2008 (10) TMI 212 - AT - Service Tax

Commercial Training or Coaching Service - The appellants have recruited several personnel as employees. They were providing induction training programme covering ERP (SAP), IVL software products, etc. in order to enable the employees to get acquainted with the nature of work and for its official implementation of the software programme. They were collecting some training fee, which was adjusted in case if the employees were not completing the initial bonded period of three years. Later, they were returning the amounts to them in case they completed the training programme and the bonded service of three years. The revenue has brought this induction training programme under the category of Commercial Training or Coaching Service , which is contested. In view of decision in the matter of ICFAI (2009 -TMI - 32004 - CESTAT, BANGALORE) Stay Granted

Summary

Issues:
Interpretation of 'Commercial Training or Coaching Service' under Service Tax law.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Bangalore involved the interpretation of whether an induction training program provided by the appellants falls under the category of 'Commercial Training or Coaching Service' for the purpose of Service Tax. The appellants argued that the training was in-plant training to enable employees to carry out computer programming and did not involve granting diplomas or degrees. They relied on a previous decision by the same bench in a similar case. The revenue contended that the training program did fall under 'Commercial Training or Coaching Service' as the amounts collected were not proven to be reimbursed to the employees.

The Tribunal carefully considered the nature of the training program and found that it was an induction training program aimed at familiarizing employees with the nature of work. The joining fee collected was returned upon successful completion of training and fulfillment of the bonded service period. The Tribunal noted that the program did not fit prima facie within the definition of 'Commercial Training or Coaching Service'. Relying on a previous judgment in a similar case, the Tribunal granted a waiver of pre-deposit and stayed the recovery until the appeal's disposal. The Tribunal accepted the request to expedite the appeal hearing due to the significant amount involved and the similarity to the previous ruling. The matter was scheduled for final hearing along with similar cases on a specified date.

In conclusion, the Tribunal ruled in favor of the appellants, finding that the induction training program did not constitute 'Commercial Training or Coaching Service' under the Service Tax law. The decision was based on the nature of the training, the return of joining fees, and the bonded service period, which distinguished it from commercial training programs.