Activity of Providing International Hospitality Administration Courses approved by IGNOU is Eligible for Service Tax Exemption: CESTAT [Read Order]

The Delhi bench of the CESTAT, on Thursday held that the activity of providing international hospitality administration courses approved by IGNOU is eligible for service tax exemption since the same would not fall under the head “commercial training or coaching centre”.

The division bench, accordingly, quashed the service tax demand raised by the department against the assessee for the period 1.4.2008 to 30.09.2011.

The appellants, in the instant case, were offering their students a 4 year BA (Hons) in International Hotel Management, involving both the academic and practical training in all aspects of hotel management. On completion of the course, the students were granted BA (Hons.) degree by the Thames Valley University, a recognized university under the law in UK. From 2008 onwards, the appellant/assessee stopped the above course and instead conducted a 3 year BA (Hons.) in International Hospitality Administration, as an approved Institute of India Gandhi National Open University (IGNOU) . A degree was awarded by IGNOU, an open university recognized under the UGC Act.

The department imposed service tax on the appellants by finding that the services rendered by them falls under the category of commercial training or coaching centre in terms of Section 65(27) read with Section 65(105) (zzc) of the Finance Act, 1994.

The bench observed that admittedly, the course offered by the appellant is in the specialized area of hospitality industry and are intended for seeking employment in that specified area of hotel management.

While concluding, the bench said that the courses conducted by the appellant in collaboration with the Thames Valley University, UK in international hotel management are covered by exemption notification no.24/2004. No service tax liability can be fastened on the appellant for this period.

The bench noted that post 2008, the appellants discontinued the course in collaboration with the Thames Valley University, UK. They have started a 3 year course of BA (Hons) in International Hospitality Administration approved by IGNOU, leading to an award of degree by IGNOU, which is, admittedly, a recognized open university under UGC Act.

“It is common knowledge that when institutes are running approved courses, affiliated to recognized universities, the degree on completion of such course are awarded by the universities not by the institute or college running such courses. As such, as long as the course results in the award of recognized degree by an approved university, the same is excluded from the tax entry of Commercial or Coaching Service. Section 65(27) defines “Commercial Training or Coaching Centre”. The said definition excludes any institute or establishment , which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force. In the present case, the admitted facts are that IGNOU is a recognized university issuing the degree on completion of the course conducted by the appellant, as per the approval granted by the university. In the face of such facts, we find that for the period, during which the appellants were conducting courses results in the award of degree by a recognized university, they are not covered by the scope of “Commercial Training or Coaching Centre”,” the bench said.