2018 (1) TMI 1090 - AT - Service Tax

Classification of services - certain courses conducted by the appellant - whether classified under Commercial coaching and training services or not? - Held that - no College or Institute issues independently any degree. It is university, who are recognized by UGC, who can issue degree. In the present case, the impugned order falls in error in insisting that the Institute itself should issue a degree. We find no force in such findings. Accordingly, the appellants are not liable to pay service tax on such courses. Courses conducted by the appellant in collaboration with Ballarat University, Australia - Held that - The AIU is mandated to have recognition of equivalence degrees issued by the foreign university, as stipulated by the Ministry of Human Resources Development, Govt of India - it cannot be accepted that courses conducted by the appellant result in issue of degree or diploma which are recognized by the law for the time being in force in India and the in the absence of categorical evidence, the conclusion made by the lower authorities cannot be interfered with. Penalty - Held that - the issue is one of interpretation of legal provision. The appellant have no malafide intention not to pay the taxes in time - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Whether the courses conducted by the appellant are liable to service tax as commercial coaching and training services.
2. Whether the courses conducted in collaboration with foreign universities are recognized as per Indian regulations.
3. Whether the penalty under section 80 can be waived due to the interpretation of legal provisions.

Analysis:

Issue 1:
The dispute revolved around the classification of courses conducted by the appellant as either educational services or commercial coaching and training services for the purpose of service tax. The Revenue contended that the courses were liable to service tax, while the appellant argued that the courses resulted in degrees recognized by Indian law, making them educational services. The impugned orders held that the courses were not recognized by competent authorities and thus not excluded from tax entry as educational services. However, the Tribunal found that the courses conducted by the appellant, in affiliation with a deemed university, did result in the issuance of degrees by the university. The Tribunal clarified that it is the university, recognized by the UGC, that issues degrees for courses conducted in affiliated institutes, not the institutes themselves. Therefore, the Tribunal held that the appellant was not liable to pay service tax on such courses.

Issue 2:
Regarding the courses conducted in collaboration with a foreign university, the Tribunal sought clarification on whether the degrees issued by the foreign university were recognized as per Indian regulations. The appellant failed to provide categorical evidence of recognition by the Association of Indian Universities (AIU) as mandated by the Ministry of Human Resources Development, Government of India. Consequently, the Tribunal upheld the lower authorities' decision that without such evidence, the courses were not recognized by Indian law, and thus, the appellant was liable to pay service tax on these courses.

Issue 3:
The appellant requested a waiver of penalty under section 80, citing the issue as a matter of interpretation of legal provisions without any malicious intent to evade taxes. The Tribunal agreed that section 80 could be invoked for the case and granted the waiver of penalties, considering the circumstances. Therefore, the penalties were set aside, and the appeals were partly allowed based on the Tribunal's findings on the main issues.

In conclusion, the Tribunal ruled in favor of the appellant on the first issue regarding courses conducted in affiliation with a deemed university but upheld the decision of the lower authorities on the courses conducted in collaboration with a foreign university. Additionally, the Tribunal granted the waiver of penalties under section 80 due to the interpretation of legal provisions and the lack of malicious intent by the appellant.