2019 (11) TMI 17 - AT - Service Tax

Levy of Service tax - whether Service Tax was leviable under commercial training or coaching Section 65(26) of Finance Act for the coaching provided by the Junior Colleges? - HELD THAT - For an institute to claim that it is not a commercial training or coaching centre , it must also be issuing certificates recognized by law for the time being in force. The Appellant does not issue the certificates. In such circumstances, it is clearly a commercial training or coaching centre providing commercial training or coaching . It is providing a taxable service. All decisions of the Tribunal taking a contrary view stand overruled. The decision of the Tribunal in Sri Chaitanya Educational Committee lays down the correct law which was in relation to the Appellant s own case for the previous years from 2003-07, while examining the contention raised on behalf of the Appellant that since the optional courses were integrated in the syllabus of the first and second year, commercial coaching or training was not provided by the Appellant, was repelled by a learned Member (Technical) . The appeals may now be listed before the Regular Bench.

Issues Involved:

1. Whether Service Tax is leviable under 'commercial training or coaching' for the coaching provided by Junior Colleges.
2. Whether the Appellant falls under the definition of 'commercial training or coaching centre' as per Section 65(27) of the Finance Act, 1994.
3. Whether the Appellant can claim exemption from Service Tax on the grounds of being a 'not-for-profit' society and issuing certificates recognized by law.
4. Applicability of the extended period of limitation and penalties.

Issue-wise Detailed Analysis:

1. Levy of Service Tax on Coaching Provided by Junior Colleges:

The Larger Bench was constituted to resolve divergent views in previous Tribunal decisions regarding the applicability of Service Tax on coaching provided by Junior Colleges. The Tribunal examined whether the coaching for entrance exams integrated with intermediate education falls under 'commercial training or coaching' as per Section 65(26) of the Finance Act, 1994. It was noted that the Appellant provides optional courses integrated into the syllabus to prepare students for entrance exams, charging higher fees than the regular intermediate courses.

2. Definition of 'Commercial Training or Coaching Centre':

Section 65(27) defines 'commercial training or coaching centre' as any institute providing commercial training or coaching for imparting skill or knowledge, excluding institutes issuing certificates recognized by law. The Tribunal found that the Appellant's Junior Colleges do not issue certificates themselves; rather, certificates are issued by the Board of Intermediate Education. The Tribunal emphasized that the definition includes institutes providing coaching for consideration, regardless of profit motive, as clarified by various Board Circulars and an explanation inserted by the Finance Act, 2010.

3. Claim of Exemption as a 'Not-for-Profit' Society and Issuing Recognized Certificates:

The Appellant argued that being a 'not-for-profit' society and issuing certificates recognized by law should exempt it from Service Tax. However, the Tribunal rejected this, stating that the term 'commercial' in 'commercial training or coaching' refers to the activity, not the nature of the institute. The Tribunal also clarified that the exemption applies only to institutes issuing certificates themselves, not those where certificates are issued by another entity like the Board of Intermediate Education.

4. Extended Period of Limitation and Penalties:

The Tribunal discussed the applicability of the extended period of limitation and penalties. It was noted that for the period 2007-11, the Department issued show cause notices demanding Service Tax, and the Adjudicating Authority confirmed these demands. The Tribunal upheld the imposition of Service Tax but limited the demand to the normal period of limitation and upheld only the penalty under Section 77 of the Finance Act, 1994.

Conclusion:

The Tribunal concluded that the Appellant's activities fall under 'commercial training or coaching' and are subject to Service Tax. The Appellant's claim of exemption as a 'not-for-profit' society and the issuance of recognized certificates by the Board was not accepted. The Tribunal's decision in Sri Chaitanya Educational Committee was upheld as laying down the correct law, and all contrary decisions were overruled. The appeals were directed to be listed before the Regular Bench for further proceedings.

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