Service tax on commercial coaching without UGC/AICTE approval set aside as it indirectly burdens students and creates discrimination

CESTAT Allahabad set aside service tax levy on appellant providing commercial coaching/training services and issuing certificates without UGC or AICTE approval during April 2015-June 2017. Court held service tax on education/training by parallel colleges indirectly burdens students, creating discrimination. Extended limitation period was deemed inapplicable as show cause notices failed to meet legal requirements for invoking extended period. Appeal allowed, impugned order set aside.

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Issues Involved:
1. Liability to pay Service Tax under "Commercial Coaching or Training Services" for the period April 2015 to June 2017.
2. Recognition and affiliation of the courses offered by the Appellant.
3. Applicability of Service Tax exemptions and negative list provisions.
4. Invocation of extended period of limitation.

Summary:

1. Liability to Pay Service Tax:
The primary issue was whether the Appellant was liable to pay Service Tax under "Commercial Coaching or Training Services" for the period from April 2015 to June 2017. The Commissioner, Central Goods & Service Tax, Noida, confirmed the demands through a common adjudication order dated 11.05.2020.

2. Recognition and Affiliation of Courses:
The Revenue alleged that the Appellant's courses were not recognized by law as they were conducted without the approval of the University Grants Commission (UGC) or the All India Council for Technical Education (AICTE). The agreements with Mewar University and Punjab Technical University (PTU) did not grant lawful affiliation, and the certificates issued by the Appellant were not recognized degrees.

3. Applicability of Service Tax Exemptions and Negative List Provisions:
The Revenue argued that the courses provided by the Appellant did not qualify for exemptions under the negative list entry No. (l) of section 66D or Sr. No.9 of Notification No.25/2012-ST. The Tribunal, however, found that the Appellant's courses were part of a curriculum recognized by law, as the degrees/diplomas were issued by the respective Universities, thereby exempting them from Service Tax.

4. Invocation of Extended Period of Limitation:
The Tribunal held that the Appellant was under a bona fide belief that their activities were not liable to Service Tax. The Appellant maintained proper records and complied with various laws, including the Income Tax Act. The Tribunal concluded that the extended period of limitation was not applicable, and the show cause notices were not in accordance with the law for invoking the extended period.

Conclusion:
The Tribunal found that the facts of the case were covered by a previous decision in favor of the Appellant, where it was held that the Appellant's activities were exempt from Service Tax. The Tribunal set aside the impugned order and allowed the appeal with consequential benefits, ruling that the Appellant was not liable to Service Tax for the period in question and that the extended period of limitation was not applicable.

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