2015 (2) TMI 931 - AT - Service Tax

Waiver of pre deposit - Commercial Coaching and Training Institute service - Imposition of interest and penalty - Held that - The fact is that the applicant is running the courses recognised by the University have not been considered by the Revenue at the time of issuance of show-cause notice. In fact the applicant is running courses recognised by the university and issuing degree for providing those courses. Therefore, for the period prior to May 11 prima facie the applicant is not covered under the definition of Commercial Coaching and Training Centre . Therefore, the argument advanced by the AR that running of degree courses by the applicant being recognised by the University is not subject matter is not correct as we have to see the whole activity carried out by the applicant. Therefore, the applicant is not providing service under the category of Commercial Coaching and Training Centre . Further, we find that post 2010, the applicant is collecting service tax on the fees recovered by them from the students to whom they are providing professional courses which are not recognised by the University. Although they are maintain a separate account as Deposits towards service tax. But as they have collected the amount on account of service tax the same is required to be paid to the department at this stage. - Partial stay granted.

Summary

Issues: Service tax demand on Commercial Coaching and Training Institute services.

Analysis:
1. Service Tax Demand: The judgment addresses a service tax demand of Rs. 52,63,542/- along with interest and penalties confirmed against the applicant for providing Commercial Coaching and Training Institute services. The demand was based on the applicant collecting service tax for courses not recognized by the University, in addition to those recognized by the Yashwantrao Open University.

2. Appellant's Argument: The appellant argued that they were not a Commercial Coaching and Training Centre during the relevant period and should not be liable to pay service tax. They contended that as they offered courses recognized by the University, approved by the UGC, they were not covered under the definition of Commercial Coaching and Training Centre. The appellant also highlighted a previous Tribunal decision to support their stance.

3. Revenue's Position: The Revenue opposed the appellant's argument, asserting that the appellant fell under the definition of a Commercial Coaching and Training Centre as they provided professional courses not recognized by any University. They emphasized that the recognition by the University was not the key issue in this case and pointed out that the appellant had collected service tax post-2010 but had not remitted it to the department.

4. Tribunal's Findings: The Tribunal considered the submissions from both sides and noted that the appellant's courses recognized by the University had not been taken into account by the Revenue when issuing the show-cause notice. The Tribunal observed that the appellant issued degrees for the courses recognized by the University, indicating that they were not strictly a Commercial Coaching and Training Centre before May 2011. The Tribunal disagreed with the Revenue's argument that the University's recognition was irrelevant, emphasizing the need to evaluate the entirety of the appellant's activities.

5. Decision: The Tribunal ruled that the appellant was not providing services under the category of Commercial Coaching and Training Centre, especially for the period before May 2011. However, post-2010, the appellant collected service tax on fees for courses not recognized by the University, maintaining a separate account as "Deposits towards service tax." The Tribunal directed the appellant to make a pre-deposit of Rs. 16,98,532/- within eight weeks, with the balance amount of service tax, interest, and penalties to be waived upon compliance. Recovery was stayed during the appeal process.

This judgment clarifies the applicability of service tax on educational services and highlights the importance of considering the full scope of an entity's activities in determining tax liability.