Chargeability of service tax on amount collected in advance prior to 1-7-2003 for imparting coaching in English language

PJ/Case Law /2016-17/3419

Case:-DARSHAN ENGLISH CLASSES Versus COMMISSIONER OF C. EX. & S.T., RAJKOT
Citation:-2015 (39) S.T.R. 167 (Tri. - Ahmd.)
Brief facts:-This appeal has been filed by the appellant against OIA No. 522/2006/440(RAJ)/COMMR(A)/RP/RAJ, dated 15-9-2006 passed by the Commissioner (Appeals), Rajkot. Under this OIA, Commissioner (Appeals) has upheld the OIO dated 30-3-2006 confirming demand of Rs. 7,082/- and imposition of penalty of Rs. 14,000/- under Section 78 but set aside penalty of Rs. 7,000/- imposed under Section 76 of the Finance Act, 1994. The issue involved is that appellant has short paid Service Tax of Rs. 7,082/-, along with appropriate interest during the period April to June, 2003 on an amount of Rs. 85,525/- collected as advance fees prior to 1-7-2003 for which services were rendered before as well as after 1-7-2003.
Appellant’s contention:-None appeared on behalf of the appellant. However, vide written submission dated 17-7-2013, received by CESTAT registry on 1-10-2013, it is argued that as per departmental Circular No. 59/08/2003, dated 20-6-2003, no Service Tax was leviable as they are providing Coaching of English Language. Sh. G.P. Thomas (AR) appearing on behalf of the appellant argued that Notification No. 9/2003-S.T., dated 20-6-2003 is effective from 1-7-2003 and accordingly defended the order passed by the first appellate authority.
Respondent’s contention:-The respondent reiterated the findings of the impugned order.
Reasoning of judgment:-Heard Learned AR and perused the case records. The issue involved is chargeability of Service Tax on an amount of Rs. 88,575/- collected prior to 1-7-2003 for imparting coaching in English language. As per the facts narrated in OIA dated 18-9-2006 this fee amounts were collected as advance fees for the services rendered before as well as after 1-7-2003. As per C.B.E. & C. Circular No. 65/14/2003-S.T., dated 5-11-2003 with effect from 1-7-2003 Service Tax liability was created on Coaching Services. Therefore, the fees collected and services rendered by the appellant up to 1-7-2003, does not attract Service Tax on coaching of English classes. For the period from 1-7-2003 there was full exemption to a “Vocational Training Institute” as per the Notification No. 9/2003-S.T., dated 20-6-2003 which was to remain in force up to 29-2-2004. Further, a vocational training institute has been defined as per Explanation-(i) to this notification as follows :-
“(i) “Vocational Training Institute” means a commercial training or coaching centre which provides vocational coaching or training that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching;
(ii) “Computer Training Institute” means a commercial training or coaching centre which provides coaching or training relating to recreational activities such as dance, singing, martial arts, hobbies.”
In view of the above definition, a Coaching in English language can impart necessary skill in a trainee to enable him to seek employment or undertake self-employment. There is no mention of coaching in any foreign language or Indian language in this notification. Appellant was thus eligible to exemption under Notification No. 9/2003-S.T., dated 20-6-2003 to the period after 1-7-2003. There is no evidence on record that coaching in English language was imparted after 29-2-2004. In view of the above appeal filed by the appellant is allowed by setting aside OIA dated 18-9-2006.
(Operative part of the order pronounced in the Court)
Decision:-Appeal allowed.
Comment:-The gist of the case is that the assessee is a Vocational Training Institute engaged in imparting coaching in English language. The Revenue confirmed demand pertaining to advance fees collected prior to 1-7-2003 .The assessee contended that it was eligible for exemption Notification No. 9/2003, dated 20-6-2003 and was not required to pay tax. It was held that English coaching may impart skill to enable trainee to seek employment or undertake self employment. Hence, the assessee was eligible to exemption for period after 1-7-2003. OIA was set aside in accordance with Sections 65(26) and 65(27) of Finance Act, 1994. Further, the fees collected and services rendered up to 1-7-2003 not was not liable to service tax as per Sec 65(26) and 65(27) of Finance Act, 1994.
Prepared by:-Praniti Lalwani

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PJ/Case Law /2016-17/3419

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