Custom, Excise & Service Tax Tribunal
M/S. Col S Calibre vs Cce & St, Coimbatore on 16 January, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
ST/302/2010
(Arising out of Order-in-Appeal No. 21/2010-ST dated 05.03.2010 passed by the Commissioner of Customs & Central Excise and Service Tax (appeals), Coimbatore).
M/s. Cols Calibre : Appellant
Vs.
CCE & ST, Coimbatore : Respondent
Appearance Shri S. Muthu Venkataraman, Adv., Ms. Minchu Punnoose, Adv., for the Appellant Shri R. Subramaniyam, AC (AR) for the Respondent.
CORAM:
Honble Ms. Sulekha Beevi, Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing/Decision: 16.01.2018 FINAL ORDER No. 40129/2018 Per Bench The appellant which is a proprietorship concern has branches in various places in Tamilnadu and is a training centre for communicative English, Personality Enhancement, IELTS and TOEFL. As per Section 65 (105) (zzc) of the Finance Act, 1994, any service provided or to be provided to any person by a commercial coaching or training centre in relation to commercial coaching or training is a taxable service. The department was of the view that the appellant is providing taxable service under the category of commercial coaching or commercial training and issued SCN proposing to recover service tax, interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.
2. On behalf of the appellants, the Ld. Counsels Shri S. Muthu Venkataraman, assisted by Ms. Minchu Punnoose, explained the activities provided by the appellants. He submitted that they are engaged in providing English language training at various levels and training with regard to personality development for seeking employment. Their course is so designed to make the participant to acquire the language skills and other soft skills to enable the trainee to seek employment or to start their own business. The trainees mostly get placement in BPO centres after the training. In addition, the appellant also imparts training to students who are desirous for appearing in TOFFL/IELTS test, aimed at testing the language proficiency of the candidates. These tests are essential to get visa permit to work/study in specific countries like USA, Australia etc. The appellant sought a clarification from the department whether their activity is liable to service tax and the department clarified that vocational training institute imparting foreign language skills are not liable to tax. SCN was defended by the appellant contending that being a vocational training institute they are exempted from payment of service tax under Notification No. 24/2004-ST dated 10.09.2004. The same was not considered by the authorities below on wrong interpretation of the said notification. He argued that since the trainees are able to seek self-employment as well as placement in BPOs and other sectors, their institute falls under the category of vocational training institute and is liable for exemption under Notification No. 24/2004. He relied upon the decisions in the case of British School of Language Vs. CST, Delhi 2017 (4) GSTL 212 (Tri.-Del.) and in the case of Maria Computer Systems Pvt. Ltd. Vs. CCE, Bhopal 2017 (49) STR 539 (Tri.-Del.). The decision in the case of Alliance Franchise De Delhi Vs. GST, Delhi -2017 (52) STR 268 (Tri.-Delhi) was also relied upon by the Ld. Counsel stating that language training imparted by the institute was considered to fall within the exemption of vocational training.
3. The Ld. AR, Shri R. Subramaniyam, AC, reiterated the findings in the impugned order. He submitted that the training and coaching provided by the appellant to the students is in communicative English, personality enhancement, IELTS/TOEFL. The exemption available under Notification No. 24/2004-ST dated 10.09.2004 to vocational training institutes and recreational training institutes is not applicable and available to the appellants as they are not providing any vocational training as explained in the notification. The coaching or training provided by the appellants does not impart skills to enable the trainee to seek employment or undertake self-employment directly after such training or coaching. Therefore the demand raised is legal and proper.
4. Heard both sides.
5.1 The main defence raised by the appellant is that their institute is a vocational training institute. The exemption Notification No. 24/2004-ST is available to the institutes that impart training to enable the trainee to seek employment or self-employment directly after such training or coaching. The Tribunal in the case of Maria Computer Systems Pvt. Ltd., had an occasion to consider a similar issue. The Notification No. 24/2004 has been further amended vide Notification No. 3/2010-ST dated 27.02.2010, in which the term vocational training institute has been clarified to mean an Industrial training institute or an Industrial training centre affiliated to the National Council for vocational training. The period involved is prior to 2010. In Maria Computer Systems Pvt. Ltd., the Tribunal observed that coaching/training imparted for acquiring skills in English language definitely improves better chances to seek employment. Needless to say, that proficiency in communicative English as well as personality enhancement is the criteria for getting employment in BPOs/Call centres. The discussions in the case of Maria Computer Systems Pvt. Ltd., (supra) is relevant for considering the issue and the relevant portion is reproduced as under:-
4.?The service of commercial coaching and training services are covered in the statute for payment of Service Tax. However, vide Notification No. 9/2003-S.T., dated 20-6-2003 as well as by the succeeding Notification No. 24/2004-S.T., dated 10-9-2004, exemption has been granted as follows :-
In exercise of the powers conferred by sub-section (1) of 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; or
(b) a recreational training institute, to any person, from the whole of the service tax leviable thereon under 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 training or coaching that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching;
(ii) ..
