TaxTMI 
TaxTMI 
2019 (11) TMI 17
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.... STR 241 (Tri. -Bang.), and ITM International 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 : ....
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....cs / Chemistry (Regular Intermediate) (v) Intermediate + EAMCET (vi) Intermediate + 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 Depar....
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....ting to the legal issue as to whether Service Tax can be levied on the income generated by Junior Colleges under the heading 'commercial 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....
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....cate is issued by the Secretary of the Board of Intermediate Education and not by the Appellant and, therefore, the Appellant cannot claim the benefit of the exemption 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 Jun....
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....vice. As noted above, 'commercial training or coaching' means any training or coaching provided by 'commercial training or coaching centre'. 'Commercial training or coaching centre' has been 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 t....
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....eceived towards the service charges, irrespective of whether the venture is 'profit making, loss making or charity oriented' in its motive or its outcome. The word "Commercial" used in the phrase is with reference 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. ....
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....of the Intermediate Education Act to mean any educational institution in the State established or maintained by the State, or by any association of individuals and affiliated to the Board as providing courses of study qualifying 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. ....
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....statue including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption 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 ....
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....tre' or its exclusion clause. The decision of the Supreme Court in M/s Dilip Kumar and Company & Ors., on which reliance has been placed by the learned Counsel for the Appellant, does not support the case of the Appellant. The Supreme Court has answered the reference holding that when there is an ambiguity 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 bei....
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....tute of Technology, Joint Entrance Examination/PreMedical Tests, Civil Services Examinations etc. are chargeable to Service Tax. It also clarifies that some institutes like colleges, apart from imparting education for obtaining recognized degrees/diploma/certificates also impart training for competitive examinations, various entrance tests 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 ....
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....July, 2003, has been explained. The word 'commercial' would mean any training or coaching that is provided for a consideration irrespective of the presence or absence of any motive. It is in this context that in Clause 6.1 it has been stated that institutes, colleges and universities providing courses that lead to award of recognized diplomas/degrees and supports 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 th....
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....e students of the colleges set up by SCEC and other likeminded societies were actually coached by SCEC in the campus set up by them. While it has been admitted that in places like Vijayawada and Hyderabad, there were separate campuses, in other places such campuses could be located in the college itself. 25. Another important aspect to be noted is that not all the 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 St....
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....hing'. In this context, it was observed that : "69. As regards the coaching provided in addition to normal curriculum by the appellant in the junior colleges (+ 2 course), the said activity is not taxable under the head commercial training or coaching under Sections 65(26) and (27) read with 65(105)(zzc) for the following reasons :- (a) The junior colleges are recognized by the Board of 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 form....
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....ed by law for the time being in force." From the aforementioned exclusion clause, it is not material who issues the certificate or degree, but what is important is whether such certificate or degree or marks sheet is recognized by law. Similar view was taken by Delhi High Court in Indian Institute of Aircraft Engg. v. UOI 2013 (30) S.T.R. 689. (f) In the facts of the case, the certificate/marks sheets are issued by the Board and countersigned 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 a....
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....g or Coaching Centre", the exclusion part must be strictly construed, what is being included in the definition cannot be excluded, unless it is specifically mentioned. In the present case, according to the appellant, they were offering coaching classes to the students of intermediate standard of their colleges and other colleges for appearing joint entrance examination of IIT, JEE, etc. In my considered view, when "coaching classes" have categorically included in the definition, 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 Educ....
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....use they are the institute or establishment who are conducting the courses where degrees like B.Sc., BBA, MBA are awarded by University of London, Allahabad Agriculture Institute, though they are running some additional courses also on English teaching and personality development. It is a fact that the appellant is mainly running courses leading to awarding of degrees by University of London and Allahabad Agriculture Institute, and which are recognised by certain Universities in India as mentioned in the brochure of 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 c....