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TMI Blog2010 (8) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... eir service tax liability and filing the periodical returns since April 2004. The officers conducted investigation called for the records from the respondents and recovered various statements. On the completion of the investigation, it was noticed by the authorities that the respondent has been imparting training for the courses like B.Com, M.Com, MBA, BSC-IT, BCA, MCA and were also conducting courses for Engineering/Medical Entrance Exams, Off campus study of IGNOU, Manipal, Bharathiar Universities etc., Certified Computer courses like CCNA, MCPC and other courses. On reasonable belief that the respondent is liable to pay service tax on the fees collected by them for the above courses, show cause notice was issued. A show cause notice directed the respondent to show cause as to why the service tax payment on the above courses conducted by them and also on the franchise services be not recovered by them. The Adjudicating Authority after considering the submissions made by the respondent before him, dropped the proceedings initiated for the recovery of service tax under the heading "Commercial Training or Coaching Service" but confirmed the demand under the category of franchise ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cational institution. The entrance examination coaching is given to science stream students studying in higher secondary schools and those students are not pursuing any course in the respondent's institution as a regular student and it is purely within the ambit of 'Commercial Coaching or Training Service'. Therefore the service rendered by the respondent in the area of competitive examinations/entrance coaching etc. will not attract para 2.2.3 of the Board's Circular referred above. (iii) It is also pertinent to mention here that the case of Malappuram District Parallel College Association v. Union of India reported in 2006-TIOL-35-HC-KERALA-S.T. = 2006 (2) S.T.R. 321 (Ker.), which was pointed out by the respondent while submitting their defence, is also not applicable in the instant case, since the said case was regarding demand of service tax for degree and diploma courses of recognized universities conducted by parallel colleges of Kerala. But in the instant case, the show cause notice did not propose to demand service tax on such courses conducted by the respondent. 3.1 It is her submission that the Adjudicating Authority has misinterpreted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety v. UOI - 2006 (1) S.T.R. 137 (Ker.) will squarely cover the issue as regards the applicability of Service Tax provisions for the parallel colleges. It is his submission that the Circulars issued by the Department are binding on the department as has been settled by the Hon'ble Supreme Court in the case of CCE v. Dhiren Chemicals - 2002 (139) E.L.T. 3 (S.C.). It is also his submission that the entire demand is barred by limitation as they have been filing the S.T.-3 Returns and there was a dispute as to the applicability of the CBEC Circular dated 20-6-2003. 5. We have considered the submissions made at length by both sides and perused the records. The issue to be decided in this case is whether the respondent's activity of conducting the courses as a parallel college would be covered under the category of "Commercial Training or Coaching Service" under Section 65(105)(zzc) of the Finance Act, 1994 and the amount charged by them for rendering such services should be treated as value of the taxable services and service tax liability be confirmed as alleged in the show cause notice. 5.1 The undisputed facts in this case are that the respondents are recognize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinction between the two classes of students namely, the students studying in the colleges affiliated to Universities and private students who take coaching in parallel colleges to write the same examinations. While the students studying in affiliated colleges cannot be subjected to service tax along with tuition fees and other fees levied by the management of those colleges students, who are studying in parallel colleges will have 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 out-station-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 coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same subjects for writing the same examinations. Therefore levy of service tax for services rendered by parallel colleges which indirectly falls on the students, but by simultaneously providing exemption to regular affiliated colleges allowing the students therein study free of tax is patently discriminatory and violative of the Art. 14 of the Constitution of India. Though the service tax is in the Union list, since education happens to be in 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 Govt. 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 thought the State is helpless in regard to levy of service tax, the Government decided to bring it 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ests etc. It is clarified that by definition, such institutes or establishments, which issue a certificate, diploma or degree recognized by law, are outside the purview of "commercial training or coaching institute". Thus, even if such institutes or establishments provide training for competitive examinations etc., such services rendered would be outside the scope of service tax." 5.5 It can be seen from the above reproduced paragraph that the colleges apart from imparting education for obtaining recognized degrees/diploma/certificates, also impart training for competitive examinations, such institutes or establishments are outside the purview of "Commercial Training or Coaching Institute". If the regular colleges affiliated to University are exempted from paying service tax for imparting training for the competitive examinations and various entrance tests etc., the respondent in this case being a parallel college, as is set out in Order-in-Original and grounds of appeal, we find that there is no reason for not extending the benefit of being outside the purview of the service tax under the category of "Commercial Training or Coaching" to the appellant. We find that the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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