2013 (12) TMI 1070 - AT - Service Tax

Demand of service tax - Exemption Notification No.3/2010-ST - Vocational training institute - Held that - Revenue and by the adjudicating authority is fallacious and misconceived. The power to grant exemption, in the nature of an executive exercise of power is under Section 93 of the Act. The provision authoriese no grant retrospective exemption or to alter the scope of an extant exemption retrospectively. In this view of the matter, exemption Notification No.3/2010-ST dated 27/02/2010 can only have prospective effect and cannot alter the definition of the expression vocational training institute retrospectively. Vocational Training Institute as defined by Notification No.24/2004 dated 10/09/2004 contains no such restrictive definition which requires affiliation to National Council for Vocational Training or the requirement of offering courses in designated trades as notified under the Apprentices Act, 1961, by an Industrial Training Institute or an Industrial Training Centre. It is impermissible for an authority conferred with the power to enforce provisions of the Act, to interpret the Act or exemption Notifications issued thereunder, by resorting to assumptions impermissible in law. For the aforesaid reason, the adjudication order is fallacious and unsustainable. It is accordingly quashed - Decided against assessee.

Summary

Issues:
1. Exemption claim under Notification No.24/2004-ST for service tax on commercial training.
2. Interpretation of the term "vocational training institute" under subsequent Notification No.3/2010-ST.
3. Retrospective effect of exemption notifications and authority's power to grant exemptions.

Analysis:

Issue 1: Exemption claim under Notification No.24/2004-ST
The appellant, a commercial training and coaching center, claimed exemption from service tax under Notification No.24/2004-ST for conducting professional acting courses. The adjudicating authority rejected the claim based on subsequent Notification No.3/2010-ST, disentitling the appellant from exemption due to not being a "vocational training institute" as defined in the later notification.

Issue 2: Interpretation of the term "vocational training institute"
The dispute centered on whether the appellant, meeting the criteria for exemption under Notification No.24/2004-ST, was disqualified from the exemption due to the re-definition of "vocational training institute" in Notification No.3/2010-ST. The authority concluded that the appellant did not meet the new definition, leading to the denial of exemption.

Issue 3: Retrospective effect of exemption notifications
The appellate tribunal held that the power to grant exemptions under Section 93 of the Act did not allow for retrospective alterations to the scope of existing exemptions. The tribunal emphasized that Notification No.3/2010-ST could only have prospective effect and could not redefine "vocational training institute" retrospectively. As the original definition under Notification No.24/2004-ST did not impose the restrictions later introduced, the tribunal deemed the adjudication order erroneous and unsustainable, ultimately quashing it and allowing the appeal.

In conclusion, the tribunal's judgment clarified the limitations on retrospective changes to exemption definitions and emphasized adherence to the original terms of exemption notifications. The decision favored the appellant, highlighting the impermissibility of authorities to interpret laws based on assumptions contrary to legal provisions.