2017 (7) TMI 130 - AT - Service Tax

Commercial training and coaching services - if the nature of training provided by the appellant amounts to vocational training or not? - Held that - the appellants are providing vocational training and service provided by them are exempt from service tax during the period of N/N. 9/2003 and 24/2004. For the intervening period, the appellants would be liable to pay service tax - Since the activities conducted by the appellant are exempt from service tax for most of the period, the credit of CENVAT would have to be recalculated for the same period. As a result, the matter relating to recalculation of demand of duty and credit available for the said period needs to be remanded to the original adjudicating authority - the appellants are liable to penalty under Section 76, 77 and 78 of the Act read with Rule 4, 6 and 7 of the Rules. However, the quantum of the penalties would have to be recalculated in terms of revised demand of service tax for the limited period - appeal allowed by way of remand.

Summary

Issues:
Confirmation of demand of service tax and imposition of penalty by lower authorities, interpretation of vocational training for exemption under notification no.9/2003-ST and notification no.24/04-ST, denial of cenvat credit, liability for penalty under Section 76, 77, and 78 of the Act.

Confirmation of Demand and Penalty:
The appeal was filed against the confirmation of demand of service tax and penalty imposed by lower authorities. The Tribunal had remanded the matter back to the adjudicating authority to verify if the appellant had paid the entire service tax amount and availed cenvat credit. The appellant argued that their training services were exempt under notification no.9/2003-ST and notification no.24/04-ST, except for a specific period. They contended that their activities constituted vocational training, relying on relevant definitions and circulars. The AR argued against considering the training for insurance as vocational training.

Interpretation of Vocational Training:
The Tribunal analyzed whether the training provided by the appellant qualified as vocational training. Referring to a similar case, the Tribunal held that the training enabling trainees to seek employment or self-employment immediately after training should be considered vocational. Since the appellant's training was recognized by the Insurance Regulatory and Development Authority and enabled trainees to appear for IRDA examinations, it was deemed vocational training. Consequently, the service provided by the appellant was exempt from service tax for specific periods.

Denial of Cenvat Credit:
As the appellant's activities were exempt from service tax for most of the period, the recalculated cenvat credit needed to be determined for that period. The matter related to the recalculation of demand and available credit was remanded to the original adjudicating authority for further assessment.

Liability for Penalty:
Due to the appellant's failure to obtain service tax registration during the non-exempt period and non-filing of returns, penalties under Section 76, 77, and 78 of the Act were deemed applicable. However, the quantum of penalties required recalculation based on the revised demand of service tax for the limited period. Consequently, the impugned order was set aside, and the matter was remanded for the reassessment of demand, cenvat credit, and penalties.