Services provided for Imparting Education as per University Curriculum Exempted from Service Tax: CESTAT rules in favour of Sky Lark Educational Welfare Society [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad bench in a ruling in favour of Sky Lark Educational Welfare Society held that services provided for imparting education as per curriculum of a University are exempted from service tax. Providing vocational education to urban youth as per programmes approved by NUML which are based on the curriculum approved by Uttar Pradesh Government, would be treated as educational institutions.

M/s Sky Lark Educational Welfare Society, the Appellant challenged the Order-in-Appeal passed by the Commissioner (Appeals), CGST, Noida. The Appellant was registered with the Central Excise & Service Tax Department for providing taxable services.

On receipt of data/information from Income Tax Department, under third party data exchange policy of the Government of India for the year 2016-17, a substantial difference between the gross value of services declared in ST-3 returns filed by the Appellant for the year 2016-17 and total amount declared in ITR for the same period was observed by the Department and it was observed by the Department that the Appellant had not paid their service tax liability.

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A Demand-cum-Show Cause Notice dated 08.10.2021 was issued by the Ld. Assistant Commissioner, Central Goods & Services Tax, Division-I, Muzaffarnagar to the Appellant proposing to demand service tax of Rs.17,62,641/- alongwith interest at applicable rates in terms of Section 73(1) and Section 75, respectively, of the Finance Act, 1994. Penalties under Section 77(1)(c) and Section 78, ibid, were also proposed against the Appellant in the Show Cause Notice .

The SCN was contested by the Appellant before the Adjudicating Authority on the ground that the services provided were exempt from payment of service tax in terms of Notification No.25/2012-ST dated 20.06.2012.

The Adjudicating Authority accepted the submissions of the Appellant except for the services provided to Swami Vivekanand Subharti University under Distant Education Programme for a value of Rs.9,90,000/- and confirmed the demand of service tax for Rs.1,48,500/- alongwith interest at applicable rate under Section 73(1) and Section 75 of the Finance Act, 1994 and imposed penalties of Rs.1,48,500/- under Section 78, ibid, and Rs.10,000/- under Section 77(1)(c), ibid, vide Order-in-Original No.76-ST/AC/MZN-I/2022-23 dated 28.07.2022.

The Appellant assessee filed an appeal against the Order-in-Original before the Commissioner (Appeals), Central Goods & Services Tax, Meerut vide Appeal No.157 of 2022 dated 31.10.2022 and the Ld. Principal Commissioner, Central Goods & Services Tax, Meerut, through the Assistant Commissioner, Central Goods & Services Tax Division-I, Muzaffarnagar, had also filed an appeal against the said Order-in-Original before the Commissioner of Central Goods & Central Tax (Appeals), Meerut vide Appeal No.158/ST/Appeal of 2022 on 01.11.2022.

Commissioner (Appeals) decided the appeals filed by the Appellant and by the Department vide the impugned Orderin-Appeal by enhancing the demand to Rs.3,10,254/- alongwith interest; that penalties of Rs.3,10,254/- and Rs.10,000/- were also confirmed under Sections 78 and 77(1)(c), ibid, upon the Appellant. Being aggrieved with the impugned Order-in-Appeal, the Appellant has filed the present appeal before the Tribunal.

Ms. Stuti Saggi, Advocate, appeared on behalf of the Appellant and submitted that the actual figures of revenue for the F.Y. 2016-17 is Rs.1,33,40,901/-. The Commissioner (Appeals) has upheld the demand of Service Tax of Rs.1,48,000/- on the consideration of Rs.9,90,000/- received from Swami Vivekanand Subharati University, Meerut on account of Distance Education University and National Urban Livelihood Mission.

As regards charging service tax on consideration received on account of Distance Education fee from Swami Vivekanand Subharati University, Meerut, the Counsel for the Appellant submits that the Commissioner (Appeals) has erred in observing that the University has informed regarding closure of its study centres.

He further contended that the Commissioner (Appeals) and the Adjudicating Authority had whimsically held that the Appellant had not provided services under the Distant Learning Programme of Swami Vivekananda Subharti University and no evidence for holding such view was mentioned on record.

As regards confirmation of demand on the consideration received from National Urban Livelihood Mission, the Counsel for the Appellant has submitted that the Appellant was imparting vocational educational course to urban youth under programme of National Urban Livelihood Mission .

It was argued that the Appellant had been imparting training to the trainees selected by NULM as per the training course approved by NULM on various issues like bank linkage, book keeping and accounts, micro-planning, micro-investment process, roles and responsibilities of members, etc., and all these training courses are approved by the Government and the training is provided as per the course approved by the Government of the State of Uttar Pradesh.

Further contended that the Appellant had worked as an educational institution as prescribed under clause (oa) of Part 2 of Notification No.25/2012-ST dated 20.06.2012 during the relevant period and as such services provided by an educational institutional to its students was exempt from payment of service tax in terms of clause (a) of Sl.9 of the Notification No.25/2012-ST dated 20.06.2012. The Counsel for the Appellant also rebutted the allegation of suppression of facts etc.

The Authorized Representative appearing for the Respondent Department reiterated the grounds of appeal in the appeal filed by the Department and defended the impugned order-in-appeal on the basis of the findings given by the Commissioner (Appeals).

The main issue in the case is as to whether exemption granted under Notification No.25/2012-ST dated 20.06.2012 would be available to the Appellant. Clause (9) of the said Notification provides exemption to an educational institution who provides services to its student, faculty and staff.

The term ‘Educational Institution’ has been defined under clause (oa) of Part 2 of the Notification No.25/2012-ST dated 20.06.2012.

The single member bench of P.K. Choudhary, Member (Judicial) observed that the Appellant had been imparting education to the students of Swami Vivekananda Subharti University, enrolled under the distant learning programme, as per the curriculum provided by the said University and the said University was duly recognized under the laws of the Uttar Pradesh Government/UGC. For such services provided by the Appellant, the Swami Vivekananda Subharti University, Meerut had been paying some fees to the Appellant.

The Appellant had been working as an educational institution during the relevant period. Services provided by the Appellant were therefore exempted from service tax. In the case of Asian School of Media Studies,, the Tribunal has held that services provided for imparting education as per curriculum of a University who issues qualification certificate was exempted from service tax.

Since the Appellant was providing vocational education to urban youth as per programme approved by NUML which are based on the curriculum approved by Uttar Pradesh Government, it would be treated as educational institution in the light of definition given under clause (oa) of Notification No.25/2012-ST dated 20.06.2012 and services provided by him would be exempted from service tax under clause (9) of the notification.

The tribunal thus held that the demand of service tax confirmed on services rendered by the Appellant on the consideration received from NULM is not sustainable and set aside the same.

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