2015 (6) TMI 694 - AT - Service Tax

Commercial Training and Coaching service - vocational training - valuation - exemption under Notification 24/04-ST - levy of penalty - Held that - From the course content, it is clear that courses are academic in nature and covers broad spectrum of subjects as diverse as Micro Economic, Business Communication, Psychology & Organizational Behaviour, Commercial Laws, Computer based Data-Analysis, Corporate Finance, Negotiation & Contracting. In the second year, courses though gets limited to the field of specialization but are again diverse, theory oriented and academic in nature. The content of courses can by no stretch of imagination can be called vocational. No doubt the two years course will help candidates in understanding various facets of management and get employment. It is a professional management course. This cannot be considered as Vocational Course that imparts skill to enable the trainee to seek employment or self employment after the said course. Decision in the case of Ashu Export Promoters P. Ltd. 2011 (11) TMI 387 - CESTAT, NEW DELHI distinguished. However in the case of the second appellant, we agree with the Ld Counsel that the genuine belief that Charitable Trusts are not covered by the expression Commercial Training or Coaching Centre is supported by the fact that Not 24/2004 was amended retrospectively to cover such institutions. Therefore the larger period of limitation cannot be invoked as held by the Tribunal in the case of I2IT P. vs. CCE - 2014 (9) TMI 345 - CESTAT MUMBAI . Valuation - Held that - Amount recovered under students fund is recovered under receipts and is towards expenses such as textbooks, uniform, medical check-up, insurance etc. Unspent amounts are returned to the students. The ld. counsel also showed from the appeal papers the details of the amounts returned to the students. We agree with the reliance placed on the case of Intercontinental Consultant & Technocrafts P. Ltd. 2012 (12) TMI 150 - DELHI HIGH COURT in which the Delhi High Court held that amounts recovered towards expenses cannot form part of the value of the service. Similar is the case relating to charges for re-examination fees which is an activity post the coaching training and is an expense recovered from the students. Accordingly, we hold that these charges are not includable in the value of the service. In view of the uncertainty prevailing on the leviability of tax on Commercial Training and Coaching centres and keeping in view the amendments to the Notification 24/2004 which introduced changes in the definition of vocational training, a fair case is made out before us to hold that there was a reasonable cause for failure to deposit the service tax. And therefore, the benefit of section 80 which uses the word reasonable cause must be extended to the appellants. - demand of service tax and interest on all the appellants but set aside the demand for the larger period of limitation; however the penalties are set aside in terms of Section 80. - Appeal disposed of.

Issues Involved:
1. Taxability under "Commercial Training and Coaching Service."
2. Eligibility for exemption under Notification 24/04-ST.
3. Invocation of the larger period of limitation.
4. Inclusion of specific amounts in the value of service.
5. Imposition of penalties under Sections 77 & 78.
6. Benefit of Section 80 for waiver of penalties.

Detailed Analysis:

1. Taxability under "Commercial Training and Coaching Service":
The appellants, engaged in postgraduate courses in Marketing, Finance, Human Resources, and System Management, were held liable to pay tax under the category of "Commercial Training and Coaching Service." The demand for duty, interest, and penalties was confirmed under Sections 77 & 78 for the first two appellants and under Section 78 for the third appellant.

2. Eligibility for Exemption under Notification 24/04-ST:
The appellants contended that their activities were exempted under Notification 24/04-ST, which defined "vocational training institute" as a commercial training or coaching center providing vocational training that imparts skills to enable the trainee to seek employment or undertake self-employment. They argued that their courses in marketing, finance, etc., were vocational as they led to employment. However, the Tribunal found that the courses were comprehensive MBA programs, akin to regular postgraduate courses, and not vocational training. The Tribunal held that the courses were academic and theory-oriented, covering a broad spectrum of subjects, and could not be considered vocational.

3. Invocation of the Larger Period of Limitation:
For the second appellant, the Tribunal agreed that the genuine belief that Charitable Trusts were not covered by the expression "Commercial Training or Coaching Centre" was supported by the retrospective amendment of Notification 24/2004. Therefore, the larger period of limitation could not be invoked.

4. Inclusion of Specific Amounts in the Value of Service:
The appellants contested the inclusion of amounts recovered towards students' special funds, alumni fund, deposit fund, sale of forms/prospectus, and re-exam fees. The Tribunal held that amounts recovered towards expenses such as textbooks, uniform, medical check-up, insurance, and re-exam fees could not form part of the value of the service, relying on the Delhi High Court's decision in Intercontinental Consultant & Technocrafts P. Ltd. The Tribunal also held that the student deposit fund, collected as a refundable security deposit, and amounts collected towards the sale of forms/prospectus were not includable in the value of service.

5. Imposition of Penalties under Sections 77 & 78:
The Tribunal considered the appellants' contention that they had a bona fide belief that they were not liable to service tax. Given the uncertainty regarding the taxability of "Commercial Training and Coaching Centres" and the amendments to Notification 24/2004, the Tribunal found a reasonable cause for the appellants' failure to deposit the service tax.

6. Benefit of Section 80 for Waiver of Penalties:
The Tribunal extended the benefit of Section 80, which provides for waiver of penalties if there is a reasonable cause for failure to comply with the provisions of the Finance Act. The Tribunal held that the appellants were entitled to this benefit due to the prevailing uncertainty and their bona fide belief regarding their tax liability.

Conclusion:
The Tribunal upheld the demand for service tax and interest but set aside the demand for the larger period of limitation. The penalties were also set aside under Section 80. The appeals were disposed of accordingly.

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