By TIOL News Service

MUMBAI, JUNE 22 2015: THE appellants are engaged in conducting courses at post graduate level in the field of Marketing, Finance, Human Resources, System Management etc. The service provided by them was held to be taxable under the category of "Commercial Training and Coaching service."

Before the CESTAT the appellants submitted that their activities are exempted under Notification 24/04-ST before it was amended by Not 3/2010-ST. A plethora of cases were also cited in support, namely, IILM Film & Media School - 2013-TIOL-879-CESTAT-DEL, Wigan & Leigh College (I) Ltd. - 2007-TIOL-1852-CESTAT-BANG, WLC College India Ltd. - 2012-TIOL-546-CESTAT-DEL, Pasha Educational Training Inst. - 2009-TIOL-288-CESTAT-BANG, Actor Prepares - 2013-TIOL-1150-CESTAT-MUM.

The Bench observed that the matter was dealt extensively in the appellant's own case 2013-TIOL-1830-CESTAT-MUM and held against the appellant.

Nonetheless after extracting passages from the said decision, the Bench also held –

Merits & Limitation:

+ In the case of the second appellant, we agree that the genuine belief that Charitable Trusts are not covered by the expression "Commercial Training or Coaching Centre" is supported by the fact that Not 24/2004-ST was amended retrospectively to cover such institutions. Therefore the larger period of limitation cannot be invoked.

+ The second appellant has also contested the inclusion of amounts recovered towards students special funds, alumni fund and deposit fund which were used for various expenses and on sale of form/prospectus and re-exam fees. The contention is that the amount recovered under students fund is recovered under receipts and is towards expenses such as textbooks, uniform, medical check-up, insurance etc. Unspent amounts are returned to the students. We agree with the reliance placed on the case of Intercontinental Consultant & Technocrafts P. Ltd. - 2012-TIOL-966-HC-DEL-ST in which the Delhi High Court held that amounts recovered towards expenses cannot form part of the value of the service. Similar is the case relating to charges for re-examination fees which is an activity post the coaching training and is an expense recovered from the students. Accordingly, we hold that these charges are not includable in the value of the service.

+ The student deposit fund is collected as a refundable security deposit to meet unforeseen expenses. As long as these expenses are specifically charged to the students the same cannot be included in the value of service applying the above ratio.

+ The amount collected towards sale of forms, prospectus will not be includable in the value on which service tax is demanded relying on the Tribunal's judgment in the case of Cerebral Learning Solutions P. Ltd. - 2013-TIOL-834-CESTAT-DEL; Chate Coaching Classes P. Ltd. - 2012-TIOL-714-CESTAT-MUM.

Penalty:

+ In view of the uncertainty prevailing on the leviability of tax on "Commercial Training and Coaching centres and keeping in view the amendments to the Notification 24/2004 which introduced changes in the definition of vocational training, a fair case is made out before us to hold that there was a reasonable cause for failure to deposit the service tax. And therefore, the benefit of section 80 which uses the word "reasonable cause" must be extended to the appellants.

Conclusion: Demand of service tax and interest on all the appellants is upheld but the demand for the larger period of limitation is set aside. Penalties are set aside in terms of Section 80 of FA, 1994.

The Appeals were disposed of.

(See 2015-TIOL-1200-CESTAT-MUM)