Coaching by educational institutions for enrolled students' competitive exams held outside service tax net; demands including renting dropped

Coaching provided by an educational institution to its own enrolled students for competitive examinations was assessed for service tax under "Commercial Training or Coaching Service." Applying the Tribunal's Larger Bench view that non-recognised certificates render such activity taxable, the Tribunal nevertheless held that where the provider qualifies as an "educational institution" within the meaning linked to s. 66D, Finance Act, 1994, the activity remains outside the service tax net; accordingly, the service tax demand under all categories was set aside. For "renting of immovable property," the demand was based on receipts below the small service provider exemption threshold; consequently, that demand was also unsustainable. The impugned order was set aside and the appeal allowed.

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Issues involved:
- Conformation of Service Tax demand for coaching services and renting of immovable property.

Coaching services issue:
The appeal challenged the Service Tax demand of Rs.4,38,37,401/- for coaching services provided by the Appellant to its own students enrolled in competitive examination courses. The Appellant argued for exemption under Notification No. 25/2012-ST, claiming to be an educational institution exempt from Service Tax. The Commissioner upheld the demand, stating that the coaching services were not covered under "Auxiliary Education Services" and were not part of approved "Vocational Educational Courses."

Educational institution exemption:
The Appellant contended that services provided by an educational institution to its students are exempt, regardless of the nature of the service. The Appellant emphasized that no coaching was provided to students not enrolled for recognized degrees, diplomas, etc., hence falling under the exemption for "Commercial Training or Coaching Services." The Tribunal referred to the judgment in the case of M/s. Shri Chaitanya Educational Committee, holding that activities without issuing recognized certificates fall under "Commercial Training or Coaching Services."

Larger Bench decision:
A Larger Bench was constituted to resolve conflicting views on the taxability of coaching services. The Bench concluded that without issuing recognized certificates, activities are classified as "Commercial Training or Coaching Services." The Tribunal agreed with this decision, noting the changes in law through Notification No. 6/2014-ST, which provided a clear exemption for services by educational institutions without specifying the type of service.

Renting of immovable property issue:
Regarding the demand for renting of immovable property, the Tribunal found that the amount was below the Small Scale exemption threshold, thus unsustainable. Consequently, the appeal was allowed, setting aside the Commissioner's order on the coaching services demand, with any consequential relief.

Separate Judgment:
The judgment was pronounced by HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) and HON'BLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL).

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