Whether English Speaking Courses covered by vocational training?

PJ/CASE LAW/2015-16/2792

Case:-ULHAS VASANT BAPAT VERSUSCOMMR. OF CENTRAL EXCISE, PUNE-III

Citation:-2015 (37) S.T.R. 1034 (Tri. - Mumbai)

Brief facts:- The appeal was directed against Order-in-Appeal No. P-III/316/2005, dated 23-9-2005 passed by the Commissioner of Central Excise (Appeals), Pune-III.
The appellant, Prof. Ulhas V. Bapat (Prof. Bapat’s Academy of English & Speech Communication, Pune) got registered with the department under the category of ‘Commercial Coaching & Training Services’. He paid Service Tax amounting to Rs. 1,40,180/- during the period 21-1-2004 to 18-10-2004. Subsequently, he filed a refund claim dated 16-11-2004 on the ground that ‘Coaching in Spoken English’ comes under the category of ‘Coaching in Foreign Languages’ and was exempted from Service Tax vide Notification No. 9/2003-S.T., dated 20-6-2003. The said refund claim was considered by the jurisdictional Assistant Commissioner, who observed that as per Article 343 of the Indian Constitution, English is an official language and, therefore, it did not come under the category of foreign language. Therefore, he held that ‘coaching in English’ did not come under the category of Vocational Training and, therefore, the benefit of Notification No. 9/2003-S.T. will not apply. Accordingly, he rejected the refund application. Aggrieved of the said order, the appellant preferred an appeal before the lower appellate authority. The lower appellate authority after considering the submissions made, held that ‘training and coaching given for spoken English’ was not vocational training and, therefore, the benefit of Notification No. 9/2003-S.T. would not apply. Accordingly, the appeal was rejected. Aggrieved of the same, the appellant filed the present appeal.

Appellant’s contention:- Learned Counsel for the appellant made the following submissions:-
(i)he contended that English was a foreign language and as per Circular No. 50/8/2003-S.T., dated 20-6-2003, it had been clarified that foreign languages institutes would not be liable to Service Tax under Notification No. 9/2003-S.T., dated 20-6-2003.
(ii)It was further submitted that a faculty of the appellant firm M/s. Amol Bapat had conducted a One-day International English Workshop at the Infosys BPO Phase 2 at Hinjewadi, Pune, as part of the Corporate Training Services conducted by the British Council and from the letter issued by the British Council, it can be seen that the said workshop was useful to BPO firms in the field of Information Technology.
(iii)The appellant had produced letters from a few persons, who had undergone the training in Spoken English at the appellant’s coaching centre and they had certified that it has improved their employability.
(iv)The appellant had also produced a letter from Retired Professor Shridhar B. Gokhle, wherein he had certified that the course conducted by the appellant was directly related to employability of the student.
(v)Reliance was placed on the advertisement issued by the appellant, wherein it had been specifically stated that the course is for “English in Call Centres”.
In the light of the above, it was contended that the appellant was eligible for the benefit of Notification No. 9/2003-S.T. Reliance had also been placed on the decisions of this Tribunal in the case of ICM English Centre v. Commissioner of Service Tax, Bangalore - 2012 (26) S.T.R. 157 (Tri.-Bang.). In the light of this, it was the appellant's contention that they were rightly entitled for the benefit of Notification No. 9/2003-S.T.

Respondent’s contention:- Learned Dy. Commissioner (AR) appearing for the Revenue, on the other hand, reiterated the findings of the lower authorities and submitted that the appellant was not eligible for the benefit of Notification No. 9/2003-S.T.

