TaxTMI 
TaxTMI 
2026 (5) TMI 1233
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....are registered with the Service tax department as a service provider under the category of taxable services namely, Management or Business Consultant Services, Commercial Training or Coaching Services, etc. Ministry of Human Resource Development (HRD) launched the ICT@ School's Scheme in 2004 (revised in 2010) to provide opportunities to secondary stage students to mainly build their capacity on Information and Communication Technology (ICT) skills and make them learn through computer aided learning process. The Scheme is run by State Governments with funding support from the Ministry of HRD. The students and teachers are the beneficiaries of the activities undertaken under the ICT@ School' scheme. As per the guidelines issued w.e.f. 15.02.2011 * the scheme is envisaged for providing computer aided education in Secondary and Higher Secondary Government and Government aided schools; * States are engaged and encouraged to implement the program through a BOOT (Build-Own-Operate-Transfer) model under which the supplier would make available the ICT infrastructure for the duration of the contract period (normally five years) on the basis of a service level agreement and....
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....earned Counsel for M/s SNIL submits that the demand has considered six agreements; the SCN alleged that the services provided by the Appellant are different and distinct in nature and it involves the services namely (1) supply, installation and commissioning service of computer hardware, software and connected accessories in schools; (2) Management and maintenance of the same; and (3) Imparting computer aided learning or computer education to the students and teachers to make them skillful in use of Information Technology; these activities undertaken by the Appellant in the ICT Scheme are not naturally bundled and the taxability and valuation of each of the services is required to be considered separately; SCN has classified the services of supply, installation and commissioning service of computer hardware, software and connected accessories under the definition of 'Works Contract' and considered the other services of management and maintenance and Computer Aided Learning as pure service in nature for purpose of the valuation under Section 67 of the Act and Rule 2A(ii) of the Service Tax (Determination of Value) Rules, 2006. 3.1. He submits that th....
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.... supply' are similar to the Section 66F (3) (a) of the Finance Act, 1994 as held by the Hon'ble Gujarat High Court in the case of Torrent Power Ltd 2020 (34) GSTL 385 (Guj.)(Paragraph 26). He also relies on the following cases: * Mody Education Foundation 2023-VIL-421-CESTAT-DEL-ST; * Logix Infrastructure Pvt Ltd 2019 (25) GSTL 59 (Tri. - All.); * Rajiv Gandhi University of Health Sciences, Karnataka 2022 (64) GSTL 465 (Kar.). 5. Learned Counsel submits that merely because the payment schedules are indicated separately in the impugned agreements which are composite in nature, a single contract cannot artificially be vivisected for the provision of different services as held in Sri Chaitanya Educational Committee 2019 (22) GSTL 67 (Tri. - Hyd.) and Western GECO International Ltd 2025-VIL-1919-CESTATDEL-ST. 6. Learned Counsel submits that the Education Services were covered under the 'Negative List' and under 'Mega Exemption Notification'; Impugned Order acknowledges the fact that the 'bundled computer aided education services' are being provided by the Appellant to Government/ Government Authorities; however, the Adjudicating Authority has confirmed ....
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....their students and marks obtained in the 'computer subject' were considered and given due weightage in the final examination result; amended guidelines of ICT scheme particularly involve the curriculum and syllabus on computer literacy; as per Clause 7 of the Agreement (Payment terms), the part payment to the Appellant is based on the performance of students which are being adjudged in the annual examination in 'computer subject' conducted by Government of Maharashtra, Director of Education (Secondary & Higher Secondary); hence, the condition under Sl. No. (ii) of Section 66D(l) also stands fulfilled. 7. Learned Counsel submits further that that, w.e.f. 14.5.2016, clause (a) of Serial No. 9 of the Mega Exemption Notification includes services provided by an educational institution to its students, faculty and staff; the term 'educational institute' has been defined under clause 2(oa) of the Exemption Notification to mean an institution providing 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 recognized by any law for the time being in ....
