2019 (2) TMI 1495 - AT - Service Tax

Commercial Training or Coaching or not - 1 year graduate Marine Engineering Training - Held that - It is quite evident that the certificate issued by the institute in terms of Para 4.17 of the said DGS order is the certificate which is duly recognized by DG Shipping for all the purposes. There is no further certificate issued as has been observed the Commissioner - there is no hesitation in holding that the certificates issued are the ones recognised in law and hence, the courses conducted by the appellants in this regard fall under the exclusion category of the taxable services in the category of Commercial Training or Coaching services. Levy of service tax - Consulting Engineering Service received from abroad - reverse charge basis - Held that - In the case of Indian National Shipowners Association vs. UOI 2008 (12) TMI 41 - BOMBAY HIGH COURT as affirmed by the Hon ble Supreme Court in UOI vs. Indian National Shipowners Association 2009 (12) TMI 850 - SUPREME COURT OF INDIA , it has been held that the provision of levy on reverse charge basis was available only from 18.4.2006 after enactment of Section 66A. Prior to that there was no provision for charging service tax on reverse charge, thus in absence of any machinery provision to charge service tax though leviable could not have been collected from the appellants. The service tax on Consulting Engineering services received from abroad on reverse charge basis is leviable from 18.4.2006 onwards after allowing the deductions as held by the Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. Accordingly, for redetermination of the service tax payable on this account the matter needs to be remanded back to the adjudicating authority. Appeal allowed by way of remand.

Issues Involved:
1. Commercial Training or Coaching conducted by the appellant.
2. Charging of service tax for the services viz., Consulting Engineering Service received from abroad on reverse charge basis.

Detailed Analysis:

Issue 1: Commercial Training or Coaching Conducted by the Appellant

The appellants contested that for a service to be taxable under the category of Commercial Training or Coaching Service, it must satisfy the definition as per Section 65(27) of the Finance Act, 1994. According to this section, any training or coaching leading to a certificate recognized by law falls under the excluded services category. The appellants argued that the certificates issued after completing their courses are recognized by the Director General of Shipping under the Merchant Shipping Act, 1958, thus falling into the excluded category.

The Commissioner, however, observed that the certificates issued by the appellant were merely for successful completion of training and not qualification certificates recognized by law. He stated that the certificates were prerequisites for applying for further examinations rather than being recognized qualifications themselves.

Upon review, the Tribunal referred to the certificates issued by the institute, which are entered into the database maintained by the Director General of Shipping. According to DGS Order No.2 of 2007, these certificates are recognized by the DG Shipping for all purposes, contradicting the Commissioner’s stance. The Tribunal concluded that the certificates issued are indeed recognized by law, thus exempting the courses from being categorized under Commercial Training or Coaching services.

The Tribunal also acknowledged that apart from the recognized courses, the appellants conducted other courses which may not result in similar certificates recognized by law. Therefore, the Tribunal agreed to remand the matter back to the adjudicating authority for redetermination of service tax liability concerning other courses.

Issue 2: Charging of Service Tax for Consulting Engineering Services Received from Abroad on Reverse Charge Basis

The Tribunal referred to the case of Indian National Shipowners Association vs. UOI, where it was held that the provision for levy on a reverse charge basis was only available from 18.4.2006, after the enactment of Section 66A. Before this date, there was no provision for charging service tax on a reverse charge basis. Consequently, any service tax levied on Consulting Engineering services received from abroad before this date could not be collected from the appellants.

Additionally, the Tribunal considered the case of Intercontinental Consultants and Technocrats Pvt. Ltd., where it was held that reimbursements made during the provision of services could not be added to the value of the services. The appellants claimed that the value determined for the demands under Consulting Engineering Services included reimbursable charges, and thus, the value of services needed to be redetermined after allowing deductions for such charges.

The Tribunal concluded that service tax on Consulting Engineering services received from abroad on a reverse charge basis is leviable from 18.4.2006 onwards, after allowing deductions for reimbursable charges as per the Apex Court's ruling in Intercontinental Consultants and Technocrats Pvt. Ltd. The matter was remanded back to the adjudicating authority for redetermination of the service tax payable in light of these observations.

Conclusion:

The appeal was allowed by remanding the matter to the adjudicating authority for redetermination of service tax payable, considering the Tribunal's observations on both issues. The order was pronounced in Open Court on 25.02.2019.

← Previous Next →