The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has affirmed the denial of a refund claim for the period between April 2014 and September 2014. The claim pertained to service tax remitted for an educational program that only later, in March 2015, received recognition from the Yashwantrao Chavan Maharashtra Open University (YCMOU).
Delivering the judgment, the Bench comprising Dr. Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member) emphasized the need for a strict reading of clause (l)(ii) under Section 66D of the Finance Act. In essence, services that form part of a curriculum for a qualification recognized by law are entitled to the negative list benefit. However, where the period in question includes both pre- and post-recognition services, a refund of the service tax paid would be permissible only if the requisite recognition was obtained from the Open University and no service tax had been collected from students in the interim.
The appellant company was registered for multiple services—ranging from maintenance and repair to information technology services, business support, and commercial training/coaching. Since 2011, it had been conducting “WAVE” courses under an agreement dated June 7, 2011. Starting on April 1, 2014, the company introduced “KLiC” diploma programs and entered into an agreement with YCMOU on March 30, 2015, continuing to offer both WAVE and KLiC courses while collecting fees from students.
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According to the appellant, both courses met the exemption criteria under clause (l)(ii) of the negative list in Section 66D of the Finance Act, 1944, which exempts educational services from service tax if they lead to a qualification recognized by law. The WAVE and KLiC programs, both vocational in nature, shared identical content. Moreover, in a letter dated June 20, 2016, the Open University indicated that the KLiC course was valid from September 2013 onward and began issuing certificates and mark sheets to candidates who successfully completed the course. As such, the appellant argued that any fees collected during the relevant period should not attract service tax, and it sought reimbursement of taxes already paid.
Nevertheless, the refund applications were disallowed because recognition for the relevant time frame had not yet been granted by the Open University, whose agreement was finalized only on March 30, 2015. By that point, student fees had already been collected. Additionally, the Tribunal deemed the request time-barred, given that relevant documents were submitted on June 8, 2015, rather than March 30, 2015. This contradicted the appellant’s contention that an online refund application had been filed in April 2015, which would have been within the statutory deadline.
Ultimately, the Tribunal dismissed the appeal, ruling that throughout the period in question, the appellant’s course offerings did not have formal recognition from a qualifying university. Therefore, the company could not avail itself of the exemption under clause (l)(ii) of Section 66D of the Finance Act.
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