Whether training of visual effects and animation liable for benefit of exemption under vocational training?

PJ/Case Law/2013-14/1705

Case:-M/s DIGITAL MAGIC VISUAL INDIA LTD Vs COMMISSIONER OF SERVICE TAX, CHENNAI

Citation:-2013-TIOL-1292-CESTAT-MAD

Brief facts :- The applicant is engaged in the activity of video tape production and also providing training in visual effects and animation. There is a demand against the applicant under five broad categories as under:-

S. No.	Description of Demand Amount	Amount
1.	Non-payment of service tax for the period from April 2008 to March 2009	16,29,611/-
2.	Non-payment of service tax on Commercial Training or Coaching Service – April 2006 to March 2009	30,73,675/-
3.	Short payment of service tax for the period from April 2004 to March 2008	87,905/-
4.	Irregular availment of CENVAT credit	2,34,384/-
5.	Non-payment of interest on delayed payment of service tax for the period from April 2004 to March 2008	1,19,091/-

Appellant contention :-The appellant contented that in the case of Item No. 1, the applicant collected the service tax but did not pay to the Department. The counsel for the applicant is not contesting the demand except to the extent of in this respect a small difference in the quantification. So is the case for demands at item Nos. 3, 4 and 5 in the table above.

In the case of Item No.2 which relates to service tax under the heading "Commercial Training or Coaching", his contention is that the training imparted by the applicant was actually in the field of visual effects and visual communication and animation. He concedes that such training was imparted using computers. He is claiming exemption under Notification No. 24/2004-ST dated 10.9.2004 as amended which provided exemption for training provided by a vocational training institute. He submits that the training imparted by his client qualifies as vocational training. Therefore, he prays for waiver of dues arising from the order for admission of appeal.

Respondent contention :-Opposing the prayer the learned AR for Revenue submits that from 16.6.2005, the notification No.24/2004-ST was specifically amended to add following proviso:

"Provided that nothing contained in this notification shall apply to the taxable services provided in relation to commercial training or coaching by a computer training institute.";

Further an Explanation reading as under was also inserted:

'(iii) "computer training institute" means a commercial training or coaching centre which provides coaching or training relating to computer software or hardware

So he argues that the impugned training is imparted using computer cannot be covered by the said exemption. In this connection the applicants will not be eligible for this exemption. He argues that the training is actually a computer training.

Reasoning of judgment :- There can be a doubt as to whether training provided in writing codes using languages like UNIX or for using a Relational Database Management System like Oracle or a Front End Tool like Java are on the same footing as a training in creating animation using a software in computer. There are similar training like CAD (Computer Aided Design) or CAM (Computer Aided Manufacture) which types of trainings also provided by Computer Training Institutes using computer and necessary software. Though the difference between the two type is very thin there is some difference in the level of knowledge of the internal structure of software that is imparted. The training provided by the applicant appears to be of the latter type where not much knowledge about the contents of software is imparted but the skill to use software is imparted. But prima facie the latter type of training also is known as “computer training” to common man. The matter needs detailed examination in final hearing.

In view of the above facts and discussions, we direct the applicant to pre-deposit a sum of Rs.35,00,000/- (Rupees thirty five lakhs only) within a period of six weeks and report compliance on 10.7.2013. Upon such deposit, pre-deposit of the balance dues arising from the impugned order stand waived and its collection stayed during the pendency of the appeal.

Decision :-Pre-deposit ordered.

Comment:-The substance of this case is that training as regards visual effects and animation is also a sort of “computer training” in layman language and cannot be held to be liable for benefit of the exemption given to the vocational training at the outset.

Comments

PJ/Case Law/2013-14/1705

Post a Comment

Query