Case Law Details

Case Name : Commissioner of Central Excise Vs Consistent Software Technologies (I) Pvt. Ltd. (CESTAT Mumbai)
Appeal Number : Appeal No. ST/89307/2014
Date of Judgement/Order : 11/08/2018
Related Assessment Year :
Courts : All CESTAT (767) CESTAT Mumbai (146)

Commissioner of Central Excise Vs Consistent Software Technologies (I) Pvt. Ltd. (CESTAT Mumbai)

In the present case the respondent is engaged in imparting the training and coaching in various foreign languages i.e. French, German, Japanese, Spanish etc. which they claimed as a vocational training and covered under Notification No.9/2003-ST and 24/2004-ST. The very identical issue in respect of training and coaching in English language has been decided in the case of Anurag Soni (supra) and Innovative Training Place (P) Ltd. (supra) in which the Tribunal held that the said training is covered under vocational training, hence exempted.

FULL TEXT OF THE CESTAT JUDGMENT

The issue involved in the present case is that whether the commercial training or coaching centre provides training and coaching of foreign languages such as French, German, Japanese, Spanish etc. falls under ‘vocational training’ and consequently exempted under Notification No.9/2003-ST dated 20.6.2003.

2. Shri Vivek Dwivedi, learned Assistant Commissioner (AR) appearing on behalf of the Revenue-appellant, submits that training in foreign languages does not fall under the vocational training whereas the same is clearly covered by commercial training or coaching service, hence liable to service tax. He submits that as per the definition of vocational training institute, it covers only those training which enable the trainee to seek employment or undertake self employment directly after such training. However, in the present case, merely by learning foreign language, it does not enable a trainee to get a job directly.

3. On the other hand, Shri M.V. Goswami, learned consultant appearing on behalf of the respondent, submits that the very identical issue has been covered by the Tribunal’s following judgments:-

(i) Anurag Soni vs. CCE, Bhopal – 2017 (52) STR 18 (Tri.-Del.);

(ii) Innovative Training Place (P) Ltd. vs. CST, Delhi – 2017 (5) GSTL 193 (Tri.-Del.).

4. We have carefully considered the submissions made by both the sides. We find that in the present case the respondent is engaged in imparting the training and coaching in various foreign languages i.e. French, German, Japanese, Spanish etc. which they claimed as a vocational training and covered under Notification No.9/2003-ST and 24/2004-ST. The very identical issue in respect of training and coaching in English language has been decided in the case of Anurag Soni (supra) and Innovative Training Place (P) Ltd. (supra) in which the Tribunal held that the said training is covered under vocational training, hence exempted. The orders of the Tribunal are reproduced below:-

Anurag Soni

“5. Notification No.9/2003-ST and 24/2004-ST exempts vocational training institutes from payment of Service Tax under tax entry ‘commercial training or coaching’. “Vocational Training Institute” means a commercial training or coaching centre which provides vocational coaching or training that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching. Admittedly, the appellants are engaged in providing coaching in English, French and German language skills. Training included improving the skills of pronunciation, manner of speaking etc. The original authority recorded that this sort of training imparted by the appellant helps in getting employment for the participant in Multi National Companies and various Corporations/Institutions where improved particular skill in speaking is a required qualification. We are in agreement with the findings recorded by the original authority. The impugned order has at length examined the provisions of Section 3(2) of the Official Languages Act, 1963, Article 343(2) of Constitution of India and the status of English in India. We find that the whole discussion is misplaced and irrelevant to decide the taxability of the appellant under ‘commercial coaching or training’. As rightly contended by the appellant, it is not the status of the English, but the nature of coaching given by appellant which is relevant to decide the exemption under notification. Neither the tax entry nor the exemption notifications are having reference to any point of discussion which formed basis for the conclusion drawn by the impugned order. We find that the impugned order was mis-directed when examining the legal issue. Accordingly same is set aside.

6. We also rely on the decision of Tribunal in Darshan English Classes (supra). The original order has correctly applied legal provisions to the facts of case. Accordingly, the impugned order is set aside and appeal is allowed.

7. It is to be noted here that for the period when no exemption notification was available, the appellants liability is not in dispute.”

