Computer training institutes liable for service tax before 16.06.2005 despite vocational training exemption notification clarification

SC held that Notification No. 24/2004-ST dated 10.09.2004, granting exemption to "vocational" and "recreational" training institutes, did not cover computer training institutes, which had been specifically excluded, and this exclusion was deliberate. The subsequent amendment dated 16.06.2005, adding a proviso regarding computer training, was treated as clarificatory but effective only prospectively from 16.06.2005. Consequently, computer training institutes remained liable to pay service tax for the period 10.09.2004 to 15.06.2005. The appeal by the revenue was allowed and the contrary view of the HC was reversed, restoring the tax demand for the disputed period.

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Issues:
Challenge to judgment affirming service-tax exemption for a computer training institute from a specific period.

Analysis:
The appellant challenged a judgment affirming the decision that a computer training institute was exempt from paying service-tax for a certain period due to a notification issued in 2005. The notification excluded computer training institutes from the exemption granted to vocational and recreational training institutes. The Central Government was conscious of this exclusion, and the notification was in effect from September 2004 to June 2005.

The notification issued in 2005 amended the previous notification to clarify that computer training institutes were exempt from service-tax only from June 2005 onwards. The Court found that the amendment was more of a clarification, and the liability to pay service-tax for the period before June 2005 still applied to the respondent. The appeal was allowed to this extent, and each party was left to bear their own costs.

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