2019 (5) TMI 1249 - AT - Service Tax

Commercial Training or Coaching Service or not - consideration received from the students towards the conduct of a test known as International English Language Testing System (IELTS) - HELD THAT - A perusal the relevant clauses of the agreement clearly show that the agreement is with regard to the holding of the IECTS Test by the Appellant. There is nothing in the agreement which may require the Appellant to coach or train any candidate desires of appearing at the IELTS Test nor any consideration in terms of money is earmarked for this purpose. What has, therefore, to be determined is whether conduct of a test would amount to commercial training or coaching by a commercial training or coaching centre. Commercial training or coaching has necessarily to be provided by a commercial training or coaching centre which centre has been defined to mean any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field. The holding of a test cannot by any stretch of imagination, be considered as imparting skill or knowledge or lessons on any subject or field. To arrive at a conclusion that the Appellant was conducting coaching or commercial training activity it was imperative for the Commissioner to have based his conclusion on some positive evidence in this regard, rather than drawing such an inference. In any case, for levy of service tax, there has to be an evidence that the Appellant was conducting commercial coaching or training. The contention of the learned Authorized Representative of the Department that the holding of the Test is itself a skill and, therefore, the Appellant is providing commercial training or coaching cannot also be accepted. No skill or knowledge is being provided to the candidates appearing at the test. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of services provided by the Appellant as "Commercial Training or Coaching Service."
2. Non-payment of Service Tax on the income received for conducting the IELTS test.
3. The relevance of the agreement between the Appellant and IELTS Australia Pty Ltd.
4. The role of the Appellant in providing any coaching or training to the students.
5. The validity of the evidence used by the Commissioner for concluding the nature of services provided by the Appellant.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Appellant as "Commercial Training or Coaching Service":
The Appellant, M/s IDP Education India Pvt. Ltd., contested the classification of its services under "Commercial Training or Coaching Service" as defined under sections 65(26) and 65(27) of the Finance Act, 1994. The Commissioner had concluded that the Appellant's services fell under this category, thereby confirming the demand for Service Tax amounting to ?2,32,11,043/-, along with interest and penalties under sections 75, 76, and 77(2) of the Act. However, the Appellant argued that it only conducted the IELTS test and did not provide any commercial training or coaching.

2. Non-payment of Service Tax on the Income Received for Conducting the IELTS Test:
The demand for Service Tax was based on the allegation that the Appellant provided commercial training or coaching services to students. The Appellant contended that the income received was solely for conducting the IELTS test, which was not a taxable service during the relevant period (April 2012 to June 2012). The Appellant started paying Service Tax from July 2012 onwards after the introduction of the negative list of Service Tax.

3. The Relevance of the Agreement Between the Appellant and IELTS Australia Pty Ltd:
The agreement dated 9 September 2010 between the Appellant and IELTS Australia Pty Ltd. granted the Appellant a license to operate IELTS Test Centers in India. The agreement detailed the responsibilities of the Appellant, which included conducting the test according to specified procedures but did not mention any requirement for providing training or coaching. The clauses of the agreement, including those on financial arrangements and personnel, were examined to determine the nature of services provided by the Appellant.

4. The Role of the Appellant in Providing Any Coaching or Training to the Students:
The Commissioner concluded that the Appellant was providing training based on the information available on the Appellant's website and the retention of ?550 per candidate. However, the Appellant argued that the website only provided free practice materials and did not indicate that the Appellant was providing training. The Appellant also highlighted that no consideration was received for any alleged training activities. The Tribunal found that the agreement and the receipts given to students supported the Appellant's claim that it only conducted the test.

5. The Validity of the Evidence Used by the Commissioner for Concluding the Nature of Services Provided by the Appellant:
The Commissioner relied on the website and Facebook page of the Appellant to conclude that training services were provided. However, this information was not part of the show cause notices. The Tribunal found that the website and Facebook page did not conclusively prove that the Appellant provided training. The Tribunal emphasized that the name "General Training Module" did not imply that training was provided by the Appellant. The retention of ?550 per candidate was considered reasonable for conducting the test, and the Commissioner’s inference was deemed perverse without positive evidence.

Conclusion:
The Tribunal set aside the impugned order dated 29 February 2016, concluding that the Appellant was not providing commercial training or coaching services. The appeal was allowed, and the demand for Service Tax, along with interest and penalties, was quashed. The Tribunal emphasized the need for positive evidence to substantiate the claim that the Appellant was providing taxable services under "Commercial Training or Coaching Service."

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