Service Tax Exemption not allowable in absence of Certificate of Skill Development Training Service provided: CESTAT [Read Order]

In a recent case, the Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the service tax exemption is not allowable in absence of Certificate of Skill Development Training Service provided.

 M/s SRK Innovatives School of Information Pvt Ltd., (the appellant) are in appeal against the Order-in-Appeal (impugned order), whereby, Commissioner (Appeals) has upheld the Order-in-Original dated 14.12.2022. The Adjudicating Authority doubted the credential of the appellant for claiming the benefit of the notification on the ground that all the work orders for skill development are in the name of M/s Datapro Computers Pvt Ltd., and not in their name and both being two different legal entities, it cannot be said that appellant has provided computer training under the said project/scheme.

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The appellants have provided certain skill training including computer literacy etc., to upgrade the skill of the students and making them ready for employment.  This is not being disputed that they were not running a training organisation and they had never provided any skill upgradation training to student making them adaptable and ready for employment. It is also not in dispute that though M/s Datapro and the appellant have jointly taken concessional loan/funds and assistance from the NSDL, it is the appellant who has actually provided the service of skill development. NSDC is primarily a public private partnership organisation dedicated to skill development and it has been envisaged as financing and administrative organisation to support creation of skillable and profitable vocational training institutions. 

A two member bench of  A.K. Jyotishi, Member (Technical)  and Angad Prasad, Member (Judicial) found that  the Adjudicating Authority has denied this exemption on the basic ground that they have not been able to produce any certificate of their being an approved training partner of NSDC and that their name is not appearing in the list of approved partners, therefore, a plain reading of notification would debar them from the benefit of said notification at serial no. 9A.

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The bench observed that NSDC is providing, interalia, soft loans at concessional rate of interest only for the purpose of skill development or building  training capacity consistent with their objective  to partner with Central and State Governments for creating and developing favourable eco system for skill development. 

It was viewed that the beneficial purpose of the exemption contained in Section 3(1)9b) must be given full effect to, the line of authority being applicable to the facts of the cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed.

To Read the full text of the Order CLICK HERE

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