By TIOL News Service

MUMBAI, OCT 14, 2013: THE appellant is a Professor with a string of degrees namely, MA, LLB, DEPS, MTS [London].He started an academy of English language in the year 1998. The faculty members include his family members who too are qualified and proficient in English language. The academy has a website and on the Home page is mentioned the following -

English has assumed phenomenal importance in global communication. In the developing world, English is taught as a second language or a foreign language. In India it is a language of government departments, law courts, mass media, educational institutions, official institutions, commercial and industrial organizations, and therefore, a good command on English (spoken and written) is a passport to social and economic advancement.

About Us: 

'Prof. … Academy of English' has been a name synonymous with quality and pure academics for the past ten years. It has been our constant effort to strive for academic excellence and maximum output. Our objective is to enable our students to become fluent speakers of English. Keeping this objective in mind, Prof. … started this academy in May 1998. Today, we can proudly proclaim that we have trained  more than 12,000 students  in spoken English.

Our various courses in English are designed to suit the needs of professionals like  doctors, engineers, lawyers, chartered accountants, lecturers and also college and school students.  One of the principal aims of the courses is to help the participants to speak English more confidently and effectively.    

There are many courses being conducted viz. Spoken English/Business English/Advanced Communication skills/IELTS Training etc. The fees vary from Rs.3000 to Rs.5500 per student depending upon the course.

In January, 2004, the Professor got himself registered with the Central Excise department for payment of Service Tax under the category "Commercial Coaching & Training Services". He paid a total Service Tax of Rs.1,40,180/- for the period from January 2004 to October, 2004.

Subsequently, in the month of November, 2004, he filed a refund claim on the ground that ‘Coaching in Spoken English' comes under the category of ‘Coaching in Foreign Languages' and is exempted from Service Tax vide Notification no. 9/2003-ST.

The Professor had probably decided to embark on a long journey.

The adjudicating authority observed that as per Article 343 of the Indian Constitution, English is an official language and, therefore, it is not a "foreign language". Suffice to say the refund claim was rejected.

The Commissioner (A) too held that "training and coaching given for spoken English" is NOT vocational training and, therefore, the benefit of exemption is not available.

The Professor filed an appeal before the CESTAT in the year 2005.

And the matter was heard recently.

Apart from producing letters from ex-students certifying that undergoing the course at the Academy had improved their employability and also a certificate from a Retired Professor certifying that the course conducted is directly related to employability of the student, the appellant also relied on the decision of the CESTAT in the case of ICM English Centre - (2012-TIOL-247-CESTAT-BANG) & the Board Circular 59/8/2003-ST dated 20.06.2003 to justify their claim for exemption.

After extracting the notification 9/2003-ST, the Bench observed -

+ The course conducted by the appellant is a twoweeks course and as per the advertisement the said course enables the trainee to improve the pronunciation, accent, presentation skills, writing skills, telephone etiquette, group discussion training, interview techniques and so on. After undergoing this training for a period of two weeks, it is not understood how it can, in any way, improve the self-employability of the trainee. Therefore, the only question that is left is whether the said training enables the trainees to seek employment after such training or coaching.

+ The various certificates submitted by the appellant have been given by people who are already employed and they have merely certified that the training has increased their employability in future. Similarly, the certificate issued by the retired Professor merely states that the training imparted is directly related to employability of students. These certificates have been obtained very recently and, therefore, the evidentiary value of these certificates is suspect. The certificates produced are not from any employers who have found that the training imparts skills making the trainees suitable for employment in their firms.

+ The reliance placed on this Tribunal's decision also does not help as the view taken in the said case was a prima facie view at the time of considering grant of stay and, therefore, there is no precedential value for the said decision.

+ When even after undergoing training in English languages for years together both in school and colleges, it is difficult to attain proficiency, it is inconceivable that in a matter of two weeks, any proficiency or skill can be imparted or achieved by undergoing training for a mere two weeks. Thus, the whole claim of the appellant lacks credibility and conviction.

+ Training in Languages, whether Indian or foreign, has not been prescribed as a vocational training in the list published vide Notification no. DGE & T-19(4)/2011-CD-Pt dated 19.06.2013 issued by the Government of India in this regard.

+ Thus, if the apex body dealing with vocational training in India itself does not consider training in languages as vocational training, it is not conceivable how training in languages can be treated as a vocational training for the purpose of Notification no. 9/2003-ST or its successor Notification no. 24/2004. The clarification issued by the Board also would not matter as the taxability is determined not by the Circulars or notifications, but by the provisions of law.

Holding that there is no merit in the appeal, the same was dismissed.

In passing: English is a funny language…

+ Board Circular 59/8/2003-ST:

"2.2 VOCATIONAL TRAINING AND COACHING CENTERS:

2.2.1 Commercial coaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams like entrance examinations for Indian Institute of Technology-Joint Entrance Examinations/Pre Medical Tests, Civil Services exams etc. are chargeable to service tax. However, services in relation to commercial coaching and training, provided by, -

a. vocational training institute;

b. computer training institute; and

c. recreational training institute;

have been exempted from service tax w.e.f. 1 st July, 2003vide Notification No.9/2003-Servtice Tax dated 20 th 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 29 th February 2004."

Will a section 11C notification do the trick or can learning Spoken English be considered a ‘recreational activity'?

(See2013-TIOL-1510-CESTAT-MUM)