek employment or undertake self-employment directly after such training or coaching. It is common knowledge that acquiring skills in English language definitely improves better chance to seek employment. In this view of things, it is possible to say that the services rendered by the appellant could be covered by the Notification. N/N. 24/2004-ST has been further amended vide N/N. 03/2010-ST, dated 27.02.2010 in which the term vocational training institute has been taken to mean industrial training institute of an industrial training centre affiliated to National Council for Vocational Training. The contra decision has been delivered in the context of the amended provisions of the Notification. It has been held by the Tribunal in the case of Actor Prepares Vs.CST, Mumbai 2013 (12) TMI 1070 - CESTAT MUMBAI that the above amendment made in N/N. 24/2004-ST cannot be taken with retrospective effect. The demand in the present case covers the period from April, 2005 to March, 2008 and is prior to the date of amendment, i.e., 27.02.2010. As such, the amendment can have no effect for the period of demand. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of exemption under Notification No.24/2004-ST for commercial training services in English language.

Analysis:
The appellant, providing coaching in English language, contested the service tax liability under the category of Commercial Training and Coaching Services as per Section 65(105)(zzc) of the Finance Act, 1994. The appellant claimed exemption under Notification No.24/2004-ST, dated 10.09.2004, stating that the training provided is vocational in nature, falling under the exemption. The central issue revolved around whether coaching in English language qualifies as vocational training under the said Notification.

The appellant's argument was supported by a circular clarifying that coaching services, including in foreign languages, are covered under the exemption. They cited a Tribunal decision extending benefits to coaching classes in English language. Conversely, the Departmental Representative contended that English, as the official language, does not qualify as a foreign language, thus excluding it from the exemption. Reference was made to a Tribunal decision rejecting exemption for spoken English classes.

The Notification exempts commercial training or coaching services provided by vocational training institutes, defined as those imparting skills for employment or self-employment. The Tribunal noted that English language proficiency enhances employability, potentially falling under the exemption. However, the circular's focus on English as a foreign language led to conflicting Tribunal decisions. An amendment in 2010 redefined vocational training institutes, affecting the applicability of the exemption. As the demand period predated the amendment, the Tribunal ruled in favor of the appellant, setting aside the previous order and granting relief.

In conclusion, the judgment clarified the interpretation of the exemption under Notification No.24/2004-ST for commercial training services in English language, emphasizing the significance of vocational training criteria and the impact of subsequent amendments on exemption eligibility.