The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that fees charged to students in postgraduate programs do not attract service tax.
The issue to be decided was whether the fees charged to students in the post graduate student status program (PGSSP) offered by the appellant attracted service tax
The appellant was the 1st autonomous International Institute of Information Technology (IIIT) set up under the non-profit public-private partnership model under the Central Government’s policy to set up institutes of Advanced Technology. The appellant is a deemed university conducting recognized educational programs with a strong research focus in which students are involved in research as part of the educational programs. Mastering science by research is a recognised degree awarded by the appellant. The appellant provides opportunities to the students to learn by way of research in collaboration with industry, in addition to classroom lectures
As regards taxability of the fees collected from students in the PGSSP, we note that the impugned order in appeal no. ST/30082/2020 has dropped the demand, holding that the PGSSP only gives access to the Institute’s regular courses; that the credits earned for the courses attended were subsequently counted towards a formal postgraduate degree from the Institute if the student registered for one of the degree programs. The order further observed that the regular courses/degrees offered by IIIT are notified degrees, and that these are exempted from service tax as envisaged under the negative list entry in Section 66D of the Finance Act 1994 for services by an educational institution to its students.
The bench observed that the appellant stated that it was an educational institution and was the first autonomous IIIT set up under the non-profit public-private mode to foster advanced technology in terms of the central government policy. Its governing council includes senior civil servants including the Principal Secretary of the state, eminent academicians from all over the country and representatives of the information technology industry.
Further found that the focus on “nexus” between the funds and activity funded is not conclusive to establish that a service was provided. As regards the finding of shared IP, we note that the appellant’s contention, supported by annexures in its appeals that, though IP was shared as per agreements, in fact it was placed in the public domain by publication by the appellant’s scholars, remains unrefuted by Revenue.
The two member bench of the tribunal comprising Anil Choudhary ( Judicial member) and A.K Jyotishi ( Technical member) holding that the PGSSP only gives access to the Institute’s regular courses; that the credits earned for the courses attended were subsequently counted towards a formal postgraduate degree from the Institute if the student registered for one of the degree programs and that these are exempted from service tax as envisaged under the negative list entry in Section 66D of the Finance Act 1994 for services by an educational institution to its students.
The CESTAT set aside the demands of service tax that were made under the orders challenged in the appeal.
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