Reasoning of judgment:- They carefully considered the submissions made by both the sides. It was held that the Notification No. 9/2003-S.T., dated 20-6-2003 reads as follows :-
“In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services provided in relation to commercial training or coaching, by,-
(a)        a vocational training institute;
(b)        a computer training institute; or
(c)        a recreational training institute;
To any person, from the whole of the service tax leviable thereon under sub-section (2) of section 66 of the said Act.
Explanation. - For the purposes of this notification, -
(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 computer software or hardware;
(iii)       “recreational 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.
This notification shall come into force on the 1st day of July, 2003 and shall remain in force up to and inclusive of the 29th day of February, 2004.”
This notification was succeeded by Notification No. 24/2004-S.T., dated 10-9-2004, which also extended the exemption to taxable services, provided in relation to Commercial Coaching or Training by a Vocational Training Institute.
From the Notification cited above, it was clear that the exemption was on the service provided in relation to commercial training or coaching by a Vocational Training Institute. It was not in dispute that the appellant was rendering commercial training or coaching service. The only claim was that since English was a foreign language, the service rendered by the appellant should be treated as Vocational Training as per the definition of Vocational Training given in the above notification. The training should be such that it imparts skills to enable the trainee to seek employment or undertake self employment directly after such training or coaching. The course conducted by the appellant was a two weeks course and as per the advertisement the said course enabled the trainee to improve the pronunciation, accent, presentation skills, writing skills, telephone etiquette, group discussion training, and interview techniques and so on. After undergoing this training for a period of two weeks, it was not understood how it could, in any way, improve the self employability of the trainee. Therefore, the only question that was left was whether the said training enabled the trainees to seek employment after such training or coaching.
The various certificates submitted by the appellant have been given by people who were already employed and they had merely certified that the training had increased their employability in future. Similarly, the certificate issued by the retired Professor merely stated that the training imparted was directly related to employability of students. These certificates had been obtained very recently and, therefore, the evidentiary value of these certificates was suspect. The certificates produced were not from any employers who had found that the training imparts skills making the trainees suitable for employment in their firms.
The reliance placed on the Tribunal's decision in the case of ICM English Centre (supra) also did not help as the view taken in the said case was a prima facie view at the time of considering grant of stay and, therefore, there was no precedential value for the said decision.
In this case, the appellant was conducting the training in spoken English for a duration of only two weeks as can be seen from their advertisements. When even after undergoing training in English languages for years together both in school and colleges, it was difficult to attain proficiency, it was inconceivable that in a matter of two weeks, any proficiency or skill can be imparted or achieved by undergoing training for a mere two weeks. Thus, the whole claim of the appellant lacks credibility and conviction.
The apex body which deal with vocational training in India is the National Council for Vocational Training, which comes under the Ministry of Labour and Employment, Director General of Employment and Training. The said body has specified various trades which are considered for vocational training. The trades were broadly divided into two categories - Engineering Trade and Non-Engineering Trade. There are 79 trades specified in engineering category for vocational training. Similarly, in respect of non-engineering trades, 62 areas have been identified for vocational training. Minimum educational qualifications have been prescribed for undergoing the training apart from duration of the training itself. The qualifications prescribed are either 8th pass, 10th pass or 12th pass and duration of the training ranges from 6 months to 2 years. Training in languages, whether Indian or foreign, has not been prescribed as a vocational training in the list published vide Notification No. DGE & T-19(4)/2011-CD-Pt, dated 19-6-2013 issued by the Government of India in this regard.
Thus, if the apex body dealing with vocational training in India itself did not consider training in languages as vocational training, it is not conceivable how training in languages can be treated as a vocational training for the purpose of Notification No. 9/2003-S.T. or it’s successor Notification No. 24/2004. The clarification issued by the Board also would not matter as the taxability is determined not by the Circulars or notifications, but by the provisions of law. It is an accepted principle of statutory interpretation that the notification has to be interpreted strictly since it is in the nature of an exception. The Hon’ble Apex Court in the case of Union of India v. Wood Papers Ltd. - AIR 1991 SC 2049 = 1990 (47) E.L.T. 500 (S.C.) held as follows :-
“When the question is whether a subject falls in the Notification or in the exempted clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is removed and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction.”
This principle was applied to the facts of the present case, it could be seen that the appellant was not eligible for the benefit of Notification No. 9/2003-S.T. or its successor notification No. 24/2004-S.T.
In view of the above, no merit was found in this appeal. Accordingly, they dismissed the same.

Decision:- Appeal dismissed.

Comment:- The gist of the case is that the learning English course is not covered under vocational courses and so are not liable for exemption from levy of service tax. Furthermore, even the apex body dealing with vocational training in India itself did not consider training in languages as vocational training, it is not conceivable how training in languages can be treated as a vocational training for the purpose of Notification No. 9/2003-S.T. or it’s successor Notification No. 24/2004. The clarification issued by the Board also would not matter as the taxability is determined not by the Circulars or notifications, but by the provisions of law.

{Prepared by:- Prayushi Jain}

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PJ/CASE LAW/2015-16/2792

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