2018 (10) TMI 1251 - AT - Service Tax

Commercial coaching or training services - providing education for different degree courses like BBA, BCA, B.Tech, which were recognised by law during the period under dispute i.e. 2005-2006 to 2010-2011 - demand of service tax - Held that - The appellant is an Institute, which issues certificates, degree or diploma on educational qualifications recognized by law, as in force, during the relevant time and accordingly, were not a Commercial Training or Coaching Centre as defined under Section 65(27) of the Finance Act. Thus, consequently, the appellant was not liable to pay service tax on its activities of educating for diploma courses enabling the students to secure admissions in University in USA - impugned order is set aside along with penalties. As the appeal is allowed on merits, we leave the issue of limitation open - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Taxability of education/coaching for diploma courses facilitating admission to a general study in the USA under commercial coaching or training services.
2. Interpretation of the Exclusion Clause under Section 65(105)(zzc) regarding service tax liability for institutes providing diploma courses not recognized by law in India.
3. Applicability of circulars and clarifications issued by the Department on service tax levy for institutes providing commercial coaching alongside recognized degree courses.

Issue 1: Taxability of education/coaching for diploma courses facilitating admission to a general study in the USA under commercial coaching or training services:
The appellant was engaged in providing education for various degree courses and diploma courses under an agreement with North Dakota State University USA. The Revenue argued that coaching for diploma courses facilitating admission to a general study in the USA falls under commercial coaching or training services. The Service Department demanded duty on teaching activities for the diploma courses, which were not recognized by law in India by the University or the AICTE.

Issue 2: Interpretation of the Exclusion Clause under Section 65(105)(zzc) for institutes providing diploma courses not recognized by law in India:
The Tribunal adjudicated that the appellant, offering BBA/BCA and B.Tech courses recognized by Guru Govind Singh Indraprastha University or approved by AICTE, was covered by the Exclusion Clause under Section 65(105)(zzc). However, the appellant was held liable to pay service tax for diploma courses not recognized by any University or AICTE in India. The change in the exclusion clause from May 1, 2011, made institutions providing degree or diploma courses recognized by law liable to pay service tax on coaching activities.

Issue 3: Applicability of circulars and clarifications on service tax levy for institutes providing commercial coaching alongside recognized degree courses:
The appellant relied on circulars clarifying that institutes issuing certificates, diplomas, or degrees recognized by law are outside the purview of commercial training or coaching institutes for service tax. The Tribunal referred to a ruling and a Larger Bench decision emphasizing that institutions offering higher learning like MBA are not commercial training or coaching centers. The appellant was found not to qualify as a commercial coaching institute before May 1, 2011, and thus not liable for service tax on education activities for recognized degree courses.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and penalties. The appellant, as an institute issuing certificates, degrees, or diplomas recognized by law, was not considered a Commercial Training or Coaching Centre under Section 65(27) of the Finance Act. Therefore, the appellant was not liable to pay service tax on coaching activities for diploma courses enabling students to secure admissions in a University in the USA. The issue of limitation was left open, and the appellant was entitled to consequential benefits in accordance with the law.