Service Tax on university-linked coaching may be unsustainable where training is an essential part of a recognised educational programme.

Service Tax was analysed in the context of training and coaching provided by an institution functioning as a parallel college and recognised as a centre for a university distance education programme. The text states that where the institution acts as an enrolment centre for a recognised course leading to a certificate, diploma or degree, the coaching forms an essential part of the educational process rather than a taxable service. It further notes that taxing such parallel colleges while comparable regular affiliated colleges remain exempt is discriminatory because the burden falls on students and similarly placed institutions are treated differently without justification. On that basis, the tax was considered not justified.

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Issues: Whether Service Tax could be levied on training and coaching provided by an institution functioning as a parallel college and recognised as a centre for a university distance education programme leading to a certificate, diploma or degree.

Analysis: The institution produced a memorandum of understanding showing that it functioned as a centre for enrolment in the university's distance education programme. The Court applied the ratio that levy of Service Tax on parallel colleges is arbitrary and discriminatory when regular affiliated colleges are exempt, since the burden ultimately falls on students and treatment of similarly placed students differs without justification. Training and coaching that form an essential part of a recognised university course or curriculum were treated as part of the educational process rather than a taxable service in these facts.

Conclusion: Service Tax on the coaching and training activity was not justified, and the assessee succeeded.

Ratio Decidendi: A levy of Service Tax on coaching or training that is an essential component of a recognised university course, when comparable regular educational institutions are exempt, is discriminatory and cannot be sustained.

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