2025 (12) TMI 100 - AT - Service Tax

Service tax upheld on executive and outreach training programs as commercial coaching under Sections 65(26),(27),65(105)(zzc) Finance Act,1994

CESTAT BLR held that the appellant's Short Term Executive Program and Reach Out Program, conducted for plantation and agri-business officials for ... Classification of service - providing training program called as Short Term Executive Program and Reach Out Program which are designed to the needs of the plantation and associated Agri-Business Sector - classifiable under Commercial Coaching or Training Services or not - period of dispute is from 01.04.2010 to 30.09.2011 - HELD THAT:- As per Section 65(26) of the Act 'commercial training or coaching means any training or coaching provided by a commercial training or coaching centre; Whereas, as per Section 65(27) of the Act, 'commercial training or coaching centre' means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognised by law for the time being in force; Whereas, as per Section 65(105)(zzc) of the Act the 'taxable service' means to any person, by a commercial training or coaching centre in relation to commercial training or coaching. The Tribunal (Larger Bench) in the case of Shri Chaitanya Educational Committee Vs. Commissioner of Customs, C. Ex. and ST, Guntur [2019 (11) TMI 17 - CESTAT HYDERABAD (LB)] observed that 'The appellant does not issue the certificates. In such circumstances, it is clearly a ‘commercial training or coaching centre’ providing ‘commercial training or coaching’. It is providing a taxable service. All decisions of the Tribunal taking a contrary view stand overruled.' - In view of the above, since there is nothing on record to show that the institute is issuing any certificates recognized by law they clearly do not fall under the exclusion clause, hence, liable to pay service tax. In the instant case, the appellant was providing short term courses to the planter of officials of various Commodity Boards for which consideration is received. It is also on record that various attempts made by the appellant to the Ministry have failed in getting the exemption. Therefore, since these training conducted by the appellant do not fall under the exclusion clause, they are liable to discharge service tax. Appeal is allowed partially by confirming the demand for the normal period and by setting aside the penalties. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the short term executive and outreach programmes conducted for planters and officials of commodity boards are exigible to service tax under 'commercial training or coaching service' or fall within the statutory exclusion for institutes issuing recognised educational qualifications. 1.2 Whether, in light of the statutory definitions and explanatory amendment to section 65(105)(zzc), the appellant-institute can be treated as a 'commercial training or coaching centre' notwithstanding its status as an educational institution conducting recognised long-term courses. 1.3 Whether the extended period of limitation and imposition of penalties are sustainable in view of the interpretational nature of the dispute and prevailing divergent decisions. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Taxability of short term programmes as 'commercial training or coaching service' and applicability of exclusion for recognised educational institutions Legal framework (as discussed): 2.1 The Court examined sections 65(26), 65(27) and 65(105)(zzc) of the Finance Act, 1994, as applicable during the relevant period. 2.2 Section 65(26) defines 'commercial training or coaching' as any training or coaching provided by a commercial training or coaching centre. 2.3 Section 65(27) defines 'commercial training or coaching centre' as any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field (other than sports), with or without issuance of certificate, and specifically excludes: (i) pre-school coaching and training centres; and (ii) any institute or establishment which issues any certificate, diploma, degree or any educational qualification recognised by law for the time being in force. 2.4 Section 65(105)(zzc) defines taxable service as any service provided to any person by a commercial training or coaching centre in relation to commercial training or coaching, with an Explanation clarifying that: - 'commercial training or coaching centre' includes any centre or institute, by whatever name called, where training or coaching is imparted for consideration, - regardless of registration as a trust, society or similar organisation, and - irrespective of whether carried on with or without profit motive. 2.5 The Court relied on the ratio of Larger Bench and coordinated Bench decisions interpreting these provisions, particularly that: - exclusion under section 65(27) is confined to institutes which themselves issue certificates/diplomas/degrees/educational qualifications recognised by law to the persons to whom they impart training or coaching, and - once an entity imparts training or coaching for consideration, its activity is prima facie commercial training or coaching unless it squarely falls under the exclusion. Interpretation and reasoning: 2.6 It was undisputed that the appellant conducted Short Term Executive Programmes and Reach Out Programmes for planters and officials of commodity boards for a consideration. 2.7 The appellant contended that: - these were only workshops or seminars sponsored by commodity boards, and - since the institute also conducts AICTE-recognised PG Diploma and MBA courses and issues recognised qualifications in that context, the institute as such stands excluded from the definition of 'commercial training or coaching centre', relying on the exclusion clause and a CBEC circular. 2.8 The Court held that, as per the statutory definitions and the Explanation to section 65(105)(zzc), the decisive test is: - whether the particular activity involves imparting training or coaching for consideration; and - whether the institute, in relation to such activity, issues any certificate/diploma/degree/educational qualification recognised by law. 2.9 The Court accepted the Larger Bench view that: - to claim exclusion, an institute must itself issue certificates recognised by law for the time being in force to the recipients of the training or coaching in question; - institutes that do not issue such recognised qualifications, or issue qualifications not recognised by law, are 'commercial training or coaching centres'. 2.10 Applying this test, the Court found: - there was nothing on record to show that, in respect of the short term executive and outreach programmes for planters and commodity board officials, the appellant issued any certificate, diploma, degree or other educational qualification recognised by law; and - therefore, these programmes did not fall within the statutory exclusion. 2.11 The Court also noted that various attempts made by the appellant before the Ministry to obtain exemption had failed, reinforcing that no statutory exemption covered the impugned activities. Conclusions on Issues 1 & 2: 2.12 The short term executive and outreach programmes provided to planters and officials of commodity boards, being training or coaching imparted for consideration, are classifiable as 'commercial training or coaching service' under sections 65(26), 65(27) read with section 65(105)(zzc). 2.13 The appellant-institute does not qualify for the exclusion in section 65(27) in respect of these specific programmes, as there is no evidence of issuance of any certificate, diploma, degree or educational qualification recognised by law to the participants of those programmes. 2.14 Service tax liability on the impugned services is upheld on merits. Issue 3: Applicability of extended period of limitation and penalties Interpretation and reasoning: 2.15 The Court considered the nature of the dispute and the judicial history relating to the taxability of educational and training institutions, noting: - multiple Larger Bench and higher judicial pronouncements on the scope of 'commercial training or coaching service', and - the existence of differing views over time, later resolved by clarificatory amendments and authoritative decisions. 2.16 In light of such interpretational complexity and evolving jurisprudence, the Court held that the case involved issues of interpretation of law rather than deliberate suppression or wilful misstatement. Conclusions on Issue 3: 2.17 The extended period of limitation is not invocable; the demand is sustainable only for the normal period. 2.18 Penalties are not warranted in the circumstances; they are set aside. 2.19 The appeal is partly allowed by restricting the demand to the normal period and by deleting penalties, while upholding tax liability on merits for that period.