TaxTMI 
TaxTMI 
2025 (11) TMI 948
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....n the show cause notice under section 80 of the Finance Act, 1994" 2.1 The Appellant is a state government undertaking and are engaged in providing 'Management, Maintenance or Repair Services' in terms of Section 65(64) read with 65(105)(zzg), which are chargeable to Service Tax under Finance Act, 1994 and are registered with the Department. 2.2 During the course of scrutiny of records of the Appellant's it was observed that they were also providing following services for which they had neither obtained registration nor complied with any other provision of law:- (i) Commercial Coaching and Training Service in terms of Section 65(26) read with Section 65(105)(zzc) of the Finance Act, 1994. (ii) Online Information Retrieval Service in terms of Section 65(75) read with 65(105)(zh) of the Finance Act, 1994. (iii) Business Auxiliary Service in terms of Section 65(19) read with Section 65 (105)(zzb) of the Finance Act, 1994. 2.3 On each of the service it was observed that the Appellant had short paid Service Tax as detailed in tables below:- (i) Commercial Coaching and Training Service Year Rate of Service Tax Computer Education....
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....ration received for providing services. 4) The Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 for violation of section 73(1) of the Act for the reason of suppressing the facts and wilful misstatement to evade the payment of service tax. 2.7 The Show Cause Notice has been adjudicated as per the impugned order referred in Para 1 above. 2.8 Aggrieved by the impugned order Appellant and Revenue both have filed these appeals. 3.1 This matter has been listed for hearing on number of times i.e. 18.03.2024, 24.06.2024, 29.07.2024, 18.09.2024, 13.11.2024, 09.12.2024, 05.03.2025 & 15.07.2025. When the matter was listed on 15.07.2025, none appeared for the Appellant. Shri Shiv Kumar Yadav, Clerk for the Counsel appeared and requested for an adjournment. Since the matter has been adjourned for more than the maximum prescribed number of times as per proviso to Section 35C (1A) of the Central Excise Act, 1944 matter has been taken up for consideration after hearing the Revenue. On 15.07.2025 following order was passed:- "ORDER SHEET When the matter was called, Shri Shiv Kumar Yadav, Clerk of the counsel for the Respondent appeared ....
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....he demand of tax is re quantified as under- Year Name of Taxable Total Gross Amount received Taxable value Per S. 67(2) Rate of service tax Service Tax due 1 2 3 4 5 6 201011 Commercial Coaching Service 37464600 33966093 10.30% 3498508 On-line Retrieval Service 37407740 33914542 10.30% 3493198 Business Auxiliary Service 4200037 3807831 10.30% 392207 Total 7,90,72,377 7,16,88,466 73,83,913 I am inclined to appreciate the fact that the noticee is a UP Government undertaking and transaction on which the tax demand sustained was captured in the books of account. I find reasonable ground to wave penalty u/s 80 of the Act. I refrain from imposing penalty U/s 76 and 78." 4.4 The basic question which is for consideration in the present case is whether the Service Tax will be leviable on these 03 activities. The major portion of the demand has been made in respect of 'Commercial Coaching & Training Services' and Online Information, Data Access and Retrieval Services. In respect of 'Commercial Coaching & Training Services' i....
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....g under the Ministry of Uttar Pradesh government such as UP Scheduled Caste Finance & Development Corporation, Social Welfare Department, District Urban Development Authority, Zila Siksha Evam Prashikshan Sansthan, Training & Employment Department etc. has proposed service tax demand amounting to Rs. 38,27,604/- on such receipt In the impugned SCN, department on the ground that noticee is engaged in provision of Commercial Training and Coaching Service' to such government departments. It may be pointed out by the noticee that Section 65(105)(zzc) of the Act provides that taxable service means any service provided or to be provided to any person, by a commercial training or coaching centre in relation to commercial training or coaching. In this regard, 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 pre-school coaching and training centre or any institute or establishment which iss....
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....d manages the computer training program executed by business associates on behalf of government departments. The noticee itself is not providing any computer training to the trainees of the government bodies. Therefore, the noticee can never be classified as 'Commercial Training or Coaching Centre'. The noticee imparts necessary skills and knowledge through its business associates to unskilled individuals in the field of computers. It may be noted that computer training implemented by the noticee certainly helps in getting job in Industry & Commerce. In this respect the case of the noticee is that they are not engaged in the rendering, the service of Commercial Training and Coaching Service' to various government departments of Uttar Pradesh such as UP Scheduled Caste Finance & Development Corporation, Social Welfare Department, District Urban Development Authority, Zala Siksha Evam Prashikshan Sansthan, Training & Employment Department etc. for the reason in the invoices raised by the noticee to government department the noticee duly mentions that the training program is undertaken by the Business Associate. Thereafter, the noticee after reta....
