No service tax on Commercial Coaching or Training Services: CESTAT

The Allahabad Customs, Excise and Service Tax Appeals Tribunal (CESTAT) ruled that no service tax is levied on business coaching or training services.

The appellants, the Asian School of Media Studies (ASMS) and the Asian School of Communication (ASC) as well as the Asian Business School (ABS), all under the same management, provide professional training courses and deliver certificates to students, based on where students get a job or are trained to work as an entrepreneur / self-employed person.

CA Abhinav Kalra, representing the appellant, raised the issue of whether the appellants in this case are required to pay the service tax under the heading “Business coaching or training services” during the period of litigation from d ‘April 2009 to 2015-2016 (until March 2016). The claims were confirmed by a joint adjudication order of the Commissioner, Central Goods & Service Tax, Noida.

The coram of judicial member Anil Choudhary and technical member, P. Anjani Kumar, relied on Trichy Institute of Management Studies vs. CCE (Chennai Bench) in which the Tribunal noted that the institution is run as a parallel college and students graduate from Allagappa University under the distance learning program under the protocol of OK. This tribunal relied on the decision of the High Court of Kerala in the Malappuram Distt case. Parallel College Assn., Where the High Court declared the levying of a service tax on parallel colleges as arbitrary and contrary to Article 14 of the Constitution of India. The Honorable High Court further observed that the levying of the service tax on education and training provided by alternative colleges is indirectly borne by students, which is discriminatory.

The Court also noted that the definition of “Commercial training or coaching center” under Article 65 (27) of the Finance Act contains an exclusion clause excluding – the preschool training and coaching center or any institute or establishment which issues a certificate or diploma / Diploma or any study diploma recognized by the law currently in force. This court recorded a finding that the appellant / plaintiff is an authorized study center under a memorandum of understanding with the University, based on the Distance Learning Center guidelines ( DEC) issued under the IGNOU law of 1985. As a result, it was found that the appellant / applicant is exempt from service tax, even without the benefit of notification No. 10/2003-ST.

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