2017 (12) TMI 1378 - AT - Service Tax

Levy of service tax - commercial training or coaching service - Revenue entertained a view that the appellants are engaged in commercial training and coaching and are not issuing any certificate or diploma recognized by law for the time being in force - Held that - the expression recognized by law is a very wide one. Even if the Certificate is not the product of a statute but has approval of some kind in law would be exempted. It is apparent that the courses conducted by the appellants are essential and relevant and enables the candidate to obtain employment in the specialized field. As such, on this ground also the appellants liability to service tax gets exempted. Appeal allowed - decided in favor of appellant.

Summary

Issues: Liability of appellant to pay Service Tax under commercial training or coaching service category for the period 01.04.2006 to 30.09.2011.

Analysis:
1. The dispute revolved around the liability of the appellant to pay Service Tax under the category of commercial training or coaching service for a specific period. The Revenue contended that the appellant, engaged in providing training in Aircraft Maintenance Engineering, was liable for Service Tax as they were not issuing recognized certificates or diplomas. The original authority confirmed the Service Tax liability and imposed penalties under relevant sections of the Finance Act, 1994.

2. The appellant argued that they were not liable for Service Tax as they were conducting courses approved by the DGCA for Aircraft Maintenance Engineering. Completion of their course made individuals eligible to take the DGCA exam for certification under the Aircraft Act, 1934 and Aircraft Rules, 1934. The appellant relied on a decision of the Delhi High Court in a similar case, which supported their position, despite the Revenue's appeal pending in the Supreme Court with an interim stay.

3. Additionally, the appellant contended that their courses were exempt from Service Tax as they were specialized, vocational, and aimed at enhancing employability. They argued that even if considered a commercial training institute, they fell under the exemption provided in Notification 03/2009-ST, as amended.

4. The Revenue opposed the appeal, citing the stay on the Delhi High Court judgment in a related case by the Supreme Court. However, the appellate tribunal examined whether the training provided by the appellant was excluded from Service Tax liability. Referring to the Delhi High Court's decision, the tribunal noted that even if a certificate was not a product of a statute but had some form of legal approval, it could be exempted from tax liability. The tribunal differentiated between quashing an order and staying its operation, emphasizing the availability of the Delhi High Court's ratio despite the stay.

5. The tribunal further analyzed the appellant's liability based on the exemption available for vocational training or coaching. It acknowledged that the courses conducted by the appellant were specialized and directly contributed to employment opportunities in Aircraft Maintenance Engineering. Completion of the appellant's courses enabled candidates to obtain DGCA certification, validating their competence for employment in the field. Consequently, the tribunal found the appellant's liability to Service Tax exempted on this ground as well.

6. After thorough discussion and analysis, the tribunal concluded that the impugned order holding the appellant liable for Service Tax was not legally sustainable. Therefore, the tribunal set aside the order and allowed the appeal, ruling in favor of the appellant.