2025 (4) TMI 1333 - AT - Service Tax

Scope of exception by virtue of the degree issued by the University of Bradford U.K. which was also recognized by the Association of Indian Universities and IGNOU - fees collected by the respondent for conducting courses leading to degrees awarded by a foreign university recognized by the Association of Indian Universities and Indira Gandhi National Open University - Commercial Training or Coaching Services or not - demands for the entire period from 01.09.2009 to 31.03.2016 - HELD THAT - W.e.f. 01.07.2012 services by way of education as a part of curriculum for obtaining the qualification recognized by any law for the time being in force has been put in the negative list under Section 66D (1) (ii). This is same as the exclusion from the definition of Commercial Training or Coaching Centre prior to 01.07.2012. Therefore we find there is no effective change in the law. Before 01.07.2012 the services were excluded from the definition of Commercial Training and Coaching Centre . After 01.07.2012 they have been excluded by being part of the negative list. On the facts of the case it is un-disputed that the degree was being issued by the University of Bradford U.K. It is also stated in the appeal itself that this degree is also recognized by the Association of India Universities and also by the Indira Gandhi National Open University. The Commissioner has correctly followed decision of this Tribunal dated 01.11.2017 which has also attained finality as Revenue did not file any appeal against it. The Commissioner was correct in dropping the demand and the Committee of Chief Commissioners erred in finding the order not legal and proper. Conclusion - The respondent s services are not liable to service tax for the entire period covered by the show cause notices both before and after 01.07.2012. Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal were:

(a) Whether the fees collected by the respondent for conducting courses leading to degrees awarded by a foreign university, recognized by the Association of Indian Universities and Indira Gandhi National Open University, are liable to service tax under the head "Commercial Training or Coaching Services" prior to 01.07.2012.

(b) Whether the exemption from service tax applies to the respondent's services post 01.07.2012, when education as part of curriculum for obtaining a qualification recognized by law was placed in the negative list under Section 66D(1)(ii) of the Finance Act, 1994.

(c) Whether the Tribunal's earlier order dated 01.11.2017, which set aside demands of service tax and penalties for the pre-2012 period, is binding and conclusive for the subsequent proceedings initiated by multiple show cause notices covering periods before and after 01.07.2012.

(d) Whether the respondent, not awarding degrees itself but facilitating courses recognized by a foreign university, falls within the exemption or exclusion from service tax under the relevant legal provisions and notifications.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a): Liability for service tax prior to 01.07.2012 on fees collected for courses recognized by a foreign university

The relevant legal framework prior to 01.07.2012 was the Finance Act, 1994, specifically Section 65(27) defining "Commercial Training or Coaching Centre" and the classification-based service tax regime under erstwhile Section 65. The definition excluded any institute issuing certificates or degrees recognized by law. The Tribunal had earlier ruled in favor of the respondent in its order dated 01.11.2017, holding that the respondent's services were excluded from the definition of taxable "Commercial Training or Coaching Centre" because the degrees were recognized by law.

The Tribunal's reasoning was grounded on the interpretation that recognition by the Association of Indian Universities and Indira Gandhi National Open University validated the foreign degree for exemption purposes. The Tribunal found that the respondent's services did not constitute taxable commercial coaching or training under the erstwhile regime.

Revenue's contention was that another decision of the Tribunal in M/s Unitech Southcity Educational Charitable Trust conflicted with this view, holding similar services taxable. However, the Tribunal in the present case emphasized judicial discipline and the binding nature of its prior order in the respondent's own case, which the Revenue did not appeal.

Issue (b): Applicability of exemption post 01.07.2012 under the negative list regime

From 01.07.2012, the service tax regime shifted from classification-based to a negative list system under the Finance Act, 1994. Section 66D(1)(ii) placed "education as a part of curriculum for obtaining a qualification recognized by law" in the negative list, thereby exempting such services from service tax.

The Tribunal analyzed whether this represented a substantive change from the prior regime. It concluded that the exclusion of recognized educational services from taxable commercial coaching or training remained consistent before and after 01.07.2012, merely shifting from an exclusion in the definition to a negative list exemption.

Given the undisputed fact that the degree was awarded by the University of Bradford, U.K., and recognized by Indian authorities, the Tribunal held that the respondent's services fell within the negative list exemption post 01.07.2012.

Issue (c): Binding effect of the Tribunal's earlier order dated 01.11.2017

The Commissioner had dropped proceedings initiated by eight show cause notices spanning periods before and after 01.07.2012, relying on the Tribunal's earlier order in the respondent's own case. The Revenue challenged this, arguing that the earlier order only covered the pre-2012 period and that the new regime post-2012 required fresh consideration.

The Tribunal rejected this argument, noting that the legal principle excluding educational services recognized by law from service tax remained unchanged in substance. The Tribunal emphasized that the Revenue had accepted the earlier order by not filing an appeal, making it final and binding. Consequently, the Commissioner was justified in dropping the proceedings, and the Tribunal upheld this action.

Issue (d): Eligibility of exemption where the respondent does not award degrees itself

Revenue argued that since the respondent did not itself award degrees or certificates but only conducted courses, the exemption could not apply as the condition of "recognized by law" was not fulfilled. They relied on notifications exempting services only where coaching or training leads to recognized qualifications.

The Tribunal found that the key factor was the recognition of the qualification awarded upon completion of the course, not the identity of the entity awarding it. Since the University of Bradford's degree was recognized by Indian authorities, the respondent's services were effectively part of a recognized educational curriculum and thus exempt. The Tribunal did not accept the narrow interpretation suggested by Revenue that the exemption applies only if the service provider itself awards the qualification.

3. SIGNIFICANT HOLDINGS

"We find that w.e.f. 01.07.2012 services by way of education as a part of curriculum for obtaining the qualification recognized by any law for the time being in force" has been put in the negative list under Section 66D (1) (ii). This is same as the exclusion from the definition of "Commercial Training or Coaching Centre" prior to 01.07.2012. Therefore, we find there is no effective change in the law."

"On the facts of the case, it is un-disputed that the degree was being issued by the University of Bradford, U.K. It is also stated in the appeal itself that this degree is also recognized by the Association of India Universities and also by the Indira Gandhi National Open University."

"In view of the above, we find that Commissioner has correctly followed decision of this Tribunal dated 01.11.2017 which has also attained finality as Revenue did not file any appeal against it. The Commissioner was correct in dropping the demand and the Committee of Chief Commissioners erred in finding the order not legal and proper."

The Tribunal established the core principle that educational services leading to qualifications recognized by law are exempt from service tax, whether under the erstwhile classification-based regime or the post-2012 negative list regime. The identity of the awarding institution being foreign but recognized by Indian authorities does not negate this exemption. The Tribunal also underscored the binding effect of its prior orders in the absence of appeals, reinforcing the principle of judicial discipline.

Final determinations were that the respondent's services were not liable to service tax for the entire period covered by the show cause notices, both before and after 01.07.2012, and that the Commissioner's order dropping the proceedings was upheld, with the Revenue's appeal dismissed and the respondent's cross-objections disposed of accordingly.