CESTAT allows partial exemption for commercial training services to farmers before February 2010 amendment

CESTAT NEW DELHI partially allowed the appeal regarding service tax liability on various services. The tribunal granted exemption for commercial training services provided to farmers and students prior to February 2010 amendment, but confirmed taxability for subsequent periods within normal limitation. Composition scheme benefit was allowed for works contract services as service tax was already paid. Mandap keeper service demand was upheld for normal period as property rental for seminars fell within taxable scope. Foreign training services were held non-taxable as performed outside India. Scientific technical consultancy and grants-in-aid demands were rejected. Extended period invocation was set aside due to lack of evidence of suppression.

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Issues Involved:
1. Liability of service tax on trainings imparted by the appellant under the head Commercial Training or Coaching Service.
2. Eligibility of composition scheme under Works Contract Service.
3. Service Tax on Mandap Keeper Services.
4. Liability of service tax under Reverse Charge Mechanism on foreign remittances.
5. Liability of service tax on Scientific & Technical Consultancy received by the appellant.
6. Liability of service tax on Grants-in-aid.

Detailed Analysis:

1. Commercial Training or Coaching Services:
The appellant challenged the demand of service tax on the total receipts of Rs. 4,02,05,286/-, arguing that only Rs. 3,67,81,896/- was towards actual training. The remaining amount related to study materials, reimbursements, and grants-in-aid, which should not be taxable. The tribunal found that the receipts for study materials (Rs. 12,68,940/-) and reimbursements (Rs. 21,54,450/-) were exempt under Notification No. 12/2003-ST and the Supreme Court ruling in Intercontinental Consultants and Technocrats Pvt Ltd. The grant-in-aid (Rs. 20,00,000/-) was also exempt as per the Supreme Court decision in Commissioner vs Apitco Ltd. The tribunal held that training services provided by a vocational training institute were exempt until 26.2.2010, and the amendment by Notification No. 3/2010-ST was prospective. Therefore, the appellant was entitled to exemption for the period before 27.2.2010, and the demand for the subsequent period was taxable but limited to the normal period.

2. Eligibility of Composition Scheme under Works Contract Service:
The tribunal noted that the appellant had paid service tax under the composition scheme for works contract services but had not provided the actual value of goods or given advance intimation to the Department. The tribunal held that Rule 3(3) of the Composition Scheme Rules did not require written intimation and that non-intimation was a procedural irregularity. The tribunal relied on the decision in M/s J.R. Construction vs Commissioner, Jaipur-1, and held that the appellant was eligible for the composition scheme, and the demand was not sustainable.

3. Service Tax on Mandap Keeper Services:
The tribunal confirmed the demand of Rs. 93,361/- for leasing out space for educational seminars under the category of Mandap Keeper Services. The tribunal noted that the property was let out for conducting seminars, which fell under the definition of mandap keeper services. However, the demand was restricted to the normal period only.

4. Liability of Service Tax under Reverse Charge Mechanism on Foreign Remittances:
The tribunal addressed the demand of Rs. 21,73,714/- under reverse charge mechanism for foreign remittances made to M/s. Stitching PTC Netherlands for training services. The tribunal found that training services provided in the Netherlands were not taxable as per Rule 3 of the Import of Service Rules and the Bombay High Court decision in Commissioner of Central Excise and Service Tax vs Maersk India Pvt Ltd. However, the tribunal remanded the matter to the adjudicating authority to verify the place of performance for two other training activities.

5. Liability of Service Tax on Scientific & Technical Consultancy Received by the Appellant:
The tribunal set aside the demand of Rs. 5,38,952/- for design of business and master plan services received from M/s. Stitching PTC Netherlands. The tribunal held that the services did not fall under the definition of Scientific or Technical Consultancy, as they were not provided by a scientist, technocrat, or science/technology institution. The tribunal relied on the decision in Administrative Staff College of India vs Commissioner, C.Ex, Hyderabad.

6. Liability of Service Tax on Grants-in-aid:
The tribunal set aside the demand for service tax on grants-in-aid, holding that such grants were not taxable as per the Supreme Court decision in Commissioner vs Apitco Ltd.

Conclusion:
(i) The demand for service tax on trainings under Commercial Training or Coaching Service is upheld for the period after 27.2.2010, limited to the normal period.
(ii) The appellant is eligible for the composition scheme under Works Contract Service, and the demand is set aside.
(iii) The demand for Mandap Keeper Services is confirmed but restricted to the normal period.
(iv) The demand under reverse charge mechanism for training held in the Netherlands is set aside, and the matter is remanded to verify the place of performance for other trainings.
(v) The demand for Scientific & Technical Consultancy is set aside.
(vi) The demand for service tax on grants-in-aid is set aside.

The appeal is partially allowed, and the impugned order is upheld to the extent indicated by way of remand.

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