2024 (11) TMI 614 - AT - Service Tax

Demand of service tax - upheld Order-in-Original including alleged wrong availment of Cenvat credit but dropped penalty u/s 76 of the Act - appellant is a commercial coaching and training centre providing the service of Computer Training and also Technology Based Training (TBT) for skill development, and training for medical transcription; insurance agents etc. to their clients - HELD THAT - We consider it appropriate to reproduce the definition of vocational training institute as provided in the Notification No. 24/04-ST dated 10.09.2004 which provides exemption of services tax to commercial training or coaching services provided by vocational/recreational training institute. The definition of vocational training institute as given in explanation to notifications 09/2003-ST and 24/04 defines it as Commercial training or coaching centre which provides vocational coaching or training that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching. We find that the appellant in the present case is providing vocational courses pertaining to technology based, medical transcriptionists, and insurance agent which find mention in the category of non engineering trades which is elaborately mentioned in the case of Sadhana Educational People Dev Services Ltd. cited (Supra). We also find that the decisions relied upon the Ld. AR has been distinguished on facts by the Ld. Counsel for the appellant and after considering the ratio of the decisions relied upon by the appellant cited particularly Pasha Educational Training Institute 2008 (12) TMI 80 - CESTAT, BANGALORE wherein the Tribunal has observed that vocational training means training that imparts skills to enable trainee to seek employment or undertake self employment directly after such training or coaching and goes on to hold that comprehensive training given by the appellant enables trainees to appear for examination conducted by IRDAI and hence would be entitled for exemption under Notification No. 09/03-ST therefore, we hold that the training provided by the appellant falls squarely in the definition as provided by the Notification No. 09/03-ST dated 20.06.2003 and Notification No. 24/04-ST dated 10.09.2004. Demand of cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - We find that the appellant has correctly utilized the Cenvat credit of Rs. 81476/- as they were maintaining separate accounts for input and output services, the details of service tax taken and utilized by them for the relevant period has been given in annexure P-4 which has not been considered by both the authorities below. We find that perusal of material shows that the appellant has not taken cenvat credit on input services used in providing output services (exempted) during the relevant period, therefore, the question of wrong utilization of Cenvat credit does not arise and the provisions of Rule 6 of the the Cenvat credit Rules, restricting of 20% of credit are not attracted. Thus, the impugned order is not sustainable in law and therefore, we set aside the same by allowing the appeal of the appellant.

Summary

Issues:
1. Interpretation of service tax exemption for vocational training institutes.
2. Validity of Cenvat credit utilization and demand.

Analysis:

Issue 1: Interpretation of service tax exemption for vocational training institutes

The appeal challenged an order confirming service tax demand and Cenvat credit utilization. The appellant, a coaching center, provided various training services taxable under the Finance Act, 1994. The dispute arose due to the applicability of Notification No. 24/2004-ST, which amended the exemption for computer training institutes. The appellant argued that their courses qualified as vocational training exempt from service tax under the notification. They cited precedents to support their claim, emphasizing the vocational nature of their training programs. The appellant maintained that their courses, such as technology-based training and medical transcription, were vocational in nature, enabling direct employment or self-employment post-training.

The Tribunal analyzed the definition of a vocational training institute under the relevant notification, emphasizing that vocational training imparts skills for immediate employment or self-employment. Considering the appellant's courses in technology-based training, medical transcription, and insurance agents, falling under non-engineering trades, the Tribunal concluded that the training provided by the appellant qualified as vocational training exempt from service tax. The Tribunal distinguished the precedents cited by the department, holding in favor of the appellant based on the vocational nature of their courses.

Issue 2: Validity of Cenvat credit utilization and demand

Regarding the Cenvat credit demand of Rs. 81,476, the appellant argued that they maintained separate accounts for input and output services, complying with Rule 6 of the Cenvat Credit Rules. They contended that the utilization of Cenvat credit was correct, as evidenced by the details provided in annexure P-4. The Tribunal found that the appellant had not utilized Cenvat credit on exempted services during the relevant period, negating the allegation of incorrect utilization. Consequently, the Tribunal held that the provisions of Rule 6 restricting credit utilization were not applicable.

In conclusion, the Tribunal set aside the impugned order, ruling in favor of the appellant on both issues. The order was deemed unsustainable in law, and the appeal was allowed with consequential relief, if any, as per law.

The judgment was pronounced in open court on 25.06.2024 by the Appellate Tribunal CESTAT CHANDIGARH, comprising MR. S. S. GARG, MEMBER (JUDICIAL) and MR. P. ANJANI KUMAR, MEMBER (TECHNICAL).