2018 (2) TMI 827 - AT - Service Tax

Levy of service tax - Authorized Learning Centre (in short LCs) of the Sikkim Manipal University, Gangtok - fees collected was shared by LC - The department has brought the fee shared by the LCs in the clutches of the Service Tax - Held that - N/N. 10/2003-S.T.dated 20.06.2003 provides the exemption from the service tax pertaining to any institutions or establishment, leading to issuance of any certificate or diploma or degree or educational qualification recognized by law for the time being in force. In the instant case, it is evident that fee is directly collected by the university who ultimately provides degree/diploma/certificate. The University is recognized by the Statute as well as by the UGC, DEC & AICTE. When, it is so, then the LCs have no control over the fee which is directly collected by the University who later shared with LCs. In these circumstances, no service tax is leviable in the hands of LCs. Appeal dismissed - decided against Revenue

Summary

Issues: Service tax liability on fee shared by Authorized Learning Centres (LCs) of a university.

Analysis:
The case involved an appeal against the Order-in-Original related to the service tax liability on the fee shared by Authorized Learning Centres (LCs) of a university for the period of 2008-2009 to 2013-2014. The LCs were running under an agreement with the university where they provided infrastructure and faculty, but the fees were collected directly by the university. The department contended that the LCs should pay service tax as they managed the entire operation, including infrastructure and faculty, and the courses were not approved by law. On the other hand, the respondents argued that the university awarded degrees/diplomas/certificates recognized by law and established by the Act of the Legislator. The impugned order was in favor of the respondents, stating that service tax was not applicable.

The Tribunal considered Notification No. 10/2003-S.T. dated 20.06.2003, which provided an exemption from service tax for institutions leading to the issuance of recognized educational qualifications. It was noted that the university directly collected the fees and awarded degrees/diplomas/certificates recognized by the UGC, DEC, and AICTE. The Tribunal referred to the judgment of the Hon'ble Kerala High Court in a similar case, where it was held that service tax was not applicable to infrastructure support services when the university was approved by regulatory bodies.

Based on the facts presented, the Tribunal concluded that the LCs had no control over the fees collected by the university, which was recognized by statutory bodies. Therefore, the service tax liability, if any, would lie with the university and not the LCs. The Tribunal upheld the impugned order, dismissing all appeals filed by the Revenue. The decision was based on the recognition of the university by statutory authorities and the lack of control by the LCs over the fee collection process, leading to the exemption from service tax for the LCs in this case.