Cestat, Chennai Bench

Thanjai Study Centre

v.

Commissioner of Central Excise (Service Tax), Trichy

P. Karthikeyan, Technical Member

Stay Order Nos. 861 to 863 of 2007

S/PD/118/2006 IN S/242/2006/MAS

S/PD/25/2007 IN S/35/2007/MAS

S/PD/27/2007 IN S/40/2007/MAS

August 17, 2007

Commercial Training or Coaching

Section 65 of the Finance Act, 1994 - Commercial training or Coaching - Assessee was a study centre set up through Memorandum of Understanding with University for coaching persons who wished to write examinations conducted by University - Assessee collected fees from students which was shared with University in different proportions for different courses - Service tax was demanded on fees collected under head ‘Commercial training and coaching’ on ground that exemption provided under Notification No. 10/2003-ST, dated 20-6-2003 extended to taxable service provided by Commercial training or coaching centre, is not applicable if charges for such services are paid by person undergoing such course or curriculum directly to commercial training or coaching centre - Whether assessee rendered same service as regular colleges affiliated to University or parallel colleges and distinction found by lower authority to deny exemption contained in Notification No. 10/2003-ST, dated 20-6-2003 was apparently not proper as exemption is extended to regular colleges which collect entire fee directly from students - Held, yes - Whether therefore, demands of tax and penalties were not sustainable - Held, yes [Para 4]

Circulars and Notifications : Notification No. 10/2003-ST, dated 20-6-2003.

>> Facts

The assessee-institute was a study centre set up through Memorandum of Understanding with a University for coaching of persons who wished to write examinations conducted by the University. The assessee collected fees from the students which was shared with the University in different proportions for different courses. Each student paid to the assessee an amount payable directly to the University and another amount payable to the assessee. Service tax was demanded on the fees collected by the assessee under the head ‘Commercial training or coaching’ on the ground that the exemption under Notification No. 10/2003-ST, dated 20-6-2003 is not applicable if the charges for such services are paid by the person undergoing such course or curriculum directly to the commercial training or coaching centre.

On appeal, the assessee contended that it was on same footing as the parallel colleges as it provided coaching to students in courses as the regular colleges for taking examination conducted by the University.

>> Held

The assessee rendered the same service as regular colleges affiliated to University or parallel colleges. The distinction found by the lower authority to deny exemption contained in Notification No. 10/2003-ST, dated 20-6-2003 was apparently not proper as exemption is extended to regular colleges which collect entire fee directly from the students. In the case of the assessee, though it collected the entire fee from the students, a portion of the same was drawn in instruments directly encashable by the University and the balance by the respective institutes as per the Memorandum of Understanding. In the facts and circumstances of the case, prima facie, the demands of tax and penalties were not sustainable. Accordingly, there would be complete waiver of requirement of pre-deposit and stay of recovery of the demand of tax and penalties till the disposal of the appeals. [Para 4]