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....cture predominantly for use as an educational establishment. 8.1. Learned Counsel submits that in the present case, the benefit of this exemption was denied to the Appellant only on the assumed ground of non-fulfilment of the third condition as above; Adjudicating Authority wrongly concluded (Para 5.6.2 of the Impugned Order) that the activities of installation, commissioning and maintenance was not done by the Appellant on a structure meant predominantly for use as an educational establishment; the term 'structure' is not defined under the Exemption Notification or the Act; thus, a reference may be made to understand the dictionary meanings of the said term or as interpreted by various courts; (i). Cambridge Advanced Learners Dictionary (Fourth Edition) defines structure to relate to or forming part of the structure of a building or other item; (ii). Black' Law Dictionary (Tenth Edition) defines it to mean any construction, production, or piece of work artificially built up or composed of parts purposefully joined together or the organization of elements or parts or A method of constructing parts. (iii). The Chambers Dictionary defines it to mean the ....
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....ivities fall under clause (a) of Sl. No. 12 and 12A of the Mega Exemption Notification and Section 102 of the Act, "falling under any other original works" meant predominantly for use other than for commerce, industry, or any other business or profession; Clause 2(y) of the Exemption Notification, the term "original works" has the meaning assigned to it in Rule 2A of the Service Tax (Determination of Value) Rules, 2006; the term 'original works' has been defined under Rule 2A as follows. "(a) "original works" means- 4.1. all new constructions; 4.2. all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; 4.3. erection, commissioning or installation of plant, machinery or equipment or structures, whether prefabricated or otherwise; 9.1. He submits that the 'equipment' covers within its ambit the computer hardware, software and connected accessories and thus, the activities of erection, commissioning or installation of such equipment done by the Appellant are covered within the definition of the 'Original Works'; the subsequent 'maintenance' of such Original Works is also covered ....
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....or confirming the invocation of extended period of limitation that the Appellant neither sought any clarification from the Department, is fallacious as there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. * the Appellant was functioning under the self-assessment regime; appellant was under a bona fide belief that the aforesaid activities were exempted from Service tax; * appellant has been regularly filing its ST-3 returns and cooperated with the department in audit proceedings and have furnished all the details asked for by the Department.; * no positive action for a wilful default has been shown by the department; * payment of Service tax by the Appellant in respect of some agreements does not mean acceptance of tax liability as principles of Estoppel will not apply in instant case; present case pertains to the complex interpretation of the legal provisions as evident from the above submissions. * since the demand itself is not admissible for the reasons above, no penalty is imposable under Section 78 of the Act, and no interest is recoverable under Secti....
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....ounds of appeal briefly are that :- * the adjudicating authority has erred in holding the services provided by the party as composite indivisible "Works Contract Service" without proper appreciation of the facts of the case as well as the relied- upon documents; the adjudicating authority has wrongly concluded that the party had supplied goods as well as services under the contracts which could not be vivisected and, therefore, he allowed a blanket abatement of 60% from the total contract value. The Adjudicating Authority has allowed abatement of 60% in these cases also by taking recourse to Rule 2A(ii), whereas Service Tax is required to be paid as per Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006. * as per Annexure C and G, M/s SNIL provided pure service to Bihar and Gujarat and they had paid applicable Service Tax on the said service. * as per Annexure H and I, i.e. agreements with Pondicherry and Jharkhand, M/s SNIL raised bills for service on which they had paid appropriate Service Tax on the full value after deducting the value of goods and VAT paid. * invoices raised by M/s SNIL, the party for ICT projects relating to ....
