By TIOL News Service

NAINITAL, APR 04, 2014: THE appellants are engaged in running Computer Training Institute as franchisee of NIIT.

In terms of Notification 24/2004-ST, dated 10/09/2004 taxable services provided in relation to commercial training or coaching, by a vocational training institute were exempted.

However, by notification 19/2005-ST, [w.e.f 16.06.2005] the following amendments were made in this notification -

(i) in the opening paragraph, the following proviso shall be inserted at the end, namely:-

"Provided that nothing contained in this notification shall apply to the taxable services provided in relation to commercial training or coaching by a computer training institute.";

(ii) in the Explanation , after clause (ii), the following clause shall be inserted, namely:-

'(iii) "computer training institute" means a commercial training or coaching centre which provides coaching or training relating to computer software or hardware.'.

At the instance of the Central Excise officers, the appellant paid Service Tax for the period for the period from 10/09/2004 to 15/06/2005.

Later, they filed a refund for the tax so paid contending that no tax was payable in the first place. The adjudicating authority rejected the refund claim and the same was upheld by the Commissioner (Appeals).

The CESTAT after adverting to the notification 9/2003-ST which exempted commercial training or coaching service by a computer training institute and the extensions granted till the advent of notification 24/2004-ST inter alia held -

6. The main contention of the revenue in that the words "a computer training institute" have not been incorporated under Notification No. 24/2004-ST (supra) and therefore the appellant is not eligible to avail the exemption benefit. We do not agree with the submission of the learned DR. In the present case, the appellant claimed that they were providing computer training to enable the trainee to seek employment after such training, which is come under "vocational training institute" under Notification No. 24/2004 (supra). We find that there is no dispute that the appellant is a computer training institute providing commercial training to enable the trainee to seek employment or undertake self employment, directly after such training. Therefore, the service provided by the appellant satisfies the Explanation [I] of the said notification and it is within the purview of "vocational training institute".

As for giving retrospective effect to the amending notification No. 19/2005-ST, as pleaded by the Revenue representative, the Bench held that it is a well settled law that unless it is specified otherwise, an exemption notification shall come into effect on the date of its issue and, therefore, the submission of the DR has no merit.

In fine, the appeal was allowed with consequential relief. We reported this order as 2008-TIOL-1566-CESTAT-DEL.

Incidentally, a similar decision was also rendered in the case of SunwinTechnosolutions Pvt. Ltd. - 2007-TIOL-1392-CESTAT-KOL.

Never in a mood to accept the order of the CESTAT, in the present case, the CCE, Meerut-I filed an appeal before the High Court of Uttarakhand in the year 2009.

The appeal was decided recently.

The High Court was not in agreement with the reasoning proffered by the Tribunal in the matter of tracing the exemption lineage as available to a Computer Training Institute and concluding that the same is a vocational training institute.

The High Court observed -

"…, even if by being trained in computer software or hardware, the person is capable of seeking employment or undertaking self-employment, inasmuch as the training is in computer software or hardware, it will not come within vocational training institutes as the Notification (9/2003-ST, dt. 20.06.2003) made specific distinction between vocational training institutes and the computer training institutes by giving definitions thereof in the Notification dated 20th June, 2003. Therefore, we are of the view that the Tribunal was wrong in holding that, inasmuch as training in computer software and hardware imparted to the trainees enables the trainees to seek employment or to undertake self-employment, the trainer, namely, respondent is a vocational training institute and not a computer training institute as was provided in the Notification dated 20th June, 2003."

Nonetheless, in the context of whether Computer Training Institute is exempted by notification 24/2004-ST till its amendment by notification 19/2005-ST, the High Court in following precise words held -

++ 10th September, 2004 Notification is an independent Notification. The same did not refer to any earlier Notification. Therefore, in the matter of interpreting the Notification dated 10th September, 2004, one has to read only the words used in that Notification and cannot borrow any words from any other Notification.

++ By this Notification, there is no dispute that exemption was accorded to vocational training institutes. Vocational training institutes had been defined by the Notification.

++ In absence of statutory definition, we have to proceed on the basis of the ordinary meaning of the word "vocational", which means "relating to an occupation or employment; directed at a particular occupation and its skills".

++ It cannot be questioned that skill pertaining to computer software and hardware is required to be acquired and, at the same time, it cannot be disputed that once such a skill is acquired, it throws open the door of an occupation relating to computer software and hardware, which entails employment or self-employment.

++ Inasmuch as nothing was mentioned in the Notification dated 10th September, 2004 as regards computer training institutes, it cannot be said that the 10th September, 2004 Notification made any distinction in between a vocational training institute and a computer training institute, as was made on 20th June, 2003.

++ In that background, we find that the Tribunal cannot be said to have erred by holding out that the respondent assessee was a vocational training institute, but we make it clear that it was so in terms of the Notification dated 10th September, 2004 until 16th June, 2005, i.e. when the concept of computer training institute was introduced for the first time in the Notification dated 10th September, 2004.

In fine, the Revenue appeal was dismissed.

(See 2014-TIOL-429-HC-UKHAND-ST)

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