2018 (8) TMI 1597 - AT - Service Tax

Commercial training or coaching Services - trainees / students who undertook project works in their institution - whether taxable under the category of Commercial Training or Coaching services or otherwise? - Held that - In the present case, permitting the students to use the factory premises for their research work as a part of their academic curriculum will not make the receipt of the appellant as consideration for services rendered under the category of commercial training or coaching as the scope of the said service is specific and requires satisfaction of the ingredients contain in Section 65(105(zzc) read with Section 65(26) and Section 65(27). It is not the case of the Department that the appellant is conducting any training programmes for the students and the only case of the Department is that the appellant is permitting the students to visit the plant and to do their own research. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against order upholding Order-in-Original but dropping penalty under Section 76 and imposing penalty under Section 78.

Analysis:
The case involved a service provider appealing against an order confirming a demand for service tax along with a penalty under Section 78. The appellant, a service provider in various categories, was collecting amounts from students for project works, which the Department alleged to be taxable under 'Commercial Training or Coaching' services. The appellant argued that they were not providing formal training or coaching but only allowing students to access their premises for project work. The appellant contended that their activity did not fall under the definition of 'commercial training or coaching services' as per relevant provisions of the Finance Act, 1994.

Upon hearing both sides and examining the provisions of service tax, the Tribunal referred to Section 65(105)(zzc), Section 65(26), and Section 65(27) of the Finance Act, 1994. The Tribunal noted that merely permitting students to use the factory premises for research work did not constitute 'commercial training or coaching' services as defined in the Act. The Department did not allege that the appellant conducted any training programs, only allowing students to visit the plant for their research. The Tribunal found the Commissioner(Appeals) order to be contrary to the specific provisions of the Act for classification under 'Commercial Training or Coaching.' Consequently, the Tribunal held the impugned order as unsustainable in law and allowed the appeal of the appellant.

In conclusion, the Tribunal set aside the impugned order, emphasizing that the appellant's activity did not meet the criteria for 'commercial training or coaching' services as defined in the Finance Act, 1994. The judgment highlighted the importance of satisfying the specific provisions of the Act for proper classification and taxation of services, ultimately ruling in favor of the appellant based on the interpretation of relevant legal provisions and factual circumstances.