ST – Since degree is not issued, the college should be considered as a 'Commercial training or Coaching centre’ is absurd interpretation: CESTAT by Majority
By TIOL News Service
NEW DELHI, OCT 09, 2017: THE matter concerns liability of service tax for the services rendered by the appellants under the category of " Commercial Training and Coaching " services.
| 65(27) Commercial Training or Coaching Centre" means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognised by law for the time being in force;" |
The facts:-
i. The appellant runs various courses which lead to award of degrees of University of London, Allahabad Agriculture Institute (deemed University)
ii. Along with above courses, they also run British English Certificate course and personality development courses.
iii. The degrees awarded by University of London and Allahabad Agriculture Institute for their courses are equivalent and at par with undergraduate and Honours degrees of various universities.
iv. The degrees awarded for the appellant's courses by University of London have been mentioned as equivalent to the corresponding degrees like B.Sc. and B.A.(Hons.) of University of Delhi and other universities in the title "Equivalence of Foreign Degrees". The Association of Indian Universities (AIU) is the only body in India which is recognised to grant Equivalence of Degrees awarded by the foreign universities.
v. Acknowledging its role and work, the Ministry of Human Resource Development, Govt. of India vide their letter No.F.15-17/94-TS IV dated 13.03.1995 issued a Notification that those foreign qualifications which are recognised/equated by the AIUU are treated as recognised for the purpose of employment to post and services under the Central Govt.
vi. Rule 12 of Central Excise (Appeal) Rules, 2001, in its Explanation also makes a mention of University of London as the recognised university, whose degree is being recognised as eligible qualification for the "authorised representative".
The following case laws were also relied upon in support of their stand that no service tax is payable -
(a) IILM Academy of Higher Learning = 2012-TIOL-489-CESTAT-DEL .
(b) Institute of Clinical Research (India) = 2013-TIOL-585-CESTAT-DEL .
(c) Apex Institute of English = 2010-TIOL-1742-CESTAT-BANG .
(d) ICM English Centre = 2012-TIOL-247-CESTAT-BANG .
The Member (Technical) took the following view –
+ It is not in dispute that the degree/diploma for the courses run by the appellant are issued/awarded either by University of London or by Allahabad Agriculture Institute, but when the appellant itself is not issuing any diploma or degree certificates recognised by law, it is not excluded from the definition of " Commercial Training or Coaching Centre" given in Section 65 (27) of the Finance Act, 1994.
+ Department has not been able to produce any substantial evidence to indicate that there has been wilful suppression with intent to evade the service tax on the part of the appellant. Consequently, the liability of service tax against the appellant cannot be confirmed beyond the period of one year preceding the date of Show Cause Notice.
+ The matter was remanded for quantification of demand for the period of one year.
The Member (Judicial) while concluding that the appeal has to be allowed in totality inter alia observed -
++ In my view, the degree awarded by University of London or University of Allahabad are the degree which are recognized by law for the time being in force and as such, would get included in the exclusion clause of the definition.
++ I find that Commissioner (Appeals) in the same assessees case vide his order-in-appeal No. 28/SVS/GGN/2014 dated 30.1.14 has examined the issue in detail and has concluded that the courses offered by the appellant are recognized by law in India and as such, appellant would fall outside the ambit of Commercial or coaching centre insofar as LSE courses by the appellant are concerned. No appeal stands filed by the Revenue against the said order of Commercial (Appeals) and the same has attained finality. Revenue has also not been able to show us that the said order of Commissioner (Appeals) was put to challenge by the Revenue before the higher appellate forum.
++ Inasmuch as the issue is finally settled by the said decision of Commissioner (Appeals) with which the Revenue does not seem to be aggrieved with and in view of the discussions in the preceding paragraphs as also in view of the fact that degrees being awarded by the London School of Economics and Allahabad Agricultural Institute are recognized by law, I am of the firm opinion that no service tax liability would get fastened against the appellant in respect of such two courses.
The following difference of opinion was, therefore, referred to the third Member –
| "Demand within the limitation period is required to be upheld, as held by learned Member (Technical) or the entire demand has to be set aside as held by learned Member (Judicial)." |
The third Member on reference while agreeing with the findings of Member (Judicial) observed -
++ On the first issue, regarding courses offered by the appellant resulting in the degrees/diplomas awarded by University of London, I find that these degrees/diplomas are to be considered as recognized by the law for the time being in force. It is noted that inference that degree or diploma or any educational qualification should be issued by commercial trainee or coaching Centre itself, is too literal interpretation of the statute . It is a well known fact that the colleges in India provide courses resulting in degrees or diplomas but the said degree and diplomas are issued by the University or the main Institute to which these colleges are affiliated. If it is to be held that as the degree is not issued by the college which is providing course, the college should be considered as a " commercial trainee or coaching centre ", subjected to service tax, such interpretation will result in absurd consequences.
++ The UGC and AICTE etc. are recognizing bodies of a University or an institution. The degree or diploma awarded by these institutions are being considered as recognized by law for time being in force. In this connection, we note the position has been clarified regarding the scope of the term qualification "recognized by any law" will include such course as are approved or recognized by any entity established under a central or a state law, including delegated legislation, for the purpose of granting recognition to any education course.
++ It is relevant to note here that the department has been taking consistently a view that when an educational institute is affiliated to a university/institution awarding a degree recognized by law, then the said institute is not a commercial training or coaching centre.
++ Admittedly, the appellants were providing course resulting in the award of B.Tech, BBA, MBA of Allahabad Agricultural Institute (deemed university). No demand for Service Tax has been made in respect of these courses. Even on this ground, the appellants cannot be considered as commercial coaching or training centre. Apart from the fact that the appellants will fall outside the purview of commercial coaching or training centre, I find that the Business English Course and Personality Development course offered by the appellants will be covered by exemption notification No.9/2003 ST .
The demand for Service Tax against the appellants is not sustainable.
Consequently, in view of the Majority decision, the impugned orders were set aside and the appeals were allowed.
(See 2017-TIOL-3635-CESTAT-DEL)
