TaxTMI 
TaxTMI 
2026 (8) TMI 160
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....llant and penalty upon its director. 2. The fact, in brief, is that the appellant is engaged in organizing various National Level Talent Search Examinations and Olympiad such as National Level Science Talent Search Examinations (NLSTSE), Unified Cyber Olympiad (UCO), Unified International English Olympiad (UIEO) and similar examinations for school students throughout the Country. The appellant prepares question papers, supplies OMR sheets to schools, evaluates answer sheets and declares results after receiving participation details from schools. According to the appellant, these activities are undertaken for educational institutions and constitute services relating to the conduct of examinations, which are exempt under Entry No. 9(b) of Notification No. 25/2012-ST dated 20.06.2012. 3. Pursuant to investigation conducted by the Department, a Show Cause Notice dated 29.09.2020 came to be issued proposing recovery of Service Tax on the ground that the examinations conducted by the appellant were optional talent search examinations, not forming part of the prescribed curriculum of schools and therefore not covered under the exemption notification. The notice also proposed invocat....
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....cial Leave Petition filed by the Revenue against the said judgment has been dismissed by the Hon'ble Supreme Court and, therefore, the ratio laid down therein has attained finality. Reliance is also placed upon decision of the Hon'ble Gujarat High Court in Sahitya Mudranalaya Vs Additional Director General [2021 46 GSTL 245 Guj], wherein, the expression "Education" and examination-related activities has been interpreted broadly. 8. On the issue of limitation, Learned Counsel submits that the dispute is purely interpretational. The appellant had maintained proper books of account, disclosed all recipients in its financial statements and had responded to every query raised during investigation. There was neither suppression of facts nor any willful mis-statement with intent to evade payment of tax. Consequently, invocation of the extended period under the proviso of Section 73(1) is wholly not sustainable. In this regard Learned Counsel relied on the following decisions: (i) International Merchandising Company, LLC Vs. Commissioner of Service Tax, New Delhi [2022 (67) G.S.T.L. 129 (S.C.)] (ii) Social Media India Ltd., Vs Commissioner of Central Excise and Service....
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....al institution; (iv) services relating to admission to, or conduct of examination by, such institution;" 12. The controversy essentially turns upon the interpretation of Entry No. 9(b) of the Mega exemption notification and therefore, the issue is one of the statutory interpretations. Entry No. 9(b) of Notification No. 25/2012-ST exempts services provided to an educational institute by way of services relating to admission to, or conduct of examination by, such institution. A plain reading of the notification shows that the legislature has consciously employed the expression "services relating to conduct of examination" and not narrower expression "services relating to conduct of curriculum examinations" or "Board Examinations". It is a settled principle of interpretation that where the language of the notification is plain and unambiguous, neither Department nor the Tribunal can add words which the legislature has consciously omitted. 13. The Adjudicating Authority has denied the exemption primarily on the ground that the Olympiad and talent search examinations conducted by the appellant do not form part of the prescribed curriculum of CBSE or State Boards and are o....
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....lar activities, Olympiads seminars and competitive examinations, may be availed only by interested students. The optional nature of participation does not alter the identity of the recipient of service where the educational institution itself engages the service provider for conducting such examinations. 18. Much emphasis has been placed in the impugned order on the fact that the examinations conducted by the appellant are not mandatory examinations prescribed by the Boards. We are unable to hold that this circumstance is decisive. The exemption entry speaks of services relating to conduct of examination and not of examinations conducted pursuant to statutory mandate. In modern educational systems, institutions conduct several assessments, aptitude tests, Olympiads, talent search examinations and internal evaluations to asses and improve academic performance of their students as also to evaluate the skill or knowledge gap of students. This is also undertaken by students to see the status of their students vis-a-vis students of other schools undertaken similar examinations. Such examinations are undoubtedly connected with the educational process and cannot be excluded merely beca....
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....he skills of a candidate and the knowledge, be it a school test, university examination, professional entrance examination or any other examination. As held by the Supreme Court, the examination is considered as a common tool around which the entire education system revolves. In State of Tamil Nadu vs. K. Shyam Sunder (2011) 8 SCC 737, the Supreme Court held thus: "21. There has been a campaign that right to education under Article 21-A of our Constitution be read in conformity with Articles 14 and 15 of the Constitution and there must be no discrimination in quality of education. Thus, a common syllabus and a common curriculum is required. The right of a child should not be restricted only to free and compulsory education but should be extended to have quality education without any discrimination on the ground of its economic, social and cultural background." 19. Thus, the Supreme Court, in the above decisions, has held that: - the expression 'education' is of wide import and includes all matters relating to imparting and controlling education; - the examination is always considered as one of the major means to assess and evaluate candid....
