2019 (11) TMI 1058 - AT - Service Tax

Commercial Coaching and Training Services - appellants are engaged in imparting courses such as MBA, PGP programme (industry integrated) - benefit of N/N. 10/2003 dated 20.06.2003 - HELD THAT - The appellants themselves are not recognized by law to grant any degree and therefore, the service provided by the appellant qualifies as Commercial Coaching and Training. Benefit of N/N. 10/2003 dated 20.06.2003 - HELD THAT - It is seen that to claim the Notification benefit, the appellant have to establish that the charge for such services are not paid by the service recipient to the service provider - In the instant case, the order in original as well as the impugned order record that the payment has been made to the appellants by the service recipient and thus, the benefit of Notification 10/2003-ST is not available. Also, in view of the decision of Tribunal in case of SRI CHAITANYA EDUCATIONAL COMMITTEE (SCEC) VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, GUNTUR, COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, GUNTUR VERSUS SRI CHAITANYA EDUCATIONAL COMMITTEE (SCEC) 2015 (6) TMI 627 - CESTAT BANGALORE (LB) , the appellants are liable to pay service tax on the service provided by them as the appellants are not falling under any category excluded from the definition of Commercial Coaching and Training. The demand of duty, interest and penalty under Section 77 and 78 are upheld - appeal dismissed.

Issues Involved:
1. Demand of service tax on the appellant's activities under 'Commercial Coaching and Training'.
2. Entitlement to Notification No. 10/2003-ST exemption.
3. Applicability of the decision in the case of Sri Chaitanya Educational Committee.
4. Imposition of penalty under Section 77 and 78 of the Finance Act, 1994.

Issue-wise Detailed Analysis:

1. Demand of Service Tax on the Appellant's Activities under 'Commercial Coaching and Training':
The appellants are engaged in imparting courses such as MBA and PGP programs. A show cause notice was issued demanding service tax on these activities under 'Commercial Coaching and Training'. The demand was confirmed, and penalties were imposed by the original adjudicating authority and upheld by the Commissioner (Appeals). The appellants contended that they were set up by a public charitable trust and were an approved center of a university recognized by the University Grants Commission (UGC). However, the tribunal found that the appellants themselves are not recognized by law to grant any degree, and therefore, the service provided qualifies as 'Commercial Coaching and Training'.

2. Entitlement to Notification No. 10/2003-ST Exemption:
The appellants argued that they are entitled to the exemption under Notification No. 10/2003-ST, which exempts services provided by a commercial training or coaching center if they form an essential part of a course leading to a recognized degree or diploma. However, the tribunal noted that to claim this exemption, the charges for such services should not be paid directly by the service recipient to the service provider. In this case, the payments were made directly to the appellants by the service recipients, thus disqualifying them from the exemption.

3. Applicability of the Decision in the Case of Sri Chaitanya Educational Committee:
The tribunal relied on the Larger Bench decision in the case of Sri Chaitanya Educational Committee, which held that institutes providing coaching classes for competitive exams, despite being part of recognized educational courses, are liable to pay service tax if the coaching is conducted independently and fees are charged separately. The tribunal found that the appellants' situation was similar, as they provided coaching services independently and charged fees directly from the students.

4. Imposition of Penalty under Section 77 and 78 of the Finance Act, 1994:
The tribunal upheld the imposition of penalties under Section 77 and 78 of the Finance Act, 1994, based on the findings that the appellants were liable to pay service tax on the services provided. The penalties were deemed appropriate given the circumstances and the established liability for service tax.

Conclusion:
The tribunal dismissed the appeal, upholding the demand for service tax, interest, and penalties. The appellants were found to be providing 'Commercial Coaching and Training' services and were not entitled to the exemption under Notification No. 10/2003-ST due to the direct payment of fees by the service recipients. The decision in the case of Sri Chaitanya Educational Committee was applied, reinforcing the liability to pay service tax on the coaching services provided independently.

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