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TMI Blog2005 (8) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... the encouraging policy of the State Government to improve the educational opportunities of the students in the State, wherefrom large number of educated people migrate outside the State and outside the country seeking employment, the view of the State Government was called for by this Court. After referring the matter to the Cabinet, the Under Secretary to Government has filed an affidavit in Court wherein he has stated that though the State is helpless in regard to levy of service-tax, the Government decided to bring to the notice of the Central Government the difficulties experienced by parallel colleges in the matter of service-tax. In the circumstances, it has to be assumed that the State Government is also in favour of exemption to the parallel colleges in the same way granted to regular colleges under the exemption in the definition clause. In view of the above findings, I hold that the impugned provisions of the Act authorising levy of service-tax on parallel colleges are arbitrary and violative of Art. 14 of the Constitution of India. - 29788 and 35834 of 2003 - - - Dated:- 31-8-2005 - C.N. Ramachandran Nair, J M.K. Damodaran, P.K. Vijayamohanan, M. Thamban, Smt. T. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners rightly did not canvass any such general proposition. However, petitioners raised a general contention that the provision for taxing education in any form is against the Constitution. They have referred to new Art. 21A introduced by Constitution (86th Amendment) Act, 2002, which provides for free and compulsory education to children of the age of 6 to 14 years and the substituted Art. 45 which requires the State to endeavour to provide early childhood care and education for all children until they complete the age of six years. of course Art. 41 also provides that the State shall within its economic capacity and development make effective provision for securing the right to work to education and to public assistance in cases of unemployment, old age, etc. There is certainly force in the contention of the petitioners that even if the State is not able to finance higher education as required under the Directive Principles of State Policy under Art. 41 of the Constitution, it should not deny and discourage opportunities for education by adding cost to it in the form of tax on education which will certainly disable the economically weaker sections from pursuing higher studies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the argument of the petitioners that levy of tax on education is against the spirit of Constitution and against the directive principles is only to be rejected and I do so. 2. The limited question, therefore, to be considered is the challenge against abovereferred charging section, which provides for service-tax on services rendered by commercial training or coaching centres on grounds of violation of Art. 14 of the Constitution. In the first place, the petitioners raised a contention that parallel colleges do not come within the definition clause contained in s. 65(27) of the Act. Alternatively, they contended that if the parallel colleges are covered by the definition clause, and consequently the charging provision, then the same is discriminatory and violative of Art. 14 of the Constitution, inasmuch as regular colleges affiliated to universities whether aided or self-financed rendering the same services are outside the scope of levy. 3. The Central excise authorities have issued the impugned notices to petitioners demanding registration and payment of service-tax on their finding that the service rendered by parallel colleges attracts service-tax under the charging sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition clause. The claim of the petitioners is that they are imparting coaching and training to students to appear for university degree examinations in B.A., B. Com., M.A., M. Com., etc. as private students and the said students write the same examinations and get the same degrees as students of regular colleges affiliated to regular universities. According to the petitioners, the regular colleges, whether aided or self-financed affiliated to universities, are also rendering the same service to students and though they are not awarding any degrees or diplomas, they are not subjected to levy of service-tax by the Department and so much so, if such colleges are not liable for payment of service-tax, then there is no reason why the petitioners who are rendering same service; should be treated differently and subjected to tax. Alternatively they contended that the regular colleges, whether aided on self-financed affiliated to universities, which are not awarding any degree on diploma also are liable to service-tax as they also do not come under the exclusion clause. In other words, according to the petitioners, the respondents are not justified in exempting regular colleges, whether a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te university examination, irrespective of whether examination is written immediately on completion of course-study in the same college or not. Even though the colleges are not issuing any diploma or degree certificates, they are issuing course completion certificate to the students to make them eligible to write the examinations in terms of the university regulations which is certainly an educational qualification prescribed by the university. So much so, affiliated colleges whether aided or self-financed are different and come within the description of the exempted category under the definition clause, while petitioners who are engaged in private coaching are not covered by the exemption clause. In the circumstances, the petitioners' contention that students trained by them are getting diploma or degree certificate after writing university or board examinations in the same way as students studying similar subjects in regular aided or self-financed colleges does not make them eligible for exemption under the exemption clause. Therefore the service rendered by the petitioners in coaching and training private students for examinations will attract service-tax while regular aid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bear the service-tax as an additional burden along with tuition fees and other charges collected by the management of parallel colleges. The main reason why many students cannot join regular colleges affiliated to universities is economical. Further, on account of limited number of seats available in the affiliated colleges, the less brilliant will have to look for coaching elsewhere and they end up in parallel colleges. It is also a well-known fact that in interior and remote areas of the State, poor students even if eligible for admission in regular colleges cannot afford outstation study and they naturally go to parallel colleges. In fact counsel for the petitioners pointed out that many brilliant students who could not afford to go to regular colleges after study in parallel colleges have secured high ranks in the examinations conducted by the universities. Therefore, in most cases, students landing in parallel colleges are the less fortunate ones who are compelled to join parallel colleges for economic reasons. It is worthwhile to note that the State Government after appreciating these realities have granted the same concession in bus fare granted to regular college studen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the concurrent list and considering the encouraging policy of the State Government to improve the educational opportunities of the students in the State, wherefrom large number of educated people migrate outside the State and outside the country seeking employment, the view of the State Government was called for by this Court. After referring the matter to the Cabinet, the Under Secretary to Government has filed an affidavit in Court wherein he has stated that though the State is helpless in regard to levy of service-tax, the Government decided to bring to the notice of the Central Government the difficulties experienced by parallel colleges in the matter of service-tax. In the circumstances, it has to be assumed that the State Government is also in favour of exemption to the parallel colleges in the same way granted to regular colleges under the exemption in the definition clause. In view of the above findings, I hold that the impugned provisions of the Act authorising levy of service-tax on parallel colleges are arbitrary and violative of Art. 14 of the Constitution of India. However, I make it clear that the judgment is rendered on the peculiar facts applicable to parallel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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