TaxTMI 
TaxTMI 
2026 (4) TMI 1358
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....SCN), dated 08.09.2009, 12.09.2009, and 27.09.2010 were issued for the period 2005-06 to 2009-10, proposing levy of Service Tax under the category of 'Commercial Training or Coaching Service.' The Adjudicating Authority confirmed demands along with interest and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Appellant's appeal against the said Order was rejected by the Commissioner (Appeals), leading to Appeal No. ST/40911/2015 filed along with an application for additional evidence. 2.1 Appeals Nos. ST/41709 to 41712/2016 arise from SCN's for the periods 2010-11, 2011-12, July 2012 to September 2013, and October 2013 to September 2014, for the same activity, demanding service tax along with interest and penalties. These demands were confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals), giving rise to the present appeals. 2.2 The appellant filed Miscellaneous Application (M.A.) No. ST/MISC/40057/2025 in Appeal No. 40911/2015, placing on record documents to substantiate that vocational training imparted by a VTI was exempt from service tax under Notification No. 24/2004-ST dated PERIOD REASON FOR DENYING EXEMPTION APPE....
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.... 28,73,700/- Penalty Under S. 78 Under S.76 Under S.76 Under S.76 Under S.76 Under S.76 Under S.76 TABLE -II 27.02.2010 - 21.01.2011 27.02.2010-31.03.2010: The Appellant did not obtain affiliation with the NCVT as required by the Amendment Notification. [ST/40911/2015] The Amendment Notification did not take effect until its publication on the official gazette on 22.01.2011. 01.04.2010-21.01.2011: The Appellant was affiliated with NCVT, but the courses are not "approved vocational education courses" [ST/41709/2015] ▪ The courses offered by the Appellant are notified as designated trades under the Apprentices Act, 1961. ▪ The Impugned OIA has applied the provisions in the negative list regime to deny exemption for the period prior to the negative list. 22.01.2011 - 31.03.2012 The Appellant was affiliated with NCVT, but the courses are not "approved vocational education courses" [ST/41709-41710/2015] ▪ The courses offered by the Appellant are notified as designated trades under the Apprentices Act, 1961. ▪ The Impugned OIA has applied the provisions in the negative list regime to deny exemption f....
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....d by Notification No. 03/2010-ST dated 27.02.2010. The impugned OIA dated 10.02.2015 denied exemption for the period from 27.02.2010 on the ground that the appellant, being required (post-amendment) to be an NCVT-affiliated VTI offering designated trades under the Apprentices Act, 1961, was not full filled as the Appellant had not obtained NCVT registration as on 27.02.2010. The appellant, however, contends that under para 2 of the amending notification dated 27.02.2010, the amendment took effect only upon publication in the Official Gazette, which factually occurred on 22.01.2011-after the registration was obtained by them on 10.11.2010. B. The impugned order records that the Appellant after possessing NCVT affiliation was in principle eligible for exemption. Exemption was however denied solely on the ground that the courses were allegedly not designated trades or not "approved vocational courses." C. For the period up to 31.03.2012, the only requirement under the Exemption Notification (as amended w.e.f. 22.01.2011) was that the institute be an NCVT-affiliated VTI offering courses in designated trades under the Apprentices Act, 1961. "Designated trade" under Sec....
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....No. 24/2004-ST dated 10.09.2004, the amendment takes effect from the date of its publication in the Gazette of India. Although dated 27.02.2010, it was published only on 22.01.2011. Consequently, the amended conditions became operative only from that date. To ascertain the publication date, the Appellant filed an RTI application on 22.10.2024. Upon non-response, a first appeal was filed on 02.12.2024, followed by a hearing on 17.12.2024. As the response dated 06.01.2025 was incomplete, a second appeal dated 10.02.2025 was filed and remains pending before the Central Information Commission. B. The Ld. Counsel stated that the impugned order, having disregarded the settled position, is liable to be set aside. The appellant filed a written submission post the hearing as permitted by the Bench, summarizing the averments made during the hearing. 3.2 Smt. Anandalakshmi Ganeshram the Ld. Authorized Representative submitted on behalf of the Revenue A. M/s L.V. Prasad Film & TV Academy has been imparting training in film craft, photography, sound recording and editing since 2005 and has collected course fees from students for such training. B. The appellant prov....