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....tionary. This is also the submission of the notice that training provided to the employees of the Government of Uttar Pradesh is on job training hence it will not be covered under the category of Commercial Training and Coaching Service'. I do not find any force in the above submissions. The noticee is not a department of the government of Uttar Pradesh but an undertaking, a corporate body created under statute. Their function cannot be equated with sovereign or statutory function of the state. The noticee charges commercial consideration from the departments of government of Uttar Pradesh for the services rendered by them. The noticee has sought to take cover of nodal agency to establish that they are doing any sovereign or statutory function while imparting training to the Government employees and women and members of weaker sections of society. No where I find, in the GOs produced by the noticee that they are nodal agency of the government for imparting education and providing employment to women and members of weaker sections of society. Rather the notice is appointed as nodal agency for computerization and for promoting and developing information technology in gov....
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....e Tax. However, the Notification is subject to the condition that there should be a documentary proof specifically indicating the value of the said goods and materials. In the absence of documentary proof, a service provider may claim deduction in an arbitrary manner. In order to avoid that the above condition has been stipulated, it should be borne in mind that there is no requirement that in each and every invoice, such values of goods and materials should be indicated. But I am not inclined to extend the benefit of notification 12/2003-ST on the basis of bald claim that the books were supplied to the trainees. The noticee has given no evidence to sustain their claim. The case laws are distinguishable here. The benefit of exemption under notification 12/2003-ST is not available to the notice. 4.5 We find that the services sought to be taxed under this category can be grouped in two categories namely,- ⮚ Training provided to the government employees, in respect of the user applications developed by the appellant; ⮚ Training course organized by the appellant to impart computer education to the unemployed youth belonging to weaker section of societ....
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....at the expenses incurred by the appellant-assessee is very much includible in the tax value for the purpose of tax liability under franchisee service. These are essential expenditure to provide the service. 9. We have heard both the sides and perused the appeal records. We take up the first issue regarding liability of the appellant-assessee to pay service tax under the category of "commercial coaching and training". Admittedly the appellant-assessee is providing commercial coaching and training. The dispute is relating to their eligibility to the exemption under Notification No. 24/2004-S.T. The said Notification provides exemption to taxable services provided in relation to commercial training or coaching by a 'Vocational Training Institute'. "(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;" 10. In the first proceedings (impugned Order-in-Original No. 36-38/S.T., dated 30-11-2010), the Original authority held that as the courses offered by the....
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....he above said notification and accordingly should provide training to impart skills which enables the trainees to seek 'employment', or to undertake 'self-employment'. In the present case, after going through the documents available on record, I am of considered opinion that the courses offered by M/s. FASPL do provide the opportunity to the trainees to undertake 'self-employment' directly after the training or coaching and also provide opportunities of 'self-employment'. Further, any person undertaking such a training or coaching does it only with a view to get an employment or to persue self-employment in a particular field, say in aviation industry. There cannot be any other purpose for joining such a course. Naturally, they join such courses only because it is provided by an institute which equip them with skills and develop ability in them to persue a career in the desired field. It is nobody's case that all trainees who pass out from such an institute would necessarily get employment or be successful in being self-employed in the chosen field, but definitely such persons who undergo such training or coaching have an 'advantage' or 'edge' over those who have not. It is this 'e....
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....rmits the appellant-assessee to use Edexcel name or trade-mark for the purpose of promoting its Diploma and Edexcel's BTEC - HNC to call the course "Frankfinn's one year Diploma in aviation, hospitality and travel management along with BTEC higher national certificate by Edexcel, U.K." and will be permitted to mention the exclusive arrangement in India. 13. We have noted that M/s. Edexcel are themselves not having any coaching package or course of training in this field. They are basically an entity to certify vocational qualification and is an awarding body for BTEC National and Higher National Diplomas and Certificates. In order to become a BTEC Centre, Edexcel provides for staff development, to prepare the Institute to the required level of quality standards. The agreement entered into by the appellant-assessee with Edexcel is only for that purpose. We are not able to discern any representational right offered to the appellant-assessee in the scope of the said agreement. The Original Authority also did not elaborate what type of representational right has been granted by Edexcel to the appellant-assessee in terms of the said agreement. Basically, Edexcel provides for an....
