2016 (1) TMI 111 - AT - Service Tax

Tribunal grants exemption to appellants for promoting computer education

M/s Kolte Computers Pvt Ltd Versus Commissioner of Central Excise, Kolhapur

M/s Kolte Computers Pvt Ltd Versus Commissioner of Central Excise, Kolhapur - TMI Issues:Interpretation of exemption clause for services provided by an Authorized Local Agency in the field of computer education.Analysis:The case involves the appellants who were appointed as an Authorized Local Agency for promoting and developing computer training in the state of Maharashtra by M/s. Maharashtra Knowledge Corporation Limited (MKCL). The appellants' role included coordinating with Authorized Training Centers (ATCs) to ensure compliance with MKCL's directions for conducting computer courses. The issue revolved around whether the services provided by the appellants fell within the exemption clause of Notification 14/2004-ST, which covers services incidental or auxiliary to specified activities. The Tribunal referred to a previous judgment involving a similar scenario (Sunbeam Infocomm Pvt. Ltd. vs. Commissioner of C.Ex., Pune -II) where it was held that services incidental to the promotion of IT Education were exempted under Notification No. 1/2004-ST. The Tribunal applied a two-stage interpretation approach to exemption notifications, emphasizing strict interpretation initially and liberal construction once falling within the exemption scope. It was established that the appellants' activities as an Authorized Local Agency were indeed incidental to the services provided by MKCL, making them eligible for the exemption.The Tribunal noted that MKCL's services in computer education and the appellants' role as an authorized lead agency involved coordinating with ATCs, ensuring course compliance, infrastructure provision, fee collection, and remittance to MKCL. These activities were deemed to fall within the exemption clause as services provided on behalf of the client, as per clause (c) of the relevant notification. Citing the legal principle established in Mangalore Chemicals and Fertilisers Ltd. case, the Tribunal emphasized the need for strict interpretation followed by a liberal construction of exemption notifications. The judgment highlighted that once falling within the exemption scope, a liberal interpretation should be adopted. Consequently, the Tribunal found no merit in the lower appellate authority's decision to deny the exemption benefit to the appellants and set aside the impugned orders, allowing the appeals based on the precedent set by previous judgments.In conclusion, the Tribunal, following the established legal precedents and interpretation principles, ruled in favor of the appellants, holding that their services as an Authorized Local Agency for promoting computer education were exempted under the relevant notification. The issue was deemed settled based on previous judgments, and the impugned order was set aside, granting relief to the appellants.