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....nsustainable in law. O. Accordingly, the services provided are taxable under Commercial Training or Coaching Service, and the appellant is liable to pay service tax along with applicable consequences. 4. We have patiently heard the parties to the dispute and carefully considered their written and oral submissions in the appeals along with the Miscellaneous Application. It is not in dispute that the Appellant provides training in film craft, cinematography, editing and sound design for consideration. Accordingly, the activity squarely falls within the scope of Commercial Training or Coaching Service as defined under Sections 65(26), 65(27) and 65(105)(zzc) of the Finance Act, 1994. The main dispute is confined only to eligibility to exemption from Service Tax during the impugned period in its many facets and not to classification per se. 5. The issues for determination can be broadly summarised as follows: I) Whether the services rendered by the Appellant qualifies for exemption under Notification No. 24/2004-ST for the pre-amendment and post-amendment periods. II) Whether Notification No. 03/2010-ST dated 27.02.2010 amending Notification No. 24/2004....
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....empted from service tax w.e.f. 1st July, 2003 vide Notification No.9/2003-Servtice Tax dated 20th June 2003. Therefore, vocational coaching and training services provided by typing and shorthand institutes, TV/ vehicle repair training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer-training centers, hobby classes, institutes teaching martial arts, painting, dancing etc., would not be chargeable to service tax. This exemption would remain in force up to 29th February 2004." (emphasis added) 6.2 Subsequently, Courts and Tribunals held that certain non-profit or charitable institutions were not liable to tax under this entry. To neutralise these rulings, the Finance Act, 2010 inserted an Explanation to Section 65(105)(zzc), with retrospective effect from 01.07.2003, clarifying that any institute imparting training for consideration would be covered, irrespective of profit motive or legal form as non-profit making or charitable institutions. TRU letter, D.O.F. No.334/1/2010-TRU, dated 26.02.2010 clarified the issue as under: "6. Redefining the scope of commercial training and coaching service 6.1 Commercial....
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....g is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force and carrying on its activity with or without profit motive and the expression "commercial training or coaching" shall be construed accordingly." (emphasis added) Further, with effect from 01.05.2011, the Finance Act, 2011 amended Section 65(27) by deleting the exclusionary portion of the definition, while simultaneously exempting such excluded institutions through Notification No. 33/2011-ST dated 01.05.2011. 6.3 The issue under challenge pertains to exemption from duty to Commercial Training or Coaching Service provided by vocational/ recreational training institute. The notification is reproduced below: "Notification No. 24/2004-S.T. dated 10-9-2004 - Service tax exemption to commercial training or coaching services provided by vocational/recreational training institute. In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being ST/947/2011, 26195/2013 satisfied that it is necessary in the public....
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.... "11. Provisions of a beneficial legislation have to be construed with a purpose-oriented approach. [Kerala Fishermen's Welfare Fund Board Vs Fancy Food, (1995) 4 SCC 341] The Act should receive a liberal construction to promote its objects. [Bombay Anand Bhavan Restaurant Vs ESI Corpn., (2009) 9 SCC 61 : (2009) 2 SCC (L&S) 573 and Union of India Vs Prabhakaran Vijaya Kumar, (2008) 9 SCC 527 : (2008) 3 SCC (Cri) 813] Also, literal construction of the provisions of a beneficial legislation has to be avoided. It is the Court's duty to discern the intention of the legislature in making the law. Once such an intention is ascertained, the statute should receive a purposeful or functional interpretation [Bharat Singh Vs New Delhi Tuberculosis Centre, (1986) 2 SCC 614 : 1986 SCC (L&S) 335] **** **** ***** 13. While interpreting a statute, the problem or mischief that the statute was designed to remedy should first be identified, and then a construction that suppresses the problem and advances the remedy should be adopted. [Indian Performing Rights Society Ltd. Vs Sanjay Dalia, (2015) 10 SCC 161 : (2016) 1 SCC (Civ) 55] It is settled law that exemption clau....
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....at the courses merely enhance employment prospects without leading to employment, is speculative and misconceived. By their nature, vocational courses emphasise practical, hands-on skill development. Training in film direction, cinematography, and editing and sound design equips students with essential technical skills, creative discipline, and familiarity with industry tools, enabling entry-level engagement as assistants, interns, or freelancers. These courses also promote self-employment through independent projects and digital content creation, particularly in the expanding streaming and online media sectors. Structured instruction and a shortened learning curve directly enhance employability. By adopting a liberal and purposive interpretation consistent with the beneficial object of the notification, we find that the appellant's training squarely falls within its scope. Hence the appellant is eligible for exemption in the pre-amendment period. 8. The dispute during the period 01.04.2010 to 31.03.2012 was caused by amending Notification No. 03/2010-ST dated 27.02.2010 which substitutes Explanation (i) of Notification No. 24/2004 dated 10.09.2004 so as to modify the meaning of....