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....to reconsider in the light of the decision of the Hon'ble Delhi High Court in the case of Indian Institute of Aircraft Engineering v. Union of India - 2013 (30) S.T.R. 689 (Del.). As per the judgment in this case, the Hon'ble High Court quashed the circular issued by Board F.No.137/132/201-ST dt. 11-5-2011. After the introduction of notification No. 33/2011-ST which has already been noticed earlier, the Board issued the above circular clarifying that the Flight Training Institutes are coaching centres leviable to service tax under Section 65 (27) of Finance Act 1994. The said clarification issued by Board appeared to be contrary to the Notification No. 33/2011-ST. The Hon'ble High Court quashed the same observing that the circular is invalid. It was in this background that the Tribunal in earlier round of litigation remanded the matter for fresh consideration. However, even in such denovo-consideration, the adjudicating authority has relied upon the very same circular to confirm the demand. 32.1 The appellant has explained the nature of the course imparted by them. The appellant institute is approved by DGCA. The syllabi curriculum, the nature of theory classes....
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....tificate and the qualification offered by such Institutes. The certificate/training/qualification offered by Institutes which are without approval of DGCA would not confer the benefit of such relaxation. Thus, the certificate/training/qualification offered by approved Institutes, has by the Act, Rules and the CAR been conferred some value in the eyes of law, even if it be only for the purpose of eligibility for obtaining ultimate licence/approval for certifying repair/maintenance/airworthiness of aircrafts. The Act, Rules and CAR distinguish an approved Institute from an unapproved one and a successful candidate from an approved institute would be entitled to enforce the right, conferred on him by the Act, Rules and CAR, to one year relaxation against the DGCA in a Court of law. The inference can only be one, that the Course Completion Certificate/training offered by such Institutes is recognized by law. 26. There can be no doubt that such recognition through the Rules framed as aforesaid and through issuance of CAR, is a recognition by law, which is defined in Black's Law Dictionary, 8th Edition as the aggregate of legislation, judicial precedents and accepted legal p....
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.... 25th April, 2011. Accordingly the said Instruction and the show cause notices given to the petitioner are quashed. The Rule is made absolute and the writ petition is disposed of." 32.3 ....." 32.4 The very same issue as to whether Flight Training Institute and Aircraft Engineering Institutes are liable to service tax under 'Commercial Training or Coaching Service' was considered by the Hon'ble Allahabad High Court in the case of CCE, Cus., ST v. Garg Aviations Ltd. 2014 (35) S.T.R. 441 (All.) The Hon'ble High Court followed the decision of the Hon'ble High Court in the case of Indian Institute of Aircraft Engineering (supra) and held that the activity is not taxable. This case was appealed to Hon'ble Supreme Court, and the appeal was dismissed on 6-2-2018. 32.5 In the case of Star Aviation Academy v. CST, Delhi - 2018 (15) G.S.T.L. 342 (Tri.-Del.) the Tribunal held that the Aircraft Maintenance Engineers (AME) Training imparted by an institute authorized by DGCA and issue of AME basic course completion certificate is valid and recognized by law and therefore the levy of service tax under 'Commercial Coaching or Training Servie....
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....o in view of the decision in Mallapuram District. The observations of the Division Bench are as under:- "The assessee herein is also imparting education to obtain recognised degrees/diplomas from Universities and that apart the students are also being provided training to appear for competitive examinations, entrance tests, etc. It is not necessary that the respondent-firm should issue a certificate, diploma or degree. The students given coaching by the appellant are issued with certificates, diplomas and degrees, as issued by the Universities; identical to regular colleges and parallel colleges also. The students are being prepared for courses and are imparted training to appear for competitive examinations as well. The decision of this Court in Malappuram District Parallel College Association (supra) would squarely apply to the respondent-firm, since they are imparting coaching for courses leading to recognised certificates, diplomas and degrees issued by lawfully constituted academic bodies. Hence when such institutes also carry on training schedules to prepare students for competitive exams, categorised as "commercial coaching"; as per the clarification issued by the C....
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....legal provision. The Government modified the definition of "Commercial Training or Coaching Centre" by removing the exclusion clause, w.e.f. 1.5.2011, however, vide Notification No.33/2011-ST dated 25.04.2011, the Central Government exempted any coaching or training leading to grant of a certificate, diploma or degree or any educational qualification which is recognized by any law. Thus, the position remained the same and the coaching & training centres were not amenable to service tax. 18. Thus in terms of the circular read with the notification the appellant is eligible for exemption as they are imparting education to the students in respect of which SMU, Sikkim & MSU, Tirunelveli issues the degrees which are recognized by law. 19. The decision of the Tribunal in M/s Soft Dot Hi-Tech Educational and Training Institute versus Commissioner Service Tax, Delhi, - III14, relied on by the Revenue is based on the facts of that case where the students were directly paying charges to the appellant therein. Moreover, none of the decisions of the High Court and the Tribunal were referred to in the said case. 20. The show cause notices have also made allegation that the appellant is....
