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PJ/CASE-LAW/2015-16/2756

Issuance of certificate necessary for exclusion under coaching service.

Case:-OPPORTUNITIES INDIA SOLUTIONS PVT. LTD. VS COMMR. OF S. TAX, MUMBAI

Citation:-2015 (37) S.T.R. 520 (Tri. - Mumbai)

Brief Facts:-Show cause notices were issued to the appellants raising demand of service tax on the ground that the appellants are providing commercial training and coaching services. For the period July, 2004 to March, 2005 the appellants M/s. Opportunities (India) Business Solutions Pvt. Ltd. (E/230/2006) paid service tax as per the direction of the Revenue. Subsequently, they filed refund claim on the ground that the appellants are not providing any taxable service. In appeal No. ST/300/2010, the demand was confined on the ground that the appellants are providing commercial training & coaching services.

Appellant contentions:-  The contention of the appellants is that the appellants are an institute providing computer training which is recognized by Maharashtra State Board of vocational Examination. As per the definition of Commercial Training & Coaching services, the Institute imparts training which is recognized and is excluded from taxable services. The appellants relied upon the certificate issued by the Maharashtra State Board of Vocational Examination. The appellants submitted that the certificate is countersigned by the appellants. As the appellants were provided training course which is recognized by law, hence demand is not sustainable. The appellants relied upon the decision of the Hon'ble High Court in case of Indian Institute of Aircraft Engineering v. U01 - 2013 (30) S.T.R. 689 in support of their contention.

Respondent contentions:-Revenue relied on the definition of "Commercial training or coaching centre" as provided under Sec. 65(27) of the Finance Act and submitted that appellants are not issuing any certificate which is recognized by law and hence liable for service tax. In the present case, the issue is whether the appellants are providing commercial training or coaching services. For ready reference, the provisions of sec.65 (27) of the Finance Act are reproduced below :
“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 certificate and includes coaching or tutorial classes Finance but does not Include pre-school coaching and training centre or an institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force".
We find that the appellants are providing training but are not issuing any certificate. The certificate is issued by Maharashtra State Board of Vocational Examination. As per the definition, the only exclusion is in respect of institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law.

Reasoning of Judgment:-The appellants heavily relied upon the decision of the Hon'ble Delhi High Court in the case of Indian Institute of Aircraft engineering (supra). From the facts, we find that the Indian Institute of Aircraft Engineering were issuing certificate to the trainees which is approved by the Directorate General of Civil Aviation. In these circumstances, the Hon'ble Delhi High Court held that the appellants are not providing any taxable service under "commercial training & coaching centre". The facts of the present case are different. In the present case, the appellants are not issuing any certificate. In view of this, the ratio of the above said decision is not applicable in the facts of the present case. In view of this, there is no merit in the contention of the appellants that the appellants are not providing any taxable service. In Appeal No. ST/300/2010, the adjudicating authority while confirming the demand imposed penalties under Section 76 & 78 of the Finance Act.
We find that Sec. 80 provides as under:-
"Section 80. Notwithstanding anything contained in the provisions of Section 76 [Section 77 or [first proviso to sub-section (1) of section 78]], no penalty shall be imposable on the assessee for any failure referred to in said provisions, if the assessee proves that there was reasonable cause for the said failure."
 In the present case, we find that the appellants were under the bona fide belief that the institution is recognized by Maharashtra State Board of Vocational Examination. Hence we set aside the penalty imposed under Sections 76 & 78. Otherwise the impugned order is upheld in Appeal No. ST/300/2010. Appeal No. ST/230/2006 is in respect of refund claim. As we held that the appellants are providing taxable service, therefore, we find no merit in the contention of the appellants. Appeal No. ST/230/2006 is dismissed. Cross objection is also disposed of in the above terms.
 
Decision:-  Appeal disposed off.

Comment:-The crux of the case is that as per the defination of “commercial training or coaching centre”, the teaching services for educational qualification recognised by law and issuing certificate thereon is excluded from the taxable service. However, in the present case, as the appellant is not issuing any certificate which is recognized by law, it was not covered by the exclusion clause and hence was liable for service tax. However, as the appellant was under the bonafide belief that the institution is recognized by Maharashtra state board of vocational examination and so did not pay tax, penalty imposed under section 76 &78 was set aside as per Section 80.

Prepared By:Anas Kachaliya

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