By TIOL News Service

NEW DELHI, MAR 27, 2014: THE question of law sought to be urged by the Revenue in this appeal under Section 35 (G) of the Central Excise Act is "whether the term "vocational training institute" in Notification No.24 /2004-ST covers the respondent" and "whether the courses offered by it are exempt for the period 01.07.2003 to September, 2008".

The assessee at the relevant time in 2003 was running courses which is to impart procedural and practical skill based training in areas such as export import management, retail management and merchandising. Concededly, these courses were not accredited or certified by any Central or State Government or statutory authority such as AICTE . The appellant-Service Tax Department issued a notice alleging that the respondent had not paid service tax for the relevant period even though the activities carried on by it are taxable service under Section 65 ( zzc ).

The High Court noted:

It is evident that the levy was sought to be introduced for the first time w.e.f . 1.7.2003. Simultaneously, vocational training institutes defined specifically by a Notification No.9 were exempted. It is not in dispute that the exemption continues even till date. The only difference being that by the latest Notification of 2010, the expression had been narrowed to mean that "those institutes affiliated to the National Council for "Vocational Training and offering courses in designated trade as noticed in the Apprentice Act".

As to what is vocational has been left advisedly open to the authorities. Wigan & Leigh (2007-TIOL-1852-CESTAT-BANG) was a case where the institution was unrecognized and not affiliated to AICTE or any technical body. The contention-that was ultimately accepted by the Tribunal as to the meaning of the expression "vocational training institute" of "coaching centre " is found in the following extract of that judgment:-

"2. The Senior Counsel pointed out that the Notification does not envisage registration of a "Vocational Training Institute". He submits that so long as the trainees who achieve skills seek employment or undertake self employment directly after such training or coaching, then they are eligible for the benefit of the Notification. It is his submission that the training which is being granted to the trainee is only with an objective to find a vocation. The appellant is a training institute and providing coaching and training in business management and fashion technology, advertising, graphic design, media studies to the students. They are covered under the category of "Vocational Training or Coaching Services". The question in this appeal only pertains to the extension of benefit of Notification No.9 /2003-S.T., dated 20.6.2003 and the Commissioner (A) has given a narrow interpretation to deny the benefit solely on the ground that the assessee are not registered with AICTE as a "Vocational Institute". He submits that the order is not legal and proper."

The Tribunal noticing the specific term of what is meant by vocational training institute, i.e., computer training institute or recreation training institute or a coaching centre , was of the opinion that so long as the broad nature of the activity is to impart skills to enable the beneficiaries to seek employment or undertake self employment directly, the conditions were satisfied. In M/s Sadhna Educational and People Development Services Ltd. v. Commissioner of Central Excise, (2013-TIOL-1830-CESTAT-MUM) the findings of the Tribunal-whose order is an elaborate one-mostly containing the extract of the entire syllabus and brochure of the institution is as follows:-

"8. Learned Advocate for the appellant has quoted a catena of case laws listed earlier. We have gone through each of the cases. We find the facts of the present case are distinguishable as none of these cases cover a general M.B.A. program with content of the program as wide and academic as in the present case. We do not consider it necessary to discuss each of these cases here."

It is evident that the term "vocational training institute" included the commercial training or coaching centers which provide vocational coaching or training meant to "impart skills to enable the trainees to seek employment or to have self employment directly after such training or coaching". The notion of such training institute having been recognized or accredited to nowhere emerges from such a broad definition. The further Notification of 2010 substitutes the existing explanation to the term "vocational training institute" and narrowing it to those institutes affiliated to National Council for Vocational Training offering courses in designated trade in fact supports the assessee . Had the intention been to exempt only such class or category of institutions, the appropriate authority would have designed such a condition in the original Notification of 2003 and Notification No.10 of 2004 which had been relied upon in this case.

Held : Tribunal did not fall into error in following its previous ruling in Wigan & Leigh . The question of law framed is accordingly answered against the Revenue and in favour of assessee .

The appeal is accordingly dismissed along with all the pending applications.

(See 2014-TIOL-379-HC-DEL-ST)