TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 17
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....ational Private Limited vs Commissioner of Service Tax, Delhi 2017 (7) GSTL 448 (Tri.Del.). The issue that had arisen for consideration before the Two Benches of the Tribunal in the two Appeals was as to whether Service Tax was leviable under 'commercial training or coaching' [Section 65(26)] of [The Finance Act, 1994] the Act for the coaching provided by the Junior Colleges. In Sri Chaitanya Educational Committee it was held that Service Tax was leviable, while in ITM International Private Limited it was held that Service Tax was not leviable. It needs to be noted that in both the aforesaid decisions there was a difference of opinion between the two Members constituting the Bench resulting in the matter being resolved by a third Member. 2. The Appellant is a Society registered under the provisions of The Societies Registration Act, 1860. It claims to be a 'notfor profit' society operating solely for education purposes. The Appellant also asserts that being a charitable institution it had claimed exemption under the provisions of Section 12AA of the Income Tax Act, 1961. 3. The Appellant is running three types of institutions, namely : (i) Junior Colleges - These colleges ar....
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....EAMCET + AIIMS + JIPMER etc. (vii) Intermediate + CA/ICWA Foundation 6. For the purpose of providing the said integrated courses, the Appellant provides integrated programmes which enable students to prepare for specific entrance examinations, even while completing the intermediate education. The fee structure for each of the said streams is different, but in any case much higher than that prescribed purely for the Intermediate Courses The said programmes evolved by the Appellant are as follows : (a) IITJEE Concept Oriented Neo Intermediate (ICON) - Intermediate syllabus MPC (Mathematics, Physics, Chemistry) integrated with preparation for IIT. (b) National Engineering Oriented Neo Intermediate (NEON) - Intermediate syllabus MPS (Mathematics, Physics, Chemistry) integrated with preparation for AIEEE. (c) Long term EAMCET Oriented Immediate (LEO) - Simultaneous education imparted for Intermediate and EAMCET with Duration of 2 years. 7. The period of dispute in the present appeals is from 200711. For the previous period from 200207, the Department had issued a show cause notice to the Appellant demanding Service Tax on the income received from 01 April, 2003 to 31 Mar....
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....rcial training or coaching', it would be necessary to refer to the four show cause notices, which are identical in nature, covering the period 200711. One of these show cause notice dated 30 September, 2010 alleges that there are 73 Junior Colleges under the Appellant which are imparting coaching to students at the intermediate level and also providing coaching to the students for appearing at the State and National Level competitive medical and/or engineering examinations. It has, therefore, been alleged that the aforesaid coaching given to the students of intermediate course and entrance examinations will fall under the category of 'commercial training or coaching' service leviable to Service Tax. 11. Section 65(26) of the Act, which was inserted w.e.f. 01 July, 2003, defines 'commercial training or coaching' as follows: "65(26) 'Commercial Training or Coaching' means any training or coaching provided by commercial training or coaching centre;" 12. 'Commercial training or coaching centre' has been defined in Section 65(27) of the Act as follows : "65(27) 'Commercial training or coaching centre' means any institute or establishment providing commercial training or coachi....
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....emption contained in the definition of 'commercial training or coaching centre'. It also holds that the coaching conducted by the Appellant for entrance examination does not lead to receipt of any certificate recognized by law. The order also records a finding that the Appellant is charging much higher fees than that prescribed for Intermediate students by the Intermediate Board and the additional amount of fees is purely for coaching and training. 16. Shri G. Shiv Das and Ms. Sudeshna Benerjee, learned Counsel appearing for the Appellant in Service Tax Appeal No. 1884 of 2012 and Service Tax Appeal No. 2896 of 2012 and for the Respondent in Service Tax Appeal No. 2799 of 2012 submitted that: (i) The activity of preparing students for the entrance examinations is not a separate activity, but is integrally connected with the intermediate education provided by the Appellant. In fact, the syllabus is so designed that it prepares the students to clear the entrance examination. Separate classes are not held in the Junior Colleges for the entrance examination, though there are certain institutes where coaching is exclusively provided and for such institutes the Appellant has dischar....
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....en defined to mean any institute providing commercial training or coaching for imparting skill or acknowledge or lessons on any subject or field with or without issuance of a certificate and includes coaching or tutorial classes. It, however, excludes preschool coaching and training centre or any institute which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force. 20. In reply to the show cause notice, it was emphasised by the Appellant that since it was a 'notforprofit' society registered under the provisions of the Societies Registration Act, 1860 and exempted under the Income Tax Act as a charitable institution, it is not providing commercial training or coaching. 21. This contention cannot be accepted. The word 'commercial' before 'training or coaching' has been used to describe 'training or coaching' and not the institute. This is clear from the definition of 'commercial training or coaching' which has been defined to mean any training or coaching provided by a 'commercial training or coaching centre' and a 'commercial training or coaching centre' has been defined to mean any institute providing 'commer....
