2024 (6) TMI 1328 - AT - Service Tax

Levy of service tax - educational services rendered by the appellant to the students undertaking the course of BS - period of dispute is from April 2013 to June 2017. Appellant has submitted that the degree of BS leading to degree of MD awarded by DMSF is an approved course and is covered under the negative list given under Section 66B of Finance Act, 1994 and is exempted under Entry No.9 of Notification No.25/2012-ST dated 20.06.2012. HELD THAT - It is undisputed fact that the appellant is engaged in providing educational service to students who have enrolled for BS course with the appellant and the appellant has collected tuition fee from the students. It is also undisputed fact that BS course is prerequisite for obtaining degree of MD which is equivalent to MBBS degree in India and that MD degree is offered by an institute in Philippines where students completing BS course with the appellant take admission in Davos Medical School Foundation, Philippines. It is noted that Schedule 3 issued under Section 13 of Indian Medical Council Act, 1956 in its Part II has included MD degree offered by Davos Medical School Foundation, Philippines as recognized medical qualification under Section 13 of Indian Medical Council Act, 1956. It is also undisputed fact that the appellant is not receiving any consideration from any other source than the tuition fee collected from the students enrolled for BS course. During the entire period of dispute if a service is provided in respect of education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force, then such service either did not attract service tax under negative list till 14.05.2016 or was exempted from payment of service tax under Notification No.25/2012-ST dated 20.06.2012 under Entry No.9 with effect from 14.05.2016. The appellant was providing educational service for a course called BS which was pre-requisite for a course for MD and MD qualification is recognized by Indian Medical Council Act, 1956. It is noted that in the relied upon interim order in the case of ITM INTERNATIONAL PVT LTD VERSUS CST, DELHI 2017 (7) TMI 689 - CESTAT NEW DELHI , the third Member to whom the matter was referred has clarified in para 5 that degrees and diplomas are issued by universities and the colleges affiliated to such universities provided educational service and such colleges who themselves are not issuing degree certificate are not being subjected to levy of service tax. In similar manner, here the degree of MD which is the qualification recognized by Indian Medical Council Act, 1956 is awarded and a part of the said qualification requires study of BS course which is provided by the present appellant. Therefore, the educational service provided by the present appellant is a part of a curriculum for obtaining MD qualification which is recognized by law for the time being in force. Therefore, all such services which were provided by the appellant to students for arranging visa and air tickets are exempted under the said Entry No.9 of the said Notification No. 25/2012-ST dated 20.06.2012. It is held that during the entire period of dispute, the appellant was not liable to pay service tax on the activity of imparting education and also on any other services provided to their students. The impugned order is set aside - appeal allowed.

Issues Involved:
1. Whether the educational services rendered by the appellant for the BS course are chargeable to service tax.
2. Whether the BS course provided by the appellant qualifies as a part of the curriculum for obtaining a qualification recognized by law.
3. Whether the services provided by the appellant are covered under the negative list or exempted under the relevant notifications.
4. Whether the appellant's collection of charges for arranging visas and air tickets for students is taxable.

Issue-wise Detailed Analysis:

1. Chargeability of Educational Services to Service Tax:
The appellant, a company registered under the Companies Act, 1956, provided a BS course as a prerequisite for an MD degree at Davos Medical School Foundation (DMSF) in the Philippines. The Revenue's investigation revealed that the appellant collected tuition fees from students, which was considered taxable under Section 65B(44) read with Section 65B(51) of the Finance Act, 1994. A show cause notice was issued to the appellant demanding service tax of Rs. 16,46,44,814/- for the period from April 2013 to June 2017. The appellant contested this, arguing that the educational service provided was recognized by law and thus exempt from service tax.

2. Qualification of BS Course as Part of Recognized Curriculum:
The appellant argued that the BS course is a recognized educational service as it is a prerequisite for the MD degree, which is recognized by the Indian Medical Council Act, 1956. The original authority, however, did not accept this argument, stating that the BS course was not part of the curriculum for obtaining a qualification recognized by law, as the MD course was entirely conducted in the Philippines.

3. Coverage under Negative List and Exemptions:
The appellant contended that the educational services provided were covered under the negative list as per Section 66D of the Finance Act, 1994, until 14.05.2016, and were exempt under Entry No. 9 of Notification No. 25/2012-ST dated 20.06.2012 thereafter. The Tribunal noted that the BS course was a prerequisite for the MD degree, which is recognized by the Indian Medical Council Act, 1956. Therefore, the educational services provided by the appellant were part of the curriculum for obtaining a recognized qualification and were covered under the negative list and exemptions for the entire period of dispute.

4. Taxability of Charges for Visa and Air Tickets:
The Revenue pointed out that the appellant collected charges separately for arranging visas and air tickets for students. However, the Tribunal noted that these amounts were accounted for as tuition fees in the appellant's P&L and ledger extracts. Since services provided by an educational institution to its students were exempt under Entry No. 9 of Notification No. 25/2012-ST dated 20.06.2012 from 11.07.2014, these additional services were also exempt from service tax.

Conclusion:
The Tribunal held that the educational services provided by the appellant for the BS course were part of the curriculum for obtaining an MD degree recognized by the Indian Medical Council Act, 1956. Therefore, these services were covered under the negative list until 14.05.2016 and were exempt under Entry No. 9 of Notification No. 25/2012-ST dated 20.06.2012 thereafter. The charges for arranging visas and air tickets were also exempt. Consequently, the Tribunal set aside the impugned order and allowed the appeal, ruling that the appellant was not liable to pay service tax for the entire period of dispute.

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