2017 (11) TMI 1230 - AT - Service Tax

Commercial Training and Coaching service - fees received for offering courses of London School of Economics (University of London) resulting in issue of degree by the University of London - Fee received for coaching provided for Business English and Personality Development - scope of service - difference of opinion - majority order. Held that - On the first issue, regarding courses offered by the appellant resulting in the degrees/diplomas awarded by University of London, I find that these degrees/diplomas are to be considered as recognized by the law for the time being in force - It is a well known fact that the colleges in India provide courses resulting in degrees or diplomas but the said degree and diplomas are issued by the University or the main Institute to which these colleges are affiliated. If it is to be held that as the degree is not issued by the college which is providing course, the college should be considered as a commercial trainee or coaching centre , subjected to service tax, such interpretation will result in absurd consequences. Admittedly, the degree or diplomas are issued by the Universities or the main organization to which the college or an institute or a centre is affiliated - the degree or diploma being issued by University of London can be considered at par while interpreting the scope of commercial training or coaching centre. Whether such a degree or diploma is recognized by law for the time being in force? - Held that - the department has been taking consistently a view that when an educational institute is affiliated to a university/institution awarding a degree recognized by law, then the said institute is not a commercial training or coaching centre. Reference can be made to circular No.26/2003- 28.08.2012 and 26.02.2010 of the Board. Admittedly, the appellants were providing course resulting in the award of B.Tech, BBA, MBA of Allahabad Agricultural Institute (deemed university). No demand for Service Tax has been made in respect of these courses. Even on this ground, the appellants can not be considered as commercial coaching or training centre - Apart from the fact that the appellants will fall outside the purview of commercial coaching or training centre, I find that the Business English Course and Personality Development course offered by the appellants will be covered by exemption notification No.9/2003 ST. Demand not sustainable - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Applicability of Service Tax on courses leading to degrees awarded by foreign universities.
2. Definition and scope of "Commercial Training or Coaching Centre" under Section 65(27) of the Finance Act, 1994.
3. Invocation of the extended period of limitation under Section 73 of the Finance Act, 1994.
4. Applicability of vocational training exemption to Business English and Personality Development courses.

Issue-wise Detailed Analysis:

1. Applicability of Service Tax on Courses Leading to Degrees Awarded by Foreign Universities:
The appellants argued that the degrees awarded by the University of London and Allahabad Agriculture Institute are recognized by Indian universities and thus should not be subject to service tax. The Tribunal examined whether the courses offered by the appellant, leading to degrees awarded by these institutions, are recognized by law. The adjudicating authority initially held that since the appellant itself does not issue the degrees, they do not fall under the exclusion provided in Section 65(27) of the Finance Act, 1994. However, the Member (Judicial) disagreed, stating that the degrees awarded by these foreign universities are recognized by the Association of Indian Universities (AIU) and are treated as equivalent to Indian degrees. The third member concurred with the Member (Judicial), emphasizing that the degrees issued by the University of London are recognized by law and thus fall outside the purview of "Commercial Training or Coaching Centre."

2. Definition and Scope of "Commercial Training or Coaching Centre":
The Tribunal analyzed the definition under Section 65(27) of the Finance Act, 1994, which excludes institutes issuing recognized degrees from being categorized as commercial training or coaching centers. The Member (Technical) held that since the appellant does not issue the degrees directly, they are liable for service tax. In contrast, the Member (Judicial) and the third member held that the degrees awarded by the University of London and Allahabad Agriculture Institute are recognized by law, and thus the appellant should not be classified as a commercial training or coaching center. The Tribunal concluded that the degrees awarded by these institutions are recognized by law, and the appellant's courses fall outside the definition of commercial training or coaching center.

3. Invocation of the Extended Period of Limitation:
The appellant contended that there was no intention to evade tax and that they were under a bona fide belief that their services were not liable to service tax. The Tribunal found no substantial evidence from the Department to indicate willful suppression of facts by the appellant. Consequently, the extended period of limitation under Section 73 of the Finance Act, 1994, could not be invoked. The Tribunal remanded the matter to the original adjudicating authority for quantification of the demand and imposition of penalties, if any, for the period within one year preceding the date of the Show Cause Notice.

4. Applicability of Vocational Training Exemption to Business English and Personality Development Courses:
The appellant claimed that the Business English and Personality Development courses should be exempt from service tax as vocational training. The Tribunal examined the Board Circular No. 107/01/2009-ST, which exempts vocational training institutes from service tax. The Member (Judicial) and the third member held that these courses, which enable candidates to procure jobs, qualify as vocational training. The Tribunal concluded that the Business English and Personality Development courses offered by the appellant are exempt from service tax under the vocational training exemption.

Conclusion:
The Tribunal, by majority order, set aside the impugned order and allowed the appeal, concluding that the courses offered by the appellant leading to degrees from the University of London and Allahabad Agriculture Institute are recognized by law and thus not subject to service tax. Additionally, the Business English and Personality Development courses qualify for vocational training exemption. The matter was remanded for re-quantification of the demand and penalties for the period within one year preceding the Show Cause Notice.

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