2017 (4) TMI 97 - AT - Service Tax

Liability of tax - commercial training or coaching service - denial of exemption N/N. 24/2004-ST available to vocational training institute - denial on the ground that no skill is being imparted by the appellant. It was held that the appellants are only engaged in coaching in English language and as such, they are not a vocational training Institute imparting coaching, which will enable the participants directly to gain employment. Held that - similar issues came up for decision before the Tribunal. In the case of Maria Computer Systems Pvt. Ltd. vs. CCE, Bhopal 2017 (1) TMI 37 - CESTAT NEW DELHI the Tribunal 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. The appellants will be eligible for exemption under N/N. 9/2003, 24/2004 except for the period 01.07.2004 to 09/09/2004 during which no exemption Notification was available. Regarding English language skills imparted to children, we note that the said Notification itself provides for recreational training institute, defining the same as commercial training or coaching centre which provides training or coaching relating to recreational activities such as, dance, singing, martial arts or hobbies. The appellants are not liable to service tax, except for the period 01.07.2004 to 09.09.2004. The tax liability for the said period shall be calculated after extending the benefit of N/N. 12/2003-ST upon verification of the documents - appeal allowed by way of remand.

Summary

Issues:
1. Liability to pay service tax under the category "commercial training or coaching service."
2. Eligibility for exemption under Notification 24/2004-ST for a vocational training institute.
3. Calculation of tax liability for the period 01.07.2004 to 09.09.2004.
4. Classification of courses offered to children aged 6 to 12 years under recreational training institute.

Analysis:
1. The appellant challenged the order of the Commissioner (Appeals) regarding the liability to pay service tax for providing English language coaching services. The dispute centered around their eligibility for exemption under Notification 24/2004-ST for a vocational training institute. The appellant argued that their courses imparted skills enabling participants to seek employment, thus falling under the exemption category.

2. The appellant contended that they were rightly eligible for the exemption as a vocational training institute providing English language coaching. The lower authorities denied the exemption, stating that no skill was being imparted. However, the Tribunal referred to previous cases and held that acquiring skills in English language could improve employment prospects, potentially falling under the Notification's purview.

3. The appellant acknowledged their tax liability for a specific period but sought deductions for the cost of materials sold separately. The Tribunal noted the exemption under Notification 12/2003-ST and directed the calculation of tax liability for the mentioned period after verifying the submitted documents.

4. The issue of whether courses offered to children aged 6 to 12 years could be classified under recreational training institute was raised. The appellant argued that teaching English language skills to children fell under the scope of hobbies. The Tribunal agreed, categorizing language learning as a hobby for children and exempting the appellant from service tax liability except for the specified period.

In conclusion, the Tribunal ruled in favor of the appellant, granting exemption under Notifications 9/2003 and 24/2004 for vocational training institute services. The decision highlighted the importance of skill acquisition through language training and considered language learning for children as a recreational activity exempt from service tax.