2018 (4) TMI 846 - AT - Service Tax

Tax Tribunal: Appellant exempt from service tax for educational services

The Tribunal held that the services provided by the Appellant, in collaboration with a recognized university, were exempt from service tax as they were ... Commercial Training or Coaching Service - exemption for institutes issuing degrees recognized by law - parallel college parity with regular affiliated colleges - CBEC Circular dated 20-06-2003 - institutes issuing recognized degrees outside scope of commercial coaching - equivalence of Open University degrees to traditional universitiesCommercial Training or Coaching Service - exemption for institutes issuing degrees recognized by law - CBEC Circular dated 20-06-2003 - institutes issuing recognized degrees outside scope of commercial coaching - equivalence of Open University degrees to traditional universities - parallel college parity with regular affiliated colleges - Whether the services rendered by the appellant fall within the taxable category of Commercial Training or Coaching Service or are outside the scope of service tax because the appellant is a study centre issuing degrees/diplomas recognized by law. - HELD THAT: - The Appellant, a public charitable trust, was appointed as a study centre by Yashwantrao Chavan Maharashtra Open University (YCMOU) and imparts degree/diploma courses alongside coaching for competitive examinations. The Tribunal accepted the documentary evidence of the agreement and the appearance of the study centre code on degree certificates, and relied on the UGC communication confirming that Open University awards are equivalent to traditional university awards. Applying CBEC Circular No. 59/8/2003 (20-06-2003), which clarifies that institutes which issue a certificate/diploma/degree recognized by law are outside the purview of the definition of 'commercial training or coaching institute', the Tribunal held that the appellant's activities for competitive examinations cannot be treated separately so as to attract service tax. The Tribunal further placed reliance on precedent treating parallel colleges on par with regular affiliated colleges (including the TANDEM INTEGRATED SERVICES decision and the High Court of Kerala reasoning) to hold that denying exemption to such study centres would be discriminatory. On these grounds the adjudicating authority's conclusion to drop the demand under Commercial Training or Coaching Service was held to be correct and the impugned order was set aside. [Paras 4, 5, 7]The appellant is not liable to service tax under the head Commercial Training or Coaching Service; the impugned order is set aside and the appeal is allowed.Final Conclusion: The Tribunal held that the appellant, being an appointed study centre of a recognised Open University whose degrees are equivalent to traditional university awards, falls outside the scope of 'Commercial Training or Coaching Service' as clarified by CBEC Circular 20-06-2003; the demand for service tax was therefore set aside and the appeal allowed. Issues Involved:1. Whether the services provided by the Appellant fall under the category of 'Commercial Training and Coaching Institute' and are liable for service tax.2. Whether the educational courses imparted by the Appellant, in collaboration with Yashwantrao Chavan Maharashtra Open University (YCMOU), are recognized by law and exempt from service tax.3. The applicability of various legal precedents and CBEC Circulars to the case.4. The issue of limitation and suppression of facts.Detailed Analysis:1. Classification as 'Commercial Training and Coaching Institute':The core issue was whether the Appellant's services, which include coaching for competitive exams and other educational programs, fall under the 'Commercial Training and Coaching Institute' category, thereby attracting service tax. The adjudicating authority had confirmed the demands on the grounds that the Appellant's activities did not qualify as recognized courses under the law and thus were taxable.2. Recognition of Educational Courses:The Appellant argued that they were running classes for graduation courses through YCMOU, a recognized university, and were also a study center for these courses. They provided evidence of an agreement with YCMOU and degree certificates showing their name and code number as a study center. They contended that their activities were exempt from service tax as they were imparting recognized education.3. Legal Precedents and CBEC Circulars:The Appellant relied on CBEC Circular No. 59/8/2003 dated 20.06.2003, which clarified that institutes providing recognized degrees/diplomas/certificates are outside the purview of 'Commercial Training or Coaching Institute,' even if they also provide training for competitive exams. The Tribunal referred to the judgment in the case of TANDEM INTEGRATED SERVICES, where it was held that parallel colleges providing recognized education were exempt from service tax. The Tribunal also cited the Kerala High Court's decision in Mallapuram District Parallel College Association v. UOI, which held that taxing parallel colleges while exempting regular colleges was discriminatory and violative of Article 14 of the Constitution.4. Limitation and Suppression of Facts:The Appellant argued that there was no element of suppression, and therefore, the demand was hit by the limitation of time. However, since the Tribunal disposed of the appeal on merits, it did not record any findings on the point of limitation.Conclusion:The Tribunal concluded that the Appellant was imparting recognized education in collaboration with YCMOU and could not be differentiated from regular colleges. Based on the CBEC Circular and relevant judgments, the Tribunal held that the Appellant was not liable for service tax. The impugned order was set aside, and the appeal was allowed with consequential reliefs.Final Judgment:The appeal was allowed, and the Appellant was not liable for service tax. The Tribunal's decision was pronounced in court on 22/03/2018.