(ii) recreational training institute means a commercial training or coaching centre which provides training or coaching relating to recreational activities such as dance, singing, martial arts or hobbies. In the Explanation to the Notification, the term Vocational Training Institute has been defined as one which provides vocational training, which will enable the trainee to seek employment or undertake self-employment directly after such training or coaching. It is common knowledge that acquiring skills in English language definitely improves better chance to seek employment. In this view of things, it is possible to say that the services rendered by the appellant could be covered by the notification. However, the discussions in the impugned order centered around the Circular dated 20-6-2003, which was issued to clarify the scope of the above exemption. Imparting training in foreign language has been cited as example of a vocational training institute. However, the whole discussion in the impugned order revolves around the question whether English is a foreign language or an official language in India. Without attempting to decide the question, which was triggered by the circular rather than by the statute or the Notifications, we find that the benefit of exemption for coaching in English language stands extended by the Tribunal in some of the cases cited by appellant. But there is also a contra decision of the Tribunal, wherein the benefit stands rejected for English language classes. In this connection, we find that the Notification No. 24/2004-S.T. has been further amended vide Notification No. 3/2010-S.T., dated 27-2-2010 in which the term vocational training institute has been taken to mean industrial training institute of an industrial training centre affiliated to National Council for Vocational Training. The contra decision has been delivered in the context of the amended provisions of the Notification. It has been held by the Tribunal in the case of Actor Prepares v. CST, Mumbai [2014 (33) S.T.R. 546 (Tri.-Mum.)] that the above amendment made in Notification No. 24/2004-S.T. cannot be taken with retrospective effect. The demand in the present case covers the period from April, 2005 to March, 2008 and is prior to the date of amendment, i.e., 27-2-2010. As such, the amendment can have no effect for the period of demand. 5.2 Similar view has been taken in the case of British School of Language (supra) and relevant portion is reproduced as under:-
5.?We have heard both the sides and perused appeal records. Admittedly, the appellants provided commercial coaching or training service as covered by the tax entry cited above. The dispute is regarding their eligibility to exemption Notification No. 24/2004-S.T., dated 10-9-2004, and prior to that for Notification No. 9/2003-S.T., dated 20-6-2003. The Lower authorities denied the exemption on the ground that no skill is being imparted by the appellant. It was held that the appellants are only engaged in coaching in English language and as such, they are not a vocational training Institute imparting coaching, which will enable the participants directly to gain employment. We note that similar issues came up for decision before the Tribunal. In the case of Maria Computer Systems Pvt. Ltd. v. CCE, Bhopal - 2017 (1) TMI 37 - CESTAT, New Delhi = 2017 (49) S.T.R. 539 (Tri.-Del.), the Tribunal observed as below:-
.
6.?Further, the Tribunal in M/s. Alliance Francaise De Delhi v. C.S.T., Delhi - 2017 (3) TMI 119 - CESTAT, New Delhi = 2017 (52) S.T.R. 268 (Tri.-Del.) held that imparting training in French language will make the institute vocational training institute. Reliance was placed on the earlier decision of the Tribunal in Darshan English Classes v. CCE & ST, Rajkot - 2015 (39) S.T.R. 169 (Tri.-Ahmd.). We also note that the appellants did submit various supporting evidence to illustratively show that the participants did gain employments as a consequence of training imparted by the appellant.
7.?Considering the decisions of the Tribunal, as well as the facts of the present case, we hold that the appellants will be eligible for exemption under Notification Nos. 9/2003, 24/2004 except for the period 1-7-2004 to 9-9-2004 during which no exemption Notification was available. Regarding English language skills imparted to children, we note that the said Notification itself provides for recreational training institute, defining the same as commercial training or coaching centre which provides training or coaching relating to recreational activities such as dance, singing, martial arts or hobbies. The ld. Consultant argued that children of age of 6 to 12 were sent for part-time coaching, with the appellant, in English Language skills and this can be categorized in the general scope of hobbies. We find that there is merit in the submission made by the appellant. Learning a language or improving skills in a language will fall under the broad category of hobbies for children.
6. Following the dictums laid in the above two decisions, we are of the view that the appellant is eligible for the exemption as per the Notification No. 24/2004-ST. The demand is unsustainable and requires to be set aside. The impugned order is set aside. The appeal is allowed with consequential reliefs, if any.
(Operative part of the Order pronounced in the open Court)
(MADHU MOHAN DAMODHAR) (SULEKHA BEEVI C.S.)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
BB
7