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....ence to the activity of training or coaching and not to the nature or activity of the institute providing the training or coaching. Thus, services provided by all institutes or establishments, which fulfils the requirements of definition, are leviable to service tax." [emphasis supplied] The Board in the aforesaid Circular dated 28 January, 2009 clarified that the word 'commercial' had been used with reference to the activity of training or coaching and not to the nature or to the activity of the institute providing the training or coaching. 23. To remove all doubts, an explanation was also inserted in Section 65(105)(zzc) by Finance Act, 2010 with retrospective effect from 01 July, 2003. It provides that the expression 'commercial training or coaching centre' would include a centre or institute where training or coaching was imparted for consideration, whether or not such centre or institute was registered as a trust or society with or without profit motive. 24. Thus, it is immaterial whether the Appellant is providing the taxable service on 'nonprofit basis'. 25. It has now to be seen whether the Junior Colleges of the Appellant would fall in the definition of 'commerc....
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....lifying students for admission to the intermediate examination, in accordance with the regulations, but not to the degree examinations of a University. The powers of the Board have been specified in Section 9 of the Intermediate Education Act and include the power to grant certificates to the candidates who have passed the intermediate examination. Section 12 confers powers on the Board to make regulations and the Board has accordingly framed regulations for the two year intermediate course. 'Public Examination' is contained in Part IV of the regulations and Clause VI of Part IV deals with 'Award of Certificates'. It is reproduced below : "VI. Award of Certificates : (A) To whom awarded: 1. The certificate may be awarded to the candidates who have undergone the prescribed course of Intermediate in a recognized college and appeared for the Intermediate Public Examination conducted by the Board of Intermediate Education and passed. 2. The private candidates who appears for the Intermediate public examinations as per prescribed regulations and passed. (B) By whom awarded : The Intermediate Certificate shall be awarded by the Secretary, Board of Intermediate Education....
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....emption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State." [emphasis supplied] 30. The Supreme Court, accordingly, answered the reference as follows : "52.To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled." 31. This decision of the Supreme Court does not help the Appellant in advancing the submission that it will not be a 'commercial training or coaching centre', since it is an institute which issues a certificate recognized by law for the time being in force and, therefore, will fall in the exemption clause of the definit....
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.... in an Exemption Notification, which is subject to a strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the Revenue. 36. It is also not possible to accept the contention of the learned Counsel for the Appellant that since a certificate is issued to the students of the Junior Colleges, which certificate is recognized by law for the time being in force, the Appellant would fall in the exemption clause and would not be a 'commercial training or coaching centre'. This submission fails to take into consideration the most important aspect that to claim exemption, the institute should issue certificates recognized by law for the time being in force. The emphasis is on institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force. 37. The Circular dated 20 June, 2003 that was issued when the activity of coaching and training was taxed has been relied upon by the learned Counsel for the Appellant. The relevant portion of the Circular is reproduced below : "2.2.1 Commercial coaching and training services provided by i....
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....s etc. Such institutes or establishments which issue certificate, diploma or degree recognized by law are outside the purview of 'commercial training or coaching institute'. If such institutes or establishments provide training for competitive examinations, then the services rendered would be outside the scope of the Service Tax. 39. The aforesaid Circular only substantiates the case of the Revenue and does not help the Appellant at all. Emphasis on 'imparting education for obtaining recognized degrees/diplomas/ certificates' placed by learned Counsel for the Appellant is misconceived as it has been clarified that only such institutes or establishments which issue a certificate, diploma or degree by law are outside the purview of 'commercial training or coaching institute'. This portion on which emphasis has been laid by learned Counsel for the Appellant cannot be read dehors the entire clarification contained in the Circular. 40. Likewise, the Circular dated 26 February, 2010 on which reliance has also been placed by the learned Counsel for the Appellant, would not come to the aid of the Appellant. This Circular defines the scope of 'commercial training and coaching' and the r....
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....orts education were kept out of the tax net. This does not and cannot dilute the definition of a 'commercial training and coaching institutes' from the Act. In fact, the Circular dated 20 June, 2003 in connection with the imposition of Service Tax on new services consequent to enactment of the Finance Bill, 2003 and which has been reproduced above clarifies the definition. 42. It is more than apparent that all type of institutes are not excluded. The institutes which are excluded are institutes which issue the certificates. 43. The two decisions rendered by the Tribunal in Sri Chaitanya Educational Committee and ITM International Private Limited, which have led to the constitution of this Larger Bench for giving its opinion, need to be referred to. 44. In Sri Chaitanya Educational Committee, which was in relation to the Appellant's own case for the previous years from 200307, while examining the contention raised on behalf of the Appellant that since the optional courses were integrated in the syllabus of the first and second year, commercial coaching or training was not provided by the Appellant, was repelled by a learned Member (Technical) and the relevant portion of the or....
