2025 (8) TMI 11 - AT - Service Tax

Commercial Training Linked to Recognized Degrees Exempt from Service Tax Under Relevant Notification Section

M/s COMPUTER KIDS Versus COMMISSIONER OF CENTRAL EXCISE, & SERVICE TAX, DELHI-IV

The CESTAT New Delhi held that the appellant's commercial training services affiliated with recognized universities are exempt from service tax under the ... Taxability - Commercial Training or Coaching Centre Services - training for courses affiliated with Sikkim Manipal University [SMU] and Manonmaniam Sundaranar University [MSU] - HELD THAT:- The courses conducted by the appellant are fully recognized by the respective universities. That both the universities are recognized by their respective State Government i.e. SMU is a public partnership between Government of Sikkim & Manipal & MSU is established by Government of Tamil Nadu. The students who are admitted in the Institute of the appellant undergo a regular course of study and practical training at the Institute of the appellant. Thereafter, examinations are conducted under the supervision of the University and evaluation of the examination is done by the University. After the results are declared, statement of marks is forwarded by the University to the appellant which is then forwarded to the students. After successful completion of the courses by the students, the degrees are awarded by the University. The observations made in the impugned order that the appellant did not issue any degree/diploma/certificate recognized by law and the same is issued by SMU and MSU and therefore, the benefit of the notification is not available to the appellant is contrary to the earlier decisions of the Tribunal. In the case of Tandem Integrated Services, the Revenue had raised similar plea that the respondent therein is not a regular college which grants certificate, diplomas or degree for any educational qualification recognized by law and would therefore, not come within the exemption under subsection (27) of Section 65 of the Finance Act, 2003. The learned Division Bench did not agree with the submissions of the Revenue in view of para 2.2.3 of CBEC Circular dated 20.06.2003 clarifying the position and also in view of the decision in Mallapuram District - vide N/N. 10/2003 dated 20.06.2003, Central Government, in the public interest has exempted the taxable services provided by a commercial training or coaching centre, in relation to commercial training or coaching, which form an essential part of a course or curriculum of any other institute or establishment, leading to issuance of any certificate or diploma or degree or educational qualification recognized by law for the time being in force, to any person, from the whole of the service tax leviable thereon under Section 66(2) of the Act. This Notification had come into force w.e.f. 01.07.2003. The show cause notices have also made allegation that the appellant is providing coaching for the multimedia professional courses and claiming exemption on the amount charged for books purchased from open market and supplied by them to the students pursuing multimedia professional courses. The fee charged by the appellant from the students is inclusive of value of books, and the same is not reflected separately in the bills raised to the students. The appellant has placed reliance on N/N.12/2003-ST dated 20.06.2003, which provides that the value of goods and material sold by the service provider to the recipient of service, while providing service shall not be liable to service tax subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials sold. Thus, the intention is to immune goods and materials from levy of service tax. The learned Counsel has taken a preliminary objection that the impugned order is unsustainable as it is beyond the scope of the show cause notice and also that extended period cannot be invoked. The impugned order needs to be set aside and is hereby quashed - Appeal allowed. ISSUES: Whether services involving training for courses affiliated with recognized universities constitute taxable 'Commercial Training or Coaching Centre Services' under Section 65(26) and 65(27) of the Finance Act, 1994.Whether exemption notifications and circulars apply to institutions providing coaching for university-recognized degrees/diplomas/certificates.Whether the levy of service tax on parallel colleges or similar institutions is violative of Article 14 of the Constitution of India due to discriminatory treatment.Whether the value of goods/materials sold along with coaching services is liable to service tax when not separately indicated.Whether extended period of limitation and scope of show cause notices were properly invoked. RULINGS / HOLDINGS: The services provided by institutions imparting education for courses leading to recognized degrees, diplomas, or certificates issued by universities do not constitute taxable 'Commercial Training or Coaching Centre Services' under Section 65(26) and 65(27) of the Finance Act, 1994.Exemption notifications (Notification No.10/2003-ST and Notification No.33/2011-ST) and Circular No.59/8/2003-ST clarify that institutes issuing certificates, diplomas, or degrees recognized by law are outside the purview of 'Commercial Training or Coaching Centre' for service tax purposes, even if they provide training for competitive examinations.The levy of service tax on parallel colleges or similar institutions, while exempting regular colleges offering the same curriculum and recognized degrees, is 'patently discriminatory and violative of Art. 14 of the Constitution of India.'The value of goods and materials sold by the service provider to the recipient of service shall not be liable to service tax, provided there is documentary proof specifically indicating the value of such goods and materials, per Notification No.12/2003-ST.Since the appeal is allowed on merits, the questions regarding the scope of the show cause notice and invocation of the extended period are not adjudicated. RATIONALE: The Court applied the legal framework under Sections 65(26), 65(27), and 65(105)(zzc) of the Finance Act, 1994, along with relevant exemption notifications and circulars issued by the Central Board of Excise and Customs (CBEC).The Court relied heavily on the Kerala High Court decision in Malappuram District Parallel College Association, which held that parallel colleges imparting education for recognized degrees are exempt from service tax and that taxing them while exempting regular colleges violates Article 14.Subsequent decisions of various Benches of the Tribunal reiterated and followed the principle that institutions imparting education for recognized university qualifications are not liable to service tax under the 'Commercial Training or Coaching Centre Services' category.The Supreme Court's dismissal of appeals without interfering with the Kerala High Court's decision was noted, emphasizing that the ruling applies to parties before the Court and does not constitute a universal declaration, leaving room for independent examination of other cases.The Court interpreted Circular No.59/8/2003-ST and Notifications No.10/2003-ST and 33/2011-ST as maintaining exemption for coaching centers providing courses leading to recognized degrees despite changes in the definition of 'Commercial Training or Coaching Centre.'The Court distinguished cases where students pay fees directly to coaching centers without recognized certification authority, noting that such facts differ from the present case where recognized universities award degrees.The Court emphasized that the value of goods supplied along with services is exempt from service tax if properly documented, aligning with Notification No.12/2003-ST.No dissenting or concurring opinions were noted.