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....h the sides. 4. The Member (Technical) held that the appellants do not issue degree or diploma recognized by law. As such, he held them liable for service tax, holding that they are covered by the definition of "Commercial Training or Coaching Centre" in terms of Section 65(27) of the Finance Act, 1994. Ld Member (Judicial) held that the course provided by the appellant resulted in the issue of degree by the University of London (London School of Economics) which is recognized by law in India. She relied on various communications of UGC and AIU to hold that the degree which was issued, on completion of course is recognized as equivalent to degree issued by Indian Universities or Institutions. Reliance was also placed on the decision of the Commissioner (Appeals) order dated 30.01.2014 wherein it was held that the course offered by the appellant are recognized by law in India and as such the appellants would not fall within the ambit of "Commercial Training or Coaching Centre." Regarding Business English Course and Personality Development Courses, Member (Judicial) held that as appellant will not fall under the category of commercial training or coaching centre, no service ....
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....d for the purpose of employment to posts and services under the Central Government. No separate orders for recognition of such foreign qualification is needed to be issued. Here it is relevant to note that UGC had advised the Indian students to ascertain information regarding equivalence of the degrees and diplomas awarded by accredited Universities abroad. The degree/diploma programmes offered by the appellant resulting in the issue of certificate by the University of London (LSE) which is treated as equivalent to degree or diploma of public Universities in India. As such, I find that the appellants will fall outside the scope of definition for „commercial training or coaching centre.‟ It may be noted here that even the impugned order indicated that the certificate and diplomas issued by LSE are recognized by all the national universities. However, the adjudicating authority did not consider his own finding as relevant and followed the Board circular which refers to the recognition by statutory authorities like UGC etc. 8. It is relevant to note here that the department has been taking consistently a view that when an educational institute is affiliated to a u....
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....s relevant to decide the exemption under notification. Neither the tax entry nor the exemption notifications are having reference to any point of discussion which formed basis for the conclusion drawn by the impugned order. We find that the impugned order was mis-directed when examining the legal issue. Accordingly, same is set-aside." 9. In view of the above discussion, I find that the demand for Service Tax against the appellants, not sustainable and accordingly I agree with the Member (Judicial)." 4.11 In view of the above, we do not find any merits in the impugned order to the extend it is in relation to demand of service tax on commercial coaching and training services. 4.12 In respect of the demand confirmed under OIDAR services, we find that the Appellant was not owning the data which was being provided online against a cost instead they were providing the web based services to various Departments of Government of Uttar Pradesh by way of putting online tenders and other forms which were required to be made public for various purposes of those Departments. It facilitated the submission of tender documents etc., to Government Departments. It has been constantly ....
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....tion enables access and retrieval both between the department and the tendering applicant. The noticee is entitled to charge fee from both, the department and the applicant for the Customization activity as per the GO of the UP Government. The case laws in Nestle India 2011(22)STR165(Tri-Delhi) and United Telecom2009(14)STR212(Tri-Bang) in my view are distinguishable in the facts and circumstances of the present case and secondly the former is with reference to pre deposit and the latter stands appealed in Hon'ble Karnataka High Court. I further gather from the submissions of the noticee that the role of nodal agency to implement the computerization programme of the government of Uttar Pradesh to use information technology, was assigned to them under GOs dated 16.08.2002 and 11.01.2008. The noticee has sought to view the programme in three differentiated category viz E-Tender/Customization Activity, Website Development Service and Networking, AMC, Peripherals Service to advance their plea that barring E-Tender/Customization Activity these services at best can be classified under the category of information technology software services or Management, Maintenanc....
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....to bring these IT infrastructure services within the fold of OIDAR. We find that the term "Online Information and Database Access or Retrieval" has been defined under Section 65(75) of the Act to mean providing Data or Information Retrieval or otherwise to any person in electronic form through a computer network. Further under Section 65(105)(zh) of the Act, taxable service means any service provided or to be provided to a client by any person in relation to Online Information and Database Access or Retrieval or both, in electronic form through computer network in any manner. 5.3 The main take away from the definitions is that services provided should facilitate not only online information but also Database Access or Retrieval. From the facts on record, it appears to reason that the infrastructure services are nothing but a spider web group which connects Philips Netherlands to all its locations worldwide through the Wide Area Network (WAN) of internet protocol. For such Philips Global Network Services, payment is made on the basis of invoices raised by Philips Netherlands towards maintenance of server/portal, license fees, server software maintenance cost, infrastructure ....