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....eachers with insights into where exactly their students stand compared to the national average or another section or school ASSESSMENT OF SCHOLASTIC SKILLS THROUGH EDUCATIONAL TESTING (ASSET): - The ASSET is an examination tool for educational assessment of students of class 3-10 in schools across India and outside India. - Under the ASSET, a set of questions is provided on various subjects which are set based on the class level, board (like State or CBSE or ICSE, etc) and the methodology adapted by the school for teaching. These set of questions are either provided in hard copy or also through online mode. - Under the ASSET, no any pre or post exam teaching is provided to the students. Once the class takes the test under the ASSET, then the answers are evaluated and student wise and class wise results are provided. The exam is conducted at school, and based on their internal policy, all schools make the ASSET mandatory for evaluation of the student and the ASSET results are included in the overall evaluation system of the school. This is confirmed by the agreement-cum-application form for the ASSET also. 22. We now proceed to quote the ....
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....mandated by entry 66 (b) (iv) of notification 12/2017-Central Tax as reproduced are fulfilled or not as far as the services relating to conduct of examination by, such institution; up to higher secondary. We find from the submissions of the applicant that they are supplying ASSET multiple questions to the School for taking the examination on students on yearly basis. Sample agreement submitted by the applicant vide clause 8 stipulates as under: "It is expressly agreed that test undertaken by school under ASSET FS/FC are mandatory part of the examination and evaluation of the students and ASSET results will be taken into account for overall assessment done by the school. If the need arises the school shall issue a certificate to EI in this regards" 21.1 On reading the above, it comes out that schools taking ASSET will use its results for its examination process and overall assessment of the students. The Schools uses ASSET for the purpose of assessment and diagnostic assessment of its students. ASSET uses multiple-choice question to focus on measuring how well SKILLS and CONCEPTS have been understood by the students. The basic nature of ASSET service is an examinat....
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....levy of GST. Auxiliary services received by such educational institutions for the purpose of education up to Higher Secondary level is also exempt from GST. Other services related to education, not covered by the exemption, would be taxed at a standard rate of 18% with full admissibility of ITC for such taxable services in cases where the output service is not exempt. In a nutshell, every attempt is made to ensure that the core educational services are fully exempt from GST." 21.4 Therefore, we hold that services have been provided to the schools in relation to conduct of examination of students by such educational Institutes. We also take cognizance of case laws, CCE V/s Rajasthan State Chemical Works 1999(55) ELT 444 (SC); Union of India V/s Ahmedabad Electricity Co. Ltd. 2003(158) ELT 3(SC) and M/s. Doypack Systems (P) Ltd. Vs UOI 1988 (36) ELT 201, cited by the applicant, wherein Honourable Supreme Court, while interpreting the term 'relating to' and 'in relation to', has assigned wide and broad view of the term. Therefore, we hold that second condition for availing the exemption has also been satisfied in the instant matter. 22. The applicant ....
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....t is now well-settled that even in tax statutes, an exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive for promoting education or otherwise has some beneficial reason behind it. The exemption notification should be given a literal meaning. The recourse to other principles or canons of interpretation of statute should be resorted to only in the event the same give rise to anomaly or absurdity. As observed earlier, the exemption notification must be construed having regard to the purpose and object it seeks to achieve. The notification in the case on hand should be read as a whole. 26. We are of the view that there need not be any further debate on the question, whether the services provided by the writ-applicant to the schools, which are educational institutions, fall within the meaning of the aforesaid notifications. The services, definitely, in our view, fall within the two notifications referred to above. 27. In the overall view of the matter, we are convinced that the impugned order passed by the Gujarat Appellate Authority for Advance Ruling is not sustainable in law." ....
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....us: "66-D. 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 recognized by any law for the time being in force; (iii) education as a part of an approved vocational education course." 13.4 Entry 9 of Mega Exemption Notification No.25/2012-ST dated 20th June, 2012, which was effective from 01.07.2012 to 31.03.2013, reads as under: "9. Services provided to or by an educational institution in respect of education exempted from service tax, by way of,- (a) Auxiliary educational services; or (b) Renting of immovable property; Definition (f) - "auxiliary educational services" means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge - enhanced 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 ot....
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....petitioners, are not services which can be said to be services by way of pre-school education and education up to higher secondary or equivalent; education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; or education as a part of an approved vocational education course; and therefore, the activities carried out by the Boards/University do not fall within the ambit of clause (l) of section 66D of the Finance Act, 1994 or clause (oa) of the Mega Exemption Notification. 13.11 It is further the case of the respondents that auxiliary education services, that is, conduct of examination and result processing are exempted only if such services are provided to an educational institution. It, however, is not in dispute that the services provided by the petitioners are in the nature of auxiliary education services as defined under clause (f) of the definitions paragraph of the Mega Exemption Notification. 13.12 Notification No.06/2014 - Service Tax dated 11.07.2014 defines "educational institution" to mean an institution providing services specified in clause (l) of section 66D of the Finance Act, 1994. Therefore onl....
