Exemption Notifications Not Considered by Authority: CESTAT Allows Appeal of Rural Upskilling Institution [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Ahmedabad Bench, allowed an appeal as the Commissioner of C.E. & S.T. - Vadodara did not consider the notifications allowing exemptions for a rural upskilling institution.

The appellant, M/s. Checkmate Services Pvt. Ltd., were providing services including counselling sessions under “Pandeet DeenDayal Upadhyay - Grameen Kaushalya Yojna” (DDU-GKY). It was found that they were not paying any service tax on services provided to M/s. Gujarat Livelihood Promotion Company Ltd. as the services fell under “Commercial Training and Coaching Services”.

The department issued a show cause notice demanding service tax from them under Section 73(1) of the Finance Act, 1994 with interest under Section 75 of the Finance Act and penalty under Section 77 and 78 of the Act.

The adjudicating authority confirmed the service tax on the appellant after which the Commissioner (Appeal) reduced the service tax from INR 17,41,470/- to INR 2,47,818/- along with interest. The penalty was also reduced but the appellant filed the present appeal before CESTAT.

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The appellant took the ground that they had received grant-in-aid through Gujarat Livelihood Promotion Company and provided training and placement for the candidates, the consideration was received by them from Gujarat Livelihood Promotion Company and not from the candidates to whom training was provided.

It was argued that the service tax was confirmed without extending the benefit of Entry No. 9D of the Notification No. 25/2012 -ST as amended vide Notification 09/2016 - ST dated 01.03.2016, according to which no service tax liability would fall on the appellants.

The CESTAT observed that as per the entry, services provided by training providers were granted full exemption from payment of service tax and therefore the appellant were not liable to any service tax on their activity of training under the scheme DDU-GKY. The two member bench, comprising Dr. Ajaya Krishna Vishvesha (Judicial Member) and Satendra Vikram Singh (Technical Member), allowed the appeal accordingly.

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