Services to IIMs and XLRI Are Educational Support, Not ‘Commercial Training and Coaching’ : CESTAT [Read Order]
CESTAT held that providing infrastructure and support to IIMs and XLRI is only educational support, not “Commercial Training and Coaching,” and thus not taxable.
Educational - support - taxscan
Educational - support - taxscan
The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that merely providing infrastructure, technology, and marketing support to premier institutions like Indian Institute of Management (IIM)s and Xavier School of Management (XLRI) does not amount to rendering services as a “Commercial Training and Coaching Centre.”
The appellant, Hughes Communication India Ltd. is engaged in providing Very Small Aperture Terminal (VSAT) services under license from the Department of Telecommunications.
Under Memoranda of Understanding (MoUs) with educational institutions like IIM, Kozhikode and XLRI, Jamshedpur, the appellant set up centers to enable the institutions to deliver academic programs. It installed hardware and software in the learning centers, provided infrastructure and technology, assisted in sales and marketing, collected fees from students, and shared the same with the institutions.
Know Practical Aspects of Tax Planning, Click Here
During the audit, the Department observed that from 2005 to June 2012, the appellant booked tuition and other fees in its profit and loss account without paying service tax. Two Show Cause Notices covering 2005–06 to June 2012 were issued, demanding service tax with interest and penalties. The adjudicating authority confirmed the demands.
The appellant contended that it only provided IT infrastructure and support services to the institutions, which in turn imparted education. It was not providing commercial training or coaching, nor was it part of a joint venture, as it had no control over curriculum, courses, or degrees awarded. It argued that its services amounted only to educational support, not commercial coaching.
The Tribunal examined the agreements with IIM and XLRI and found that the institutions themselves designed the pedagogy, conducted classes, and issued certificates. The appellant’s role was limited to providing connectivity, classrooms, and marketing support. Mere provision of infrastructure and technology, the Tribunal held, does not make an entity a “Commercial Training and Coaching Centre.”
Want a deeper insight into the Income Tax Bill, 2025? Click here
The Bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that while the appellant was associated with the conduct of examinations and revenue sharing, the services were auxiliary and supportive in nature, not coaching. The findings of the Commissioner that the appellant was an independent commercial training centre.
The Tribunal ruled that such activities constitute only educational support services, and therefore cannot be subjected to service tax under the Finance Act, 1994. It allowed the appeals and set aside the demands of service tax raised on the ground of “Commercial Training and Coaching Services.”
The appellant was represented by Siddharth Jaiswal, along with Aneesh Dewan, while Krati Singh and Aman Singh represented the revenue.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
