2018 (4) TMI 1501 - AT - Service Tax

Commercial Training or Coaching Service - Appellants were conducting training courses viz., B.Sc. Degree course in Hotel Management and Catering and Diploma Course in Hotel Management and catering - these courses were neither approved by the competent authority nor affiliated with any University/deemed University - whether appellant is an independent entity to whom the SCN has been issued? - Held that - from the facts, it is not clear whether the appellants are conducting B.Sc. degree course in two streams ie., one which is affiliated to the University of Madras and the other which is affiliated to SRM deemed University. The same requires verification. It is necessary to verify whether the income on which demand is raised in regard to conduct of B.Sc. Degree course relates to the degree course affiliated to Madras University alone or whether appellant is also conducting B.Sc. Degree Course under Deemed University (SRM University) - matter on remand for verification. Demand made in respect of diploma course - case of appellant is that the course being the vocational course, the appellants are eligible for exemption as per the N/N. 9/2003 - Held that - The Tribunal in similar set of facts, in the case of Ashu export Promoters Pvt. Ltd. 2011 (11) TMI 387 - CESTAT, NEW DELHI had held that the exemption is eligible - the demand in respect of diploma course cannot sustain and the same requires to be set aside. Partly decided in favor of appellant - part matter on remand.

Summary

Issues Involved:
1. Demand of service tax under the category of Commercial Training or Coaching Service.
2. Recognition and affiliation of the B.Sc. Degree course in Hotel Management and Catering.
3. Classification and exemption eligibility of the Diploma Course in Hotel Management and Catering as a vocational training course.

Detailed Analysis:

1. Demand of Service Tax:
The appellants were issued a Show Cause Notice (SCN) based on intelligence indicating they conducted unapproved training courses. The Commissioner confirmed the demand for service tax along with interest and imposed penalties. The appellants contested the demand, arguing that they are a unit of a registered non-profit society, M/s. Valliammai Society, which administers the SRM Institute of Hotel Management. They contended that the fees collected for the courses are managed by the society, and thus, the institute should not be considered an independent entity liable for service tax.

2. Recognition and Affiliation of the B.Sc. Degree Course:
The appellant argued that the B.Sc. Degree course in Hotel Management and Catering is recognized by the University of Madras and conducted under the SRM Arts and Science College, which is also administered by M/s. Valliammai Society. They claimed that the fees collected are remitted to the University of Madras, and the degree certificates are issued by the University, thus falling outside the definition of taxable service as per the definition of Commercial Training or Coaching Services.

The respondent countered that the degree issued by the SRM Institute of Hotel Management is not recognized by law, making the course fall within the taxable category. They highlighted inconsistencies in the appellant's claims regarding the affiliation and recognition of the courses and the independent status of the SRM Institute of Hotel Management.

3. Classification and Exemption Eligibility of the Diploma Course:
The appellant asserted that the Diploma Course in Hotel Management and Catering qualifies as a vocational training course, which is exempt from service tax as per Notification No. 9/2003-ST dated 20.06.2003. They argued that the course enables students to seek employment or self-employment directly after completion, making it eligible for exemption. The appellant referenced several tribunal decisions supporting their claim.

The respondent argued that the diploma course is not recognized and does not qualify as a vocational course, thus making the demand for service tax legal and proper.

Tribunal's Findings:

1. Identity and Independence of the Appellant:
The Tribunal found that the appellant's identity as an independent entity needed further verification. The records indicated that the appellant is a unit of Valliammai Society, but there were inconsistencies in the evidence regarding the affiliation and recognition of the courses. The Tribunal deemed it necessary to remand the matter to the adjudicating authority for verification of whether the income related to the B.Sc. Degree course pertains to the University of Madras or SRM Deemed University.

2. Demand for Diploma Course:
The Tribunal referenced previous decisions and found that the diploma course qualifies as a vocational training course, making it eligible for exemption under Notification No. 9/2003-ST. The demand for service tax on the diploma course was set aside.

Conclusion:
The Tribunal set aside the impugned order and remanded the issue of the B.Sc. Degree course to the adjudicating authority for de novo adjudication after providing the appellant an opportunity for a personal hearing. The demand in respect of the diploma course was set aside, and the appeal was partly remanded and partly allowed in the stated terms.