2009 (2) TMI 121 - AT - Service Tax

Commercial Training and Coaching Service Appellant is charitable institution It is covered by section 10(23C) of the Income Tax Act, 1961 It is engaged in providing educational facilities for training the students for aircraft maintenance Since appellant failed to prove that they are not commercial concern appellant is not eligible for full waiver of demand stay partly granted.

Summary

Issues:
1. Whether the appellant qualifies as a charitable institution exempt from service tax.
2. Whether the services provided by the institution fall under the category of commercial training and coaching.
3. Whether the appellant should be granted relief from pre-deposit of tax.

Analysis:
1. The appellant claimed to be a charitable institution providing educational facilities for training students in aircraft maintenance, associated with an educational trust. The appellant argued that it falls under Section 10(23-C) of the Income Tax Act, exempting it from service tax. However, the Tribunal found the appellant failed to provide substantial evidence to prove it operates under government guidelines for societal benefit without being a commercial entity. The Circular No.107/01/2009 clarified that being a charitable institution does not automatically exempt from tax liability when services are taxable.

2. The Departmental Representative contended that the appellant should be taxed under the category of commercial training and coaching, as determined by the Commissioner. After hearing both sides and examining the record, the Tribunal noted the lack of evidence from the appellant to establish it is not a commercial coaching center. Consequently, the Tribunal upheld the Commissioner's decision and directed the appellant to make a deposit of Rs. 4 lakhs as an interim measure to protect the Revenue's interest, with the possibility of staying the realization of the remaining demand upon compliance.

3. The Tribunal's decision was based on the appellant's failure to demonstrate its non-commercial nature adequately. Despite the appellant's claim of being a charitable institution, the lack of evidence supporting this assertion led the Tribunal to deny total waiver of the pre-deposit. The Tribunal's interim directive for the deposit aimed to ensure the Revenue's interests were safeguarded pending further proceedings. Compliance with the deposit requirement was mandated within a specified timeframe, with the consequence of staying the realization of the outstanding demand if the directive was followed.