2017 (7) TMI 689 - AT - Service Tax

Commercial coaching or training service - Fee received for coaching provided for Business English and Personality Development - fees received for offering courses of London School of Economics (University of London) resulting in issue of degree by the University of London - tax liability - demand - Held that - the degree or diplomas are issued by the Universities or the main organisation to which the college or an institute or a centre is affiliated. Keeping this in the background it can be seen that the degree or diploma being issued by University of London can be considered at par while interpreting the scope of commercial training or coaching centre. Whether such a degree or diploma is recognized by law for the time being in force? - Held that - The UGC AICTE etc are recognizing bodies of a University or an Institution. The degree or diploma awarded by these institutions considered as recognized by law for time being in force. In this connection we note the position has been clarified regarding the scope of the term qualification recognized by any law vide Board circular dated 28.08.2012. It clarifies that recognized by any law will include such course as are approved or recognized by any entity established under a central or a state law including delegated legislation for the purpose of granting recognition to any education course. It is relevant to note here that the department has been taking consistently a view that when an educational institute is affiliated to a university/institution awarding a degree recognized by law then the said institute is not a commercial training or coaching centre. Reference can be made to circular No.26/2003 28.08.2012 and 26.02.2010 of the Board. Admittedly the appellants were providing course resulting in the award of B. Tech BBA MBA of Allahabad Agricultural Institute (deemed university). No demand for Service Tax has been made in respect of these courses. Even on this ground the appellants can not be considered as commercial coaching or training centre. Apart from the fact that the appellants will fall outside the purview of commercial coaching or training centre I find that the Business English Course and Personality Development course offered by the appellants will be covered by exemption notification No.9/2003 ST. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Difference of opinion between the members in the Division Bench regarding the tax liability of the appellant for offering courses resulting in degrees by the University of London and coaching for Business English and Personality Development.

Analysis:

1. Difference of Opinion in Division Bench:
The case was referred to the third member due to a difference of opinion in the Division Bench. The dispute revolved around the tax liability of the appellant for offering courses resulting in degrees by the University of London and coaching services for Business English and Personality Development.

2. Tax Liability for Courses Resulting in Degrees:
The Member (Technical) held the appellant liable for service tax as a "Commercial Training or Coaching Centre" under Section 65(27) of the Finance Act, 1994, as they did not issue degrees recognized by law. However, the Member (Judicial) argued that the degrees issued by the University of London were recognized in India, citing UGC and AIU communications. The third member found that the degrees issued by the University of London should be considered recognized by law, and the appellant did not fall under the category of a commercial training or coaching center.

3. Recognition of Degrees by Law:
The third member analyzed the recognition of degrees by law and referred to a Board circular clarifying that recognition by any entity established under central or state law constitutes recognition by law. The Ministry of Human Resource Development's notification and advice from UGC supported the recognition of the degrees awarded by the University of London as equivalent to Indian degrees. The third member concluded that the appellant's courses were outside the scope of a commercial training or coaching center.

4. Exemption for Business English and Personality Development Courses:
The third member also considered the Business English and Personality Development courses offered by the appellant. Referring to exemption notification No.9/2003 ST, the third member found that these courses fell under vocational training institutes exempt from service tax. Citing a Tribunal decision, the third member emphasized that the nature of coaching provided was crucial for exemption, not the status of the language. Consequently, the demand for service tax against the appellant was deemed unsustainable.

In conclusion, the third member agreed with the Member (Judicial) that the demand for service tax against the appellant was not sustainable, considering the recognition of degrees by the University of London and the exemption for Business English and Personality Development courses.