2019 (4) TMI 1151 - AT - Service Tax

Classification of services - commercial coaching services and franchise services or not - appellant had been engaged in providing vocational Training to students/corporate employees HELD THAT - It is a fact that the main appellant are recognized as Research and Education Society and conducts various courses affiliated by the various universities and also as per AITC approved courses and awards degree to the students. Regarding courses, which are being provided in collaboration with Coventry Universities, the same are also recognized by the UK government as well as the parallely by the Punjab Technical Universities - the main appellant is providing the educational services approved by the various Universities recognized under law for the AITC approved course. The fact that some of the students are being the Coventry University cannot be classified as the franchise services as proposed by the Revenue - We also find that the service by the way of education as a part of recognized university recognized by law is taxable neither taxability during the positive list nor under the negative list which has been rightly pointed out by the Ld. advocate. As the main service, other than the transportation service is held to be not liable for service tax, we hold demand on other appellants, who have been visited with the penalty, is also not sustainable and liable to be set aside. Appeal allowed in part.

Summary

Issues:
- Demand of Service Tax
- Recovery of interest on confirmed demand
- Penalties under various sections of the Act

Analysis:
1. Demand of Service Tax: The appeals arose from an adjudication order confirming a demand of Service Tax amounting to &8377; 4,48,58,485 under Section 73(1) of the Act. The investigation revealed that the main appellant was engaged in providing vocational training without discharging their Service Tax liability. The main appellant, a registered society, was providing commercial training and coaching services. The appellants were issued a show cause notice, and the demand was confirmed by the adjudicating authority.

2. Recovery of Interest and Penalties: In addition to the demand of Service Tax, recovery of interest under Section 75 of the Act and penalties under various sections were imposed on the appellants. Penalties included amounts under Section 77(1)(b), Section 77(1)(c), and Section 78 of the Act. The penalties were also imposed on specific individuals associated with the main appellant under Section 77(2) of the Act.

3. Appellant's Submissions: The appellants argued that the main appellant primarily provided degree courses recognized by universities and did not offer the alleged vocational training. They contended that the department relied on data without proper verification and cross-examination. The appellants also challenged the imposition of penalties and the basis for the demand of Service Tax.

4. Judgment: The Tribunal analyzed the courses provided by the main appellant and concluded that they were educational services recognized by various universities and law. The Tribunal held that the courses were not classified as commercial coaching or franchise services. It was noted that the main appellant facilitated students' study at Coventry University, which was recognized by UK and Punjab Technical University. The Tribunal found in favor of the main appellant, citing relevant legal provisions and previous judicial decisions.

5. Legal Provisions: The Tribunal highlighted the importance of recognizing courses by law and universities. It referenced specific time periods and exemptions under the Finance Act related to educational services. The judgment emphasized the wide interpretation of recognition by law and the need for full compliance with legal requirements.

6. Conclusion: The Tribunal set aside the impugned order regarding the demand of Service Tax, except for transportation services. The penalties imposed on other appellants were deemed unsustainable and set aside. The judgment emphasized procedural lapses by the adjudicating authority and upheld the main appellant's position regarding the educational services provided.

7. Final Decision: The appeal was allowed partially, setting aside the impugned order except for the service tax on transportation services. The penalties imposed on other appellants were also set aside. The judgment highlighted the importance of legal recognition and compliance in determining the tax liability of educational services provided by the main appellant.