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....students who undertake to study in the colleges of/managed by SCEC are required to undergo the coaching for entrance examination. It is only optional. If it is optional, it is bound to be separate. Further evidence also has been brought out to show that such training is given in separate campus. 26. Another important aspect that has been brought out is the fee structure for intermediate course is decided by the State Government. Therefore, the management cannot charge higher fee. This is in another reason why the coaching given for entrance examination for which the fee varies from Rs. 8,000/to Rs. 75,000/per year cannot be integral part of curriculum or coaching as a part of regular college course. The moment it becomes the part of regular course, the fee charged cannot be more than prescribed by the State Government and definitely cannot be the amounts charged by SCEC for such coaching. This is another aspect which makes it clear that the courses conducted for appearance in competitive campus are not integral part of curriculum of intermediate course. 27. At this stage, it is also necessary to take note of the fact that the AP Board itself allocates specific periods for con....
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....Intermediate Education, Andhra Pradesh. The students are enrolled for completing their intermediate or +2 course, which is part of 'formal education' and on completion of education through the junior colleges as per the prescribed syllabus, the students appeared in the examination conducted by the Board and the certificate or degree is awarded by the Board. The students on successful completion of the intermediate course and on the basis of the certificate/marks sheet awarded by the Board, enables the students to seek further higher education like graduation or for admission to professional courses like, Engineering, Medical, etc. (b) Formal education provided by school and college is not the subject matter of taxation under the Service Tax as defined in the Act. Such formal educational institution are not defined as commercial training or coaching centre under Section 65(27) of the Finance Act, 1994 and thus the coaching provided by such institution in addition to their prescribed syllabus by the Board is not the taxable activity under the Finance Act, 1994. This was also clarified time to time by C.B.E. & C., including Budget Circular No. D.O.F. No. 334/1/2010TRU, dated 262201....
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....untersigned by the Principal/Head of the Junior College, is recognized by law. (g) As per the clarification given by C.B.E. & C. Circular No. 59/8/2003S. T., dated 2062003, it has been clarified in para 2.2.3 that "where coaching for competition examination is provided by school/college in addition to approved curriculum/syllabus, still the coaching activity will not be taxable" (Quoted in para 23 above). (h) Separate fee charged by the appellant for providing coaching from the students of the junior college is not a deciding factor as per the provisions of the Finance Act, 1994 and the clarification by the Board dated 2062003. Even the activity of providing coaching in other junior colleges, set up by different bodies, by the appellant by way of collaboration or such other arrangement will also be exempted under the exclusion clause of Section 65(27) read with clarification of the C.B.E. & C. dated 2062003. (i) After the successful completion of the intermediate examination by the students enrolled in the junior colleges, in addition to the marks sheet issued by the Board under signature of the Controller of Examination, the college provides 'transfer certificate' and 'co....
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....inition, then, it cannot be excluded by stretching the meaning of exclusion clause of the definition. xxxxxxxxx xxxxxxxxxx xxxxxxxxxx 83. The students appear for the intermediate examinations under the hall ticket issued by the respective colleges and the students after passing examination, are awarded a certificate which issued by Intermediate Board Education duly endorsing stamp of respective college. However, the students of said colleges underwent coaching in different campus of the appellant on payment of fee ranging from Rs. 8,000.00 to Rs. 75,000.00 which was accepted by Shri K.V. Subba Rao, Accounts Manager of the appellant in his statement dated 2822006. He also confirmed that the amount was collected from the different students of different colleges who underwent coaching of JEIIT, EAMCET, etc., in different branches of th....
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....f AIU. However, the appellant itself does not issue any kind of diploma or degree, which is recognised by law for the time being in force. In other words, the appellant is not covered in the exclusions mentioned in Section 65(27) of the Act. To make the matter more clear it is not in dispute that the degree/diploma for the courses run by the appellant are issued awarded either by University of London or by Allahabad Agriculture Institute, but when the appellant itself is not issuing any diploma or degree certificates recognised by law, it is not excluded from the definition of "Commercial Training or Coaching Centre" given in Section 65(27) of the Finance Act, 1994. The case laws cited by the ld. consultant in support of the appellant's case are of no help and do not support the stand of the appellant." 51. The learned Member (Judicial), however, did not agree with the aforesaid views expressed by the learned Member (Technical). Emphasis was laid on the fact that the degree and diploma certificates issued by foreign universities were institutes recognized by AIU and, thereafter, the certificate has to be treated as a certificate recognized by law. There is no discussion in the or....