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....y 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 force; (iii) education as a part of an approved vocational education course." 13.15 Thus, the nature of services referred to in clause (l) of section 66D of the Finance Act, 1994 and clause (oa) of the Mega Exemption Notification are verbatim. 13.16 The question is, whether the narrow meaning sought to be assigned to the word "education" by the respondents is required to be adopted, namely only those institutions which directly impart education to the students; or a broader meaning which includes even those institutions which are connected with the education of those students. 13.17 At this juncture, reference may be made to certain decisions on which reliance has been placed on behalf of the petitioners. 13.17.1 In Gujarat University v. Krishna Ranganath Mudholkar, (supra), the Supreme Court held that the expression "education" is of wide import and includes all matters relating to importing and controlling education.....
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....ation or any other examination. Candidate's fitness for his further assignment, whether in studies or employment is, therefore, judged on the basis of his performance in the examination. It is for this reason, the examination is considered as a common tool around which the entire education system revolves. 13.17.4. In State of T.N. V.K. Shyam Sunder, (supra) the Supreme Court held thus: "21. There has been a campaign that right to education under Article 21-A of our Constitution be read in conformity with Articles 14 and 15 of the Constitution and there must be no discrimination in quality of education. Thus, a common syllabus and a common curriculum is required. The right of a child should not be restricted only to free and compulsory education, but should be extended to have quality education without any discrimination on the ground of its economic, social and cultural background." 13.18 Thus, the Supreme Court, in the above decisions, has held that: - the expression "education" is of wide import and includes all matters relating to imparting and controlling education; - the examination is always considered as one of the major mean....
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....ourt, the examination is considered as a common tool around which the entire education system revolves. 13.22 Thus, education would mean the entire process of learning, including examination and grant certificate or degree or diploma, as the case may be and would not be limited to the actual imparting of education in schools, colleges or institutions only. Unless the School Boards hold examinations, the education of school students would not be complete, so is the case with college students, whose education would be complete only when the University conducts examinations and awards degrees or diplomas. It is the School Boards which issue the Secondary and Higher Secondary School Certificates after holding examinations and the University which confers degrees/diplomas etc. after holding examinations. Unless a student holds a certificate issued by a Board, his or her school education would not be complete, similarly, without a degree or diploma being conferred by the University, college education would not be complete. Therefore, examinations are an indispensable component of education, without which such education is incomplete. Therefore, to say that Boards/Universities ar....
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....inasmuch as the show-cause notices are premised on the allegation that the service recipients namely the Boards/University referred to hereinabove are not educational institutions and, therefore, the services rendered by them do not fall within the negative list of services as provided under section 66D(l) of the Finance Act, 1994 and that the Board/University are not "educational institutions" as defined under clause (oa) of Entry No.2 of the Mega Exemption Notification No.25/2012-ST dated 20.06.2012. 15. Once it is held that the service recipients are educational institutions, the impugned show-cause notices are rendered unsustainable. Therefore, the question as to whether the respondents were justified in invoking the extended period of time on the ground that the petitioners had, with an intention to evade payment of service tax, misstated that these organisations are educational institutions to claim incorrect and ineligible exemption, is rendered more or less academic. Nonetheless the court deems it fit to answer this question also." 22. We respectfully agree with the said principle. Examination is not merely the Final Board Examination but includes the entire pro....
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....nt are not prescribed as part of school curriculum as per CBSE/State Board Authorities, as also the aim and objective of their exams/tests are mainly to judge the fundamental understanding of concepts and application of skills. The department further reiterated that in terms of judgment of Hon'ble Supreme Court in the case of CC (Import), Mumbai Vs Dilip Kumar & Company [2018 (361) ELT 577 (SC)], the exemption notification has to be interpreted strictly. They have also submitted that reliance placed on the judgment of Educational Initiatives Pvt Ltd., supra, and Sahitya Mudranalaya Vs Additional Director General, supra, are not applicable and are distinguishable primarily on the ground that in the present case examination fee is not collected from the schools but from the individual students. They have also submitted that there is difference between ASSET exam and exam conducted by the appellant. 28. Per contra, the appellants, in their additional submissions, have mainly submitted that this view of the department is not borne out of statutory provisions, as also a plain reading of entry 9(b)(iv) of the said notification, as the said entry contains no condition that examination ....
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.... grounds taken by the department are not justified for distinguishing this case, insofar as the ratio of the said case is concerned. We also note that even for the period prior to 11.07.2014, when the amendments were enacted, the services were exempted under S.No.9 of the Notification No. 25/2012. Therefore, the demand on merits does not survive. 30. Having held that the services rendered by the appellant are entitled to exemption under Entry No. 9(b) of Notification No. 25/2012-ST, the very foundation of the demand ceases to exist. Nevertheless, since elaborate arguments have been advanced on limitation and penalties, we deem it appropriate to examine those issues as well. 31. The impugned order invokes the extended period under the proviso to Section 73(1) of the Finance Act, 1994 on the allegation of suppression of facts with intent to evade payment of Service Tax. We find ourselves unable to sustain such invocation. 32. The issue involved in the present appeal is purely interpretational. The controversy revolves around the scope and ambit of an exemption notification and the meaning of expression "services relating to conduct of examination". The appellant had maintain....