Service Tax Not Leviable on Training Programs Conducted with University: CESTAT [Read Order]

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that service tax is not leviable on training and educational programs conducted in collaboration with a recognized university leading to degrees or diplomas recognized by law.

The Centre for Entrepreneurship Development, Madhya Pradesh (CEDMAP), a state government undertaking, filed an appeal against the order of the Commissioner of CGST and Central Excise, Bhopal, confirming service tax demands on the ground that CEDMAP was providing taxable services under Commercial Training or Coaching Service.

CEDMAP conducts various computer courses such as BCA, DCA, and PGDCA in collaboration with M.P. Bhoj (Open) University, a university recognized by the University Grants Commission (UGC).

The appellant’s counsel argued that CEDMAP only conducts courses affiliated with the university, which result in the award of degrees or diplomas recognized by law. They also argued that under CBEC Circular No. 59/8/2003-ST dated June 20, 2003, institutions imparting education as part of a recognized curriculum are excluded from the scope of commercial training or coaching services.

The counsel further argued that the fees collected from students were remitted to the university, fulfilling the conditions of Notification No. 10/2003-ST, which exempts training forming an integral part of a recognized course.

The revenue counsel argued that CEDMAP was providing taxable commercial training and coaching services and had collected fees from students for its programs. They argued that the institution’s collaboration with a university did not automatically exempt it from service tax liability.

The two-member bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that CEDMAP was conducting educational programs leading to degrees and diplomas issued by a recognized university.

The tribunal explained that such programs were covered by the exemption provided under the law and could not be categorized as commercial training or coaching. It also observed that CEDMAP, being a state government undertaking established for public welfare and entrepreneurship development, could not be equated with private commercial coaching institutes.

The tribunal pointed out that the conditions of Notification No. 10/2003-ST were met since fees were collected on behalf of the university and remitted to it. The tribunal explained that when education is imparted as part of a university-recognized course, it falls outside the scope of taxable services.

The tribunal held that service tax was not leviable on such training programs and set aside the demand, interest, and penalties imposed by the department.

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