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....literate; the scheme would involve formulation and transaction of curriculum and syllabus on computer literacy for each of the classes from IX to XII. 15. M/s SNIL was selected through bidding process and have entered into agreements with authorities of various States's Education Department or their authorized agencies of the States namely Maharashtra, Odisha, Bihar, West Bengal, Rajasthan, and Himachal Pradesh, for implementation of the ICT@ School's Scheme. Agreements were entered into with the primary aim of providing computer aided learning and computer education training among the students and teachers of the government and government aided higher secondary schools. 16. We find that M/s SNIL submits that they are providing bundled services and the essential character to the bouquet of services and creation of infrastructure and manpower is only for supply of education and that the education service is covered within the ambit of 'Negative list' up to 13.05.2016 and under 'mega Exemption Notification' from 14.05.2016, on which no service tax is payable by them. We find that learned Commissioner relies on NIIT Ltd. Vs Commercial Tax Officer [2015] 56 taxman....
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....ion service to the Government/Government authorities and they neither fulfil the condition Nos. (i) & (ii) of Section 66D(I) of the Finance Act, 1994 which existed up to 13.05.2016 and nor covered in S. No. 9 of the mega Exemption Notification No. 25/2012- S.T. dated 20.06.2012 as amended by Notification No. 06/2014-S.T. dated 11.07.2014 and further amended by Notification No. 09/2016-S.T. dated 01.03.2016. Therefore, the same is taxable under Section 65B (44) of the Finance Act, 1994 and chargeable to service tax under Section 66B of the Act, ibid. xxxxxxxxxxxxx 6.1. ---------- SERIAL NO. 12 OF MEGA EXEMPTION NOTIFICATION NO. 25/2012-ST DATED 20.06.2012 5.6.2. From perusal of the above provisions, I find that, the benefit under S. No. 12/12A of the mega exemption cannot be given to the party as they have not done installation, commissioning and maintenance specifically on a structure meant predominantly for use as an educational establishment. In fact, they installed and commissioned the computer in the already constructed structure i.e. the Computer Lab in Schools and subsequently maintained the same for further computer aided service. Therefor....
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....in 120 days from the date of agreement; 5% made every semester and the balance 20% payment made based on the performance of student in the annual examination of the computer to be conducted by the State Governments. As per the agreement, after completion of the contract policy of 5 years, the equipment installed and commissioned would be the property of Director of Education and M/s SNIL shall handover all the hardware and software at the end of 5 years. 19. Now, we proceed to analyse the question as to whether the private service providers like M/s SNIL, were eligible for exemption during the impugned period from payment of Service Tax under the scheme. Section 66B of the Finance Act, 1994, the charging section, w.e.f 1 July 2012, levies service tax on all services, other than those specified in the negative list, provided in the taxable territory by one person to another. The term "service" was defined in Section 65B (44) of the Finance Act, 1994 to mean any activity carried out by a person for another for consideration. Under the ICT scheme, the private entities like M/s SNIL are service providers and the state and central governments are the service recipients under the tend....
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....lia, by way of auxiliary education services were exempted from the levy of service tax. 74. Auxiliary education services were defined as under: "auxiliary educational services' means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge-enhancement activity, whether for students or the faculty, or other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for students under any mid-day meal scheme sponsored by Government, or transportation of students, faculty or staff of such institution;" 75. Subsequently, clause (oa), which defined 'educational institution' was introduced in the Mega Exemption Notification No. 25/2012 with effect from 11-7-2014 by Notification No. 06.2014 - Service Tax. In terms of the said Clause, educational institution was defined to mean institution providing the services as specified in clause (l) of Section 66D of the Finance Act, 1994. Thereafter, with effect from 14-5-2016, th....
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....ds a proper attention to the moral and religious sentiments of the child. And it is sometimes used as synonymous with 'learning'." 83. In Sole Trustee, Lok Shikshana Trust v. CIT, the term "education" was held to mean: "the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. What education connotes is the process of training and developing the knowledge, skill, mind and character of students by formal schooling." 84. In "India Vision - 2020" published by the Planning Commission of India, it is stated (at p. 250): "Education is an important input both for the growth of the society as well as for the individual. Properly planned educational input can contribute to increase in the gross national products, cultural richness, build positive attitude towards technology and increase efficiency and effectiveness of the governance. Education opens new horizons for an individual, provides new aspirations and develops new values. It strengthens competencies and develops commitment. Education generates in an individual a critical outlook o....
