2023 (10) TMI 226 - AT - Service Tax

Extended period of limitation - Commercial Training or Coaching Service - appellant are coaching classes or not - HELD THAT - Prior to 2010, there was a confusion regarding the nature of institute which are covered under the definition of Commercial Training or Coaching Centre. In the instant case, the appellant happen to be a charitable trust and held a belief that they are not a Commercial‟ Training or Coaching Centre and therefore, did not discharge the service tax. In these circumstances, invocation of extended period of limitation is not justified. The impugned order is, therefore, set aside and appeal is allowed on the ground of limitation.

Summary

Issues involved: Appeal against demand of service tax u/s "Commercial Training or Coaching Service" for the period 2006-2007 under Commercial Training or Coaching Centers.

Summary:

Issue 1 - Nature of Appellant's Services:
The appellant, a non-profit organization registered as a public charitable trust, was challenged for service tax on the income received for providing facilities to students for advanced studies and research. The appellant argued that they are not coaching classes but provide training to students sponsored by the Department of Science and Technology and Charutar Vidya Mandal. The appellant contended that they were not liable for service tax as per the Finance Act, 2010, which clarified that non-profit organizations are included in the scope of "commercial training or coaching center service." The invocation of an extended period for demand was deemed unjustified.

Issue 2 - Interpretation of Commercial Training and Coaching Center:
The definition of "Commercial training or coaching center" under Section 65 was examined, which includes institutes providing commercial training for skill or knowledge. The Finance Act, 2010, added an explanation to clarify that training or coaching centers, regardless of profit motive or registration status, are covered under the definition. The confusion prior to 2010 regarding the coverage of institutes under this definition was highlighted. The appellant's belief that they did not fall under the category of a "Commercial" Training or Coaching Center due to their charitable trust status led to the conclusion that the invocation of the extended period of limitation for demand was unwarranted. Consequently, the impugned order was set aside, and the appeal was allowed based on the limitation ground.

This judgment emphasizes the importance of clarity in defining taxable services and the impact of legislative amendments on the interpretation of tax liabilities for non-profit organizations providing educational services.