2018 (4) TMI 836 - AT - Service Tax

Commercial training and coaching Service - basic contention of the Revenue is that certificate/diploma issued by the foreign university are not recognized by statutory authorities viz. UGC & AICTE and hence, the respondent should not come under the exempted category and would liable to pay service tax - Held that - Tribunal in the case of IILM Undergraduate Business School Vs. CCE, Delhi 2017 (11) TMI 1271 - CESTAT NEW DELHI has held that AIU is a statutory authority, competent to recognize any degree awarded by a foreign university and thus, the services provided by the respondent therein should be excluded from the purview of taxable service of commercial training and coaching service, for the levy of service tax - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of service tax liability on educational services provided by a respondent collaborating with a foreign university; Recognition of certificates/diplomas by statutory authorities; Exemption from service tax under the category of commercial training and coaching service.

Analysis:
The judgment revolves around the interpretation of service tax liability concerning educational services offered by the respondent in collaboration with a foreign university. The department initiated proceedings against the respondent, contending that the services provided should be categorized as "commercial training and coaching" service, subject to service tax. The adjudication order confirmed a service tax demand against the respondent. The key issue was whether the certificates/diplomas issued by the foreign university were recognized by statutory authorities, such as UGC and AICTE, to determine the tax liability of the respondent.

The Commissioner (Appeals) ruled in favor of the respondent, emphasizing that the foreign university, De Montfort University, Leicester, U.K., was accredited, and the Association of Indian Universities (AIU) recognized the equivalence of the program. Therefore, the respondent should be exempt from service tax under the category of "commercial training and coaching" service. The Revenue, dissatisfied with this decision, appealed to the Tribunal, arguing that since the certificates/diplomas were not recognized by UGC and AICTE, the respondent should not be exempt and should be liable to pay service tax.

The Tribunal referred to a previous decision in a similar case, highlighting that the AIU is a statutory authority capable of recognizing degrees from foreign universities. The Tribunal cited instances where foreign qualifications recognized by the AIU were considered equivalent for employment and further education purposes in India. The Tribunal concluded that the respondent fell outside the scope of "commercial training or coaching" service due to the recognition of the program by relevant authorities. The Tribunal dismissed the Revenue's appeal, citing the established legal position and lack of merit in the Revenue's arguments.

In summary, the judgment clarifies that the recognition of certificates/diplomas by statutory authorities plays a crucial role in determining the service tax liability of educational services. The decision underscores the significance of AIU recognition for foreign qualifications and its impact on tax exemptions under specific service categories. The judgment reaffirms the principle that recognized degrees from accredited foreign universities can exempt educational services from certain tax obligations, provided the necessary criteria are met.