2023 (11) TMI 419 - AT - Service Tax

Levy of Service Tax - Commercial Training or Coaching Services - imparting coaching for competitive examinations to its own students enrolled in 2 3 courses - renting of immovable property - HELD THAT - Larger Bench of this Tribunal was constituted to resolve divergent views taken by two Benches of this Tribunal in 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) and M/S. ITM INTERNATIONAL PVT. LTD. VERSUS C.S.T., DELHI 2017 (11) TMI 1230 - CESTAT NEW DELHI (LB) . Interestingly when both the Members of both the Benches could not agree on the taxability of Commercial Training and Coaching imparted by the Appellant therein and the issue was referred by them to Third Members respectively, the Third Members gave divergent findings holding the same to be taxable in M/s. Shri Chaitanya Educational Committee case and not taxable in ITM International Pvt. Ltd. case. So, in order to resolve divergent findings of Third Members, a three Members Larger Bench was constituted that ultimately concluded that when Appellant does not issue certificate recognized by Law, its activities fall under the category of Commercial Training or Coaching Services for which the decision of the Tribunal in M/s. Shri Chaitanya Educational Committee was stated to have laid the correct position of law. The Appellant case is squarely covered by the decision of this Tribunal passed in SRI CHAITANYA EDUCATIONAL COMMITTEE VERSUS COMMISSIONER OF CUS, CE ST GUNTUR (VICE-VERSA) 2018 (4) TMI 664 - CESTAT HYDERABAD where it was held that and essentially an activity by an 'educational institution' as defined with reference to Section 66D of the Finance Act, 1994 was outside the purview of service tax and the appellants are squarely covered in the ambit of the same, accordingly demand of service tax der any category fails. In so far as renting of immovable property is concerned the demand being made on an amount which is below the threshold of Small Scale exemption, the same can t sustain. The impugned order set aside - appeal allowed.

Summary

Issues involved:
- Conformation of Service Tax demand for coaching services and renting of immovable property.

Coaching services issue:
The appeal challenged the Service Tax demand of Rs.4,38,37,401/- for coaching services provided by the Appellant to its own students enrolled in competitive examination courses. The Appellant argued for exemption under Notification No. 25/2012-ST, claiming to be an educational institution exempt from Service Tax. The Commissioner upheld the demand, stating that the coaching services were not covered under "Auxiliary Education Services" and were not part of approved "Vocational Educational Courses."

Educational institution exemption:
The Appellant contended that services provided by an educational institution to its students are exempt, regardless of the nature of the service. The Appellant emphasized that no coaching was provided to students not enrolled for recognized degrees, diplomas, etc., hence falling under the exemption for "Commercial Training or Coaching Services." The Tribunal referred to the judgment in the case of M/s. Shri Chaitanya Educational Committee, holding that activities without issuing recognized certificates fall under "Commercial Training or Coaching Services."

Larger Bench decision:
A Larger Bench was constituted to resolve conflicting views on the taxability of coaching services. The Bench concluded that without issuing recognized certificates, activities are classified as "Commercial Training or Coaching Services." The Tribunal agreed with this decision, noting the changes in law through Notification No. 6/2014-ST, which provided a clear exemption for services by educational institutions without specifying the type of service.

Renting of immovable property issue:
Regarding the demand for renting of immovable property, the Tribunal found that the amount was below the Small Scale exemption threshold, thus unsustainable. Consequently, the appeal was allowed, setting aside the Commissioner's order on the coaching services demand, with any consequential relief.

Separate Judgment:
The judgment was pronounced by HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) and HON'BLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL).