By TIOL News Service

MUMBAI, APRIL 17, 2018: THE Appellant is a Public Charitable trust and running classes for graduation courses for the students through Yashwantaro Chavan Maharashtra Open University (YCMOU). They are also providing coaching for preparation of competitive exams conducted by the UPSC and MPSPC.

Alleging that the services of the Appellant except imparting education of graduation courses would fall under the category of Commercial Training and Coaching Institute and be liable for service tax, demand notices were issued and confirmed by the adjudicating authority.

The original authority viewed that the YCMOU is an open university and is basically a distance learning mechanism, in which the students are not expected to attend any specific college/ institute; that therefore the certificates/ degrees issued by YCMOU are independent certificate/ degrees and do not establish that the subject courses are conducted in the institute of the Appellant.

Inasmuch as the adjudicating authority also observed that the Appellant is only preparing the candidates for appearing in various examinations conducted by the YCMOU and also UPSC/MPSC and, therefore, both the activities carried out by them do not get covered in the category of courses recognized by the law and hence the activities fall under the category of Commercial Training and Coaching Services. Further, the courses conducted by the Appellant are career guidance and Entrepreneur Development, Preparing youth for all types of competitive exams, test Series, English Speaking Course etc. cannot be called vocational.

In appeal before the CESTAT, the appellant inter alia placed reliance on the CBEC Circular No. 59/8/2003 dt. 20.06.2003 wherein it is clarified that by definition, such institutes or establishments, which issue a certificate, diploma or degree recognized by law, are outside the purview of commercial training or coaching institute and even if such institutes or establishments provide training for competitive examinations etc., such services rendered would be outside the scope of service tax. Mention is also made of the DOF 334/3/2011–TRU dt. 28.02.2011 which content clearly indicated that appellants were exempted from service tax till 01.05.2011. Moreover, since there is no element of suppression, therefore, the demand is hit by limitation of time and no penalty is imposable upon them.

The Bench observed –

++ We find that the Appellant is imparting education in degree courses as well as for competitive exams and other education programme in terms of agreement between the Yashwantrao Chavan Open University and the Appellant. The said university is recognized university and has appointed the Appellant as their study center. Clearly the Appellants are running parallel college for imparting education in degree/diploma recognized by the law and cannot be differentiated with the other courses run by the regular colleges.

++ We have also seen the letter F1-52/2000(CPP-II) dt. 05.05.2004 issued by the Joint Secretary, University Grants Commission which clearly states that the Degrees/ Diplomas/ Certificates awarded by the Open University are in conformity with the UGC notification on specification of degrees as equivalent to the corresponding awards of the traditional universities in India. Thus there is no doubt that the Appellant trust running courses are equivalent to regular courses of YCMOU and there cannot be any distinction between the regular colleges and the education imparted by the Appellant. Hence we are of the view that in terms of CBEC Circular No. 59/8/2003 dt. 20.06.2003 the Appellant is not liable to service tax.

After extracting extensively from the Tribunal decision in Tandem Integrated Services - 2010-TIOL-1547-CESTAT-BANG, the CESTAT concluded that the ratio of said judgment is absolutely applicable to the facts of the present case inasmuch as the Appellant is not liable for payment of service tax and, therefore, the impugned order was set aside.

The Appeal was allowed with consequential relief.

(See 2018-TIOL-1218-CESTAT-MUM)