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....ly notified as Designated trades, as follows: ▪ Digital photographer ▪ Audio-Visual Technician ▪ Digital camera photography & digital videography Yes. ▪ Digital Camera Photography [MDA101] Videography [MDA102] ▪ Digital Videography (Editing & Mixing) [ELC203] 2. Cinematography ▪ Duration: 2 Year PG ▪ Curriculum: photography, videography, lighting techniques,. editing, direction Yes. Notification dated 06.09.1980, published on 27.09.1980 No. 3. Editing & Sound Design rendered in collaboration with Arcadia University ▪ Duration: 1 Year PG ▪ Curriculum: sound design, editing, trimming, photography & videography, dubbing, recording and noise cleaning. Sound editing and sound design are specialised components within the broader field of sound engineering. Yes. Sound Engineering was notified under Notification dated 06.09.1980, published on 27.09.1980. Yes. ▪ Media [MDA] ▪ Mass Communication [MDA103] Accordingly, both conditions under the Exemption Notification- (i) recognition as a vocational training institute and (ii) offering courses....
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....urden and the fact of publication of the Notification on 22.01.2011 stands proved. The Appellant has stated that they had diligently applied for registration as a 'VTI' under the National Council for Vocation Training ('NCVT') on 28.07.2010. The registration was granted to the Appellant on 10.11.2010. This being so no tax demand survives during the period. 9. As regards the period with effect from 01.07.2012, it is the case of the Revenue that the Appellant was affiliated with NCVT, but the courses are not "approved vocational education courses". Per Contra the appellant submits that, services by way of education forming part of an approved vocational education course fall under Section 66D(l)(iii) and are eligible for exemption. 9.1 Section 66D(l)(iii) of the Finance Act 1994, states as under: "66D. Negative list of services. - The negative list shall comprise of the following services, namely: (l) services by way of - (i) pre-school education and education up to higher secondary school or equivalent; (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; ....
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.... to mere training in trades, skills, or vocations. [See: Sole Trustee, Loka Shikshana Trust v. CIT - (1976) 1 SCC 254 : 1976 SCC (Tax) 14 : (1975) 101 ITR 234] and T.M.A. Pai Foundation v. State of Karnataka - (2002) 8 SCC 481]. However in the impugned issue the expression "approved vocational education course" encompasses "education" and is hence used in a broad sense and is not confined to formal schooling. Vocational education involves education through the development of knowledge and skills necessary for earning a livelihood. In Unique Educational Society (supra) the Hon'ble Punjab and Haryana High Court stated: "14. . . . . We are also of firm view that vocational education is a form of education which is necessary for the development of an individual for the purpose of earning his living. Vocational training has been now recognized to be as important as any other field of education, and it is for this reason that National Council for Vocational Training has been established to streamline and lay down a systematic pattern of providing education. As the institute is duly approved by the NCVT, it cannot be said that the institute is not imparting education." (emphas....
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....y in relation to the transaction in respect of which it is issued. The Income Tax Appellate Tribunal, Mumbai, in Assistant Director of Income Tax Vs Green Emirate Shipping and Travels [(2006) 100 ITD 203 (Mum) / [2006] 286 ITR 60 (Mum)], after referring to the Supreme Court's decision in Union of India Vs Azadi Bachao Andolan [AIR 2004 SC 1107], held that the AAR, not being part of the judicial hierarchy, does not create binding precedent for the Revenue, assesses (except the applicant and the jurisdictional authority), or appellate authorities. Accordingly, the ruling does not have any general precedence value and is not relevant to this appeal. 11.2 The judgment cited by the appellant in IILM Film & Media School Vs CST [2013 (32) STR 321 (Tri-Del)], which is relevant to the issue of whether trainees are able to undertake self-employment directly (for the assessee to be eligible for the exemption) prior to the Negative List era, is reproduced below: "4. The adjudicating authority denied the benefit of the exemption claimed by the appellant for the reasons set out in para 17.4 of the adjudication order. The reasons recorded by the adjudicating authority may be summarise....