Notification no. 24/2004-ST, dated 10.09.2004 exempts services of a vocational training institute providing in relation to commercial training or coaching services from service tax.

The scope of Vocational Training Institute is defied as under:

     (i) "vocational training institute" means a commercial training or coaching centre which provides vocational training or coaching that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching;

Since, then it is hot debatable issue that what type of activities are covered by the above definition of Vocational Training Institute.

A careful reading of all the circular or clarification etc. issued by the Board or department from time to time, it appears that no serious attempt has been made to define the scope in clear terms to avoid unwarranted disputes causing loss of revenue and precious time in legal fighting.

In the latest Circular No. 107/01/2009 dated 28-1-2009, the board has clarified the issue as under:

       "The vocational training institutes are exempted from service tax vide notification no. 24/2004-ST, dated 10.09.2004 (as amended). By definition, such institutes should provide training or coaching that imparts skill to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching. Disputes have arisen in respect of institutes that offer general course on improving communication skills, personality development, how to be effective in group discussions or personal interviews, general grooming and finishing etc. It is claimed that such training or coaching improves the job prospects of a candidate and therefore they are eligible for exemption as 'vocational training institutes. However, a careful reading of the definition shows that the exemption is available only to such institutes that impart training to enable the trainee to seek employment or self-employment. The courses referred to above do not satisfy this condition because on their own such courses do not prepare a candidate to take up employment or self-employment directly after such training or coaching. They only improve the chances of success for a candidate who already has the required skill. Therefore, such institutes are not covered under the exemption."

 

See: Circular No. 107/01/2009 dated 28-1-2009,

 

Vocational training exemption denied: communication and personality development courses do not directly enable employment for service tax relief. The exemption covers a vocational training institute that imparts skills enabling a trainee to seek employment or undertake self employment directly after training. General courses in communication, personality development, grooming, group discussion or interview techniques do not, by themselves, prepare a candidate for immediate employment or self employment and therefore do not meet the direct employment nexus required for the service tax exemption.