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....e appellants also place reliance on Section 66F of the Finance Act, 1994 which states that in a bundled service where various elements are naturally bundled in the ordinary course of business, the service should be identified from the predominant nature of service which gives the bundle its essential character." 31. In the instant case, the primary activity of the appellant is to impart intermediate education. The appellants are imparting training for various national entrance tests which are integrated to their intermediate courses as prescribed by the Board. Therefore, the predominant nature of the service will be imparting formal education which stands excluded from service tax net." 24. We find that Central Board of Excise and Customs addressed this precise question in Circular No. 172/7/2013-S.T., dated 19.09.2013. Board identifies the two relevant provisions:- The matter is covered by two provisions of the Finance Act, 1994. Section 66D of the Finance Act contains a negative list of services and clause (l) thereof reads as under: 'Services by way of -- (i) pre-school education and education up to higher secondary school or equivalent....
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....in question are provided by M/s SNIL at government schools at the secondary and higher secondary level. The ICT education is delivered as part of the curriculum prescribed by the State Board. Students are evaluated on this content, and this evaluation contributes to the grant of the Secondary School Certificate or Higher Secondary Certificate, both of which are qualifications recognised by law. On these facts, the services fall squarely within Section 66D(l)(i), being services "by way of" education up to higher secondary school or equivalent. They also fall within Section 66D(l)(ii), being education as a part of a curriculum for obtaining a qualification recognised by law. 28. The CBEC Educational Guideline dated 20.06.2012 clarified the scope of clause (l)(ii) at paragraph 4.12.1: "What is the meaning of 'education as a part of curriculum for obtaining a qualification recognized by law'? It means that only such educational services are in the negative list as are related to delivery of education as 'a part' of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to understand that to be in the negative....
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....e State Board would fall within the definition of an educational institution in terms of clause (oa) of the Mega Exemption Notification No. 25/2012 relating to Service Tax... The Special Leave Petition preferred by the Revenue Department against the said decision was dismissed and the said decision has attained finality. When the entire process of learning including examination and curriculum is covered under Section 66D(l), then the bundled services, provided by M/s SNIL, under the ICT scheme, stand covered by the definition. 31. We find that Section 66D(l) was omitted by the Finance Act, 2016 (No. 28 of 2016) with effect from 14.05.2016. However, this was not intended to create a new tax liability on education services. The D.O. Letter F. No. 334/8/2016-TRU, dated 29.02.2016, issued by the Joint Secretary (Tax Research Unit), explained the transition at paragraph 4.1(A): "Presently, clause (l) of section 66D of the Act [Negative List] covers specified educational services. These services are proposed to be omitted from the Negative List but the service tax exemption on them is being continued by incorporating them in the general exemption notification (Notification....
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....case of services provided by eligible educational institutions..." 34. Entry 9(a) exempts all services provided by an educational institution to its students, faculty and staff; M/s NSIL falling within the ambit of an educational institution within clause 2(oa), provides ICT education services to students and staff of government schools. Entry 9 of Notification No. 25/2012-S.T., as it stood after the 2016 amendment, reads as under:- 9. Services provided -- (a) by an educational institution to its students, faculty and staff; (b) to an educational institution, by way of -- (i) transportation of students, faculty and staff; (ii) catering, including any midday meals scheme sponsored by the Government; (iii) security or cleaning or house-keeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution; 35. In view of our discussion as above, for the period 1.07.2012 to 13.05.2016, the services rendered by M/s SNIL, under ICT scheme services fall within the negative list under Section 66D(l)(i) and (ii) of the Finance Act, 1994. They are ....