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ST - Preparation of examination results on computers - as service is rendered 'in relation to' education, same is exempted by Notif. No. 14/2004-ST: CESTAT

By TIOL News Service

NEW DELHI, OCT 18, 2017: THE period of dispute is 2006-07 to 2011-12.

The appellant is engaged by the Chhattisgarh Madhyamik Shiksha Mandal with reference to Board examination work, checklist and foil/ counter foils, post examination work regarding maintenance relating to balance stationery etc.

The agreement executed is pertaining to the preparation of examination results on the computers which involve pre-exam and post exam work. The appellant is working on principal to principal basis with reference to third party, i.e. students.

The department has demanded and confirmed service tax under the head of Business Auxiliary Service.

In appeal before the CESTAT, the appellant submits that education service is exempted from being subjected to service tax under the head BAS.

The Bench noted that Notification No.14/2004-STas amended by notification 19/2005-ST dated 7 June 2005 -

"…exempted taxable service provided to a client byany person in relation to the business auxiliary service, and provided in relation to agriculture, printing, textile processing or education, from the whole of service tax leviable thereon under section 66 of the said Finance Act."

Furthermore, the words "in relation to" have been defined by the Supreme Court in the case of Doypack Systems (Pvt.) Ltd. - 2002-TIOL-389-SC-MISC and where it was observed that-

"48. The expression "in relation to" (so also "pertaining to"), is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10, following and approving Nitai Charan Bagchi v. Suresh Chandra Paul (66 C.W.N. 767), Shyam Lal v. M. Shayamlal (A.I.R. 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term "relate" is also defined as meaning to bring into association or connection with. It has been clearly mentioned that "relating to" has been held to be equivalent to or synonymous with as to "concerning with" and "pertaining to". The expression "pertaining to" is an expression of expansion and not of contraction".

The CESTAT, therefore, observed -

"6. From the agreement between the Education Board Chhattisgarh Madhyamik Shiksha Mandal and the appellant, it appears that the service is rendered by the appellant are "in relation to" education which is exempted from the service tax as per the Notification No. 14/2004 dated 10.09.2004. When it is so, then we find no justification to sustain the impugned order. The same is hereby set aside."

The appeal was allowed.

(See 2017-TIOL-3725-CESTAT-DEL)


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