2015 (1) TMI 504 - AT - Service Tax

Commercial Training and Coaching Services - training to candidates who intent to become Insurance Agent - exam conducted by Insurance Regulatory and Development Authority (IRDA) - whether the activity undertaken by the appellant is liable to service tax under Section 65(27) of the Finance Act, 1994 or not - Held that - it is mandatory for a candidate to go for practical training from the approved institute which is the appellant. In these set of facts, we are of the view that the certificate of completion of training issued by the appellant having recognition of law. - High Court in 2013 (5) TMI 592 - DELHI HIGH COURT concluded that the training conducted by the appellant in that case having a recognition of law and is not covered under commercial or coaching training centre as defined under Section 65(27) of the Finance Act, 1994. We have further gone through the decision of Pasha Educational Training Inst. (2008 (12) TMI 80 - CESTAT, BANGALORE) wherein similar set of facts, in the case of the competitor of the appellant this Tribunal held that the appellant was imparting the vocational training and held that the appellant was entitled for benefit of exemption under Notification No. 9/2003-ST dated 20th June 2003. Training imparted by the appellants does not fall under the ambit of Section 65(27) of the Finance Act, 1994 as the training imparted by the appellant is having the recognition of law and covered under exclusion clause of Section 65(27) of the Finance Act, 1994, therefore the appellant is not liable to pay service tax at all. - Impugned order is set aside - Decided in favour of assessee.

Issues Involved:

1. Whether the appellant's activity falls under the category of 'Commercial Training and Coaching Services' as defined under Section 65(27) of the Finance Act, 1994.
2. Whether the appellant is entitled to exemptions under Notification No. 10/2003-ST and Notification No. 9/2003-ST.
3. Whether the appellant's training is recognized by law, thereby excluding them from service tax liability.
4. Whether the extended period of limitation is applicable due to suppression of facts.

Issue-wise Detailed Analysis:

1. Applicability of 'Commercial Training and Coaching Services':

The appellant provided training to candidates aspiring to become Insurance Agents, a mandatory requirement under the Insurance Regulatory and Development Authority (IRDA) regulations. The appellant argued that their training is recognized by law and thus falls under the exclusion clause of Section 65(27) of the Finance Act, 1994. The Tribunal examined the definition of 'Commercial training or coaching centre' under Section 65(27) and concluded that institutions issuing certificates recognized by law are excluded from this category. The Tribunal found that the appellant's training, being a prerequisite for licensing as per IRDA regulations, is recognized by law and thus does not fall under 'Commercial Training and Coaching Services.'

2. Entitlement to Exemptions under Notifications:

The appellant claimed exemptions under Notification No. 10/2003-ST and Notification No. 9/2003-ST, which provide exemptions to commercial training centers forming an essential part of a course or curriculum leading to a certificate or educational qualification and vocational training institutes, respectively. The Tribunal noted the appellant's reliance on the case of Pasha Educational Training Institute, where similar training was considered vocational and thus exempt under Notification No. 9/2003-ST. The Tribunal agreed with this precedent, recognizing the appellant's training as vocational and essential for obtaining a license, thereby qualifying for the exemptions.

3. Recognition of Training by Law:

The Tribunal examined the IRDA regulations, which mandate practical training from approved institutions (like the appellant) for candidates to become licensed insurance agents. This regulatory framework implies that the appellant's training is recognized by law. The Tribunal referenced the Delhi High Court's decision in Indian Institute of Aircraft Engineering, which held that training recognized by regulatory authorities constitutes recognition by law. The Tribunal concluded that the appellant's training meets this criterion and is thus excluded from the definition of 'Commercial Training and Coaching Services.'

4. Applicability of Extended Period of Limitation:

The Revenue argued that the appellant deliberately suppressed facts to avoid service tax, justifying the extended period of limitation. However, since the Tribunal found that the appellant's training is recognized by law and excluded from service tax, the issue of limitation became moot. The Tribunal did not delve into this aspect further, having allowed the appeal on the merits of recognition by law.

Conclusion:

The Tribunal held that the appellant's training is recognized by law and thus excluded from the ambit of 'Commercial Training and Coaching Services' under Section 65(27) of the Finance Act, 1994. Consequently, the appellant is not liable to pay service tax. The appeal was allowed with consequential relief, and other issues raised by the appellant were not considered necessary to address.

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