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....itions. A user has been defined to mean a person who accesses the website and avails the online booking facility. The Terms and Conditions also indicate that convenience fee is collected over and above the value of the ticket in lieu of the convenience given to a user by PVR Cinema. Convenience is a facility offered to a user. A conjoint reading of the clauses of the Terms & Conditions of the contract would indicate that the purpose for charging convenience fee is to receive a consideration for offering a facility of online booking and in the facts of the present case would relate to online booking of tickets. It needs to be noted that the purpose of the transaction is to book and procure a ticket online by a user, though the website may provide for various other information like the current movie being exhibited, the upcoming movies and the timing of the movies. These information are even otherwise available through newspaper advertisements or other advertisements and no charge is leviable for the same. 53. It cannot be doubted that the dominant intention of a user is to book a movie ticket and convenience fee is charged for the reason that online booking facility saves p....
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.... 56.The Board Circular dated 9-7-2001 also clarifies that e-commerce transactions do not fall within the ambit of OIDAR service. It also clarifies that when information is supplied free of charge by the website, no service tax is payable and if such website charges a fee for providing information, only then such a website will be liable to tax under OIDAR. This clarification makes it abundantly clear that fees must be charged for providing information and consequentially liable to service tax under the category of OIDAR. The said Circular dated 9-7-2001 is reproduced below : Government of India Ministry of Finance Department of Revenue 9th July, 2001 Subject : Tax on 15 New Services to be effective from 167-2001 - Instructions regarding. Extension of service tax to fifteen more services 2. : In regard to the new services, which will be subject to service tax from 16th July, 2001, certain issues have been brought to notice during the course of discussion with the concerned Association. These have been discussed and clarified in the Annexures appended as per details below. (i) xx xx xx (ii) xx xx xx (iii)....
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....t would also contain a term that on payment of fee, the user shall have limited or unlimited rights to retrieve or access data/information making it abundantly clear as to what the dominant intention of the contract is. As against this, the Terms and Conditions of the contract involved in the present appeals relating to online booking arrangement make no such averments or declarations and instead are restricted to the grant of online booking facility and nothing more. 58. Where fees is not charged for information and is instead charged for other services like convenience/facility of online booking, even though such fees would be for a provision of service, it would not mean that such fees is charged for providing information/data. Thus, unless the fees is for provision of information/data, the arrangement cannot fall under OIDAR. In the present case the dominant intention for charging fees, as noticed above, is to grant facility of online booking and not for access/retrieval of any data or information. 59. The submission of Learned Authorized Representative of the Department that since a booking code is provided to a user when online booking facility is availed an....
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...." (Emphasis supplied) Circular Dated 6-8-2008 "........... The contention that a single composite service should not be broken into its components and classified as separate services is a well-accepted principle of classification. As clarified earlier vide F. No. 334/4/2006TRU, dated 28-2-2006 (para 3.2 and 3.3) [2006 (4) S.T.R. C30] and F. No. 334/1/2008-TRU, dated 29-2-2008 (para 3.2 and 3.3) [2008 (9) S.T.R. C61], a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The method of invoicing does not alter the single composite nature of the service and classification in such cases are based on essential character by applying the principle of classification enumerated in section 65A. Thus, if any ancillary/intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GT....
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....n infer from the submission, the transaction was part of job assigned to them to develop and install application software in accordance to need of the departments effectively, vide UP Government Order No. 1518/78 I.T.-2-2002 dated 16.08.2002 and to implement the e-tendering system effectively vide government order No. 72/78-2-2008441T/2008 dated 11.01.2008. I have already arrived at conclusion that the activities under the above Government Order constitute activity as defined in S.65(105)(zh) of the Finance Act 1994 i.e. service in relation to on-line information and database access or retrieval or both. The job assigned the noticee under the above GOs is to implement computerization and use of information technology in governance in the state of UP is not confined just to Management, Maintenance and Repair Service. It was for the lack of providing complete information in their letter Ref No UPLC: ACCTS: Service Tax dated 30.7.11 that the services were classified as Business Auxiliary Service. The noticee using the terminology as reflected in the Balance sheet as 'job charges' also misled the author of the show cause notice. I also do not find convincing the submis....