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TMI Blog2009 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ssifiable under "Commercial Training or Coaching". The instant appeals have been filed by the centres against orders demanding service tax for the service rendered during 2002-03. Details of the captioned appeals are as follows :- Appellants' Name Appeal No. Tax Rs. Penalty Rs. Interest Thanjai Study Centre S/242/06 90,019 90,019 Not quantified Thanjai Study Centre S/40/06 39,645 Rs. 100. per day not exceeding Rs. 40,438 Rs. 1,000 Not quantified Trichy Institute of Management Studies (P.) Ltd. 5/35/07 4,29,119 3,79,000 1000 4,29,000 500 - 2. The appellants are engaged in coaching of students desirous of taking examinations conducted by the Alagappa University. The students are taught the various subjects as per the syllabus prescribed by the University for each course. On successful completion of the respective courses, the students are awarded B.A., B.Sc., B.Com., M.A., M.B.A. etc. The centres involved are two of above 200 such centres functioning across the country which have entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o regular colleges for the same service was discriminatory and violative of article 14 of the Constitution. The appellants were on the same footing as the parallel colleges held by the Kerala High Court not liable to pay service tax for coaching students. They were not liable to pay service tax under the heading "Commercial Training or Coaching'. If they were held liable, they were eligible for exemption from payment of service tax up to an aggregate value of Rs. four lakhs of all taxable services rendered in a financial year. 4. Heard both sides. 5. I have carefully studied the case records and considered the submissions by both sides. The centres in question render the same service as regular colleges affiliated to the University. The lower appellate authority denied the exemption contained in Notification No.10/2003-ST to the appellants enjoyed by a large number of regular colleges similarly placed as the centers qua the conditions of the above notification. Notification No. 10/2003-ST reads as follows- In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission in regular colleges meeting the heavy expenditure involved. Less privileged patronized the parallel colleges. Taxing them for the service was discriminatory and against article 14 of the Constitution when the same service rendered by regular affiliated colleges were kept outside the levy. I find that the centres in the parallel stream deserve the same patronage of the State as the regular colleges. They cater to an important need of the citizen to receive higher education which the State is not able to provide. Taxing them amounts to discrimination if the regular colleges are commercial training or coaching centres like the appellants. 6.2 The Hon'ble High Court of Kerala found in the case of Malappuram District Parallel College Association (supra), as follows "..........As already the parallel colleges are students who are entitled to write the University examinations as private students. The curriculam prescribed for the examination and the degree certificate awarded to private students and students studying in regular colleges, whether aided or self-financed affiliated to University, are the same. Therefore there is no distinction between the two classes of students ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on turnover, because, the burden of service tax on the parallel colleges will have to be borne by the students, and the validity of charging section has to be tested against article 14 of the Constitution with reference to its effect on the beneficiaries, that is the students. In view of the findings above, I find no distinction between students undergoing private study in parallel colleges and those undergoing study in affiliated colleges whether aided or self-financed in 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 article 14 of the Constitution of India? (p. 94) The Hon'ble High Court thus vacated the demand of service tax on them. Their Lordships had clarified that the above judgment was rendered on the peculiar facts applicable to parallel colleges in Kerala and advised that the same was not to be treated as declaring the section unconstitutional, insofar as any other category of educationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to the benefit of the Notification No. 6/05-ST, dated 1-3-2005. The original authority rejected the claim of the centres. I find that the lower appellate authority has not dealt with this issue. In the circumstances, the impugned orders demanding service tax are set aside for quantifying the liability of the centres after examining their entitlement of the benefit of Notification No. 6/05-ST, dated 1-3-2005. 9. As regards the penalties, the appellants claimed bona fide belief for their not discharging the tax due. The authorities have held that the centres did not pay tax even after registering themselves as service providers. In this connection, I find that the view taken by the Hon'ble High Court of Kerala against liability of colleges in the parallel stream lends adequate support to the claim of bona fide belief held by the centres, though the said judgment came to be pronounced only on 31-8-1999. The Commissioner (Appeals) may keep this aspect in mind while adjudicating penalties in the remand proceedings. Needless to say that the centres shall be allowed adequate opportunity for presenting their case. The appeals are allowed by way of remand. - - TaxTMI - TMITax - S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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