Innovative Training

“2.We have heard Shri A.K. Batra, learned Consultant for the appellant and Ms. Neha Garg, learned AR for Revenue. We have also perused the appeal records. The dispute in the present appeal relates to the liability of the appellant to pay service tax on the consideration received for providing coaching/training in English language. Section 65(26) of the Finance Act, 1994 defines commercial training and coaching means any training or coaching provided by commercial training or coaching centre. Section 65(27) states that commercial training or coaching centre means any institute or establishment providing commercial training or coaching for imparting skills or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training or any institute which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force. Notification No.9/2003-ST dated 20.6.2003 exempted taxable services provided in relation to commercial training or coaching by vocational training institute.

Explanation to the notification defines “Vocational training institute” as a commercial training or coaching centre which provides vocational coaching or training that imparts skills to enable the trainee to seek employment or undertake self-employment, directly after such coaching or training.

3.The dispute in the present appeal narrows down to the scope of coaching or training provided by the appellant, in English language skills. The lower authorities emphasized that English is not a foreign language and improving general communication skills in English will not result in the skills to enable the trainee to seek employment or undertake self-employment directly after such coaching or training. First of all, we note that the notification does not talk about any coaching or training in language, either Indian or foreign. Apparently, the lower authorities were guided by the Circular dated 20-6-2003 of the Board which clarified that among other things foreign language institute would not be chargeable to service tax. The Board was clarifying the scope of vocational coaching and training. We find that the lower authorities have mis-directing themselves into the analysis of whether or not English is a foreign language. We find that such analysis or conclusion thereafter is of no relevance to decide the status of an institute as vocational training institute.

4.The lower authorities also found that general improvement in communication skills in English does not by itself provide directly employment opportunity to the trainee. We find a sweeping general assertion of such nature is not proper.

5.We have examined the nature of training imparted by the appellant. The appellant is running a career school by name and design Persona Lingua. They conduct three training modules. The emphasis is on accent training. The training brochure indicates that the training will help persons aspiring to join jobs in call centre, hospitability or aviation field, etc. The training module includes scope of call centre, career in call centre, communication skills, elimination of error in Indian English, Neutral accent, reduction of mother tongue influence, job exercise, pronunciation of consonants and vowels, introduction to U.S. and U.K. accent. Personal development and interview skills were also imparted. We have perused the course brochure submitted by the appellant. We find that the English language skills as imparted by the appellant will enable the trainee to seek employment or undertake self-employment directly. As such, we hold that the appellants are rightly eligible for the exemption under Notification No.9/2003-ST and 24/2004-ST.

6. In similar set of facts, the Tribunal has held that such commercial coaching in English language is covered for exemption under these notifications. We refer to Final Order No. 52456/2017, dated 22-3-2017 in the case of British School of Language, New Delhi v. CST, Delhi. The Tribunal relied on another decision in the case of Maria Computer Systems Pvt. Ltd. v. CCE, Bhopal reported in 2017 (1) PMI 37-CESTAT, New Delhi.

7. The learned AR relied on the decision of the Tribunal in Prof. Ulhas Vasant Bapat v. CCE, Pune-III reported in 2013-TIOL-1510-CESTAT-MUM. We note in the said decision, the Tribunal held against the eligibility of appellant for exemption under the above notifications. It was recorded that the appellants conducted only a two weeks course which will only improve their skills. The Tribunal observed that when the candidate was trained in English language for years together both in school and colleges, the appellant coaching centre cannot provide training in two weeks to make the candidate employable. Further, the Tribunal also referred to the various fields listed by National Counsel for Vocational Training, Ministry of Labour and Employment to justify the denial of exemption to the appellant. We find that the facts of the present case as examined and appreciated by us cannot be covered by the ratio of the decision by the Tribunal in Prof. Ulhas Vasant Bapat (supra). First of all, we note that the training imparted by the appellant under various modules, as per the literature we have perused, is very specific and targeted towards employment. The nature of course is so designed that it is intended to benefit a candidate for getting employment in call centres/BPO. Secondly, we note that there is no list of vocations mentioned in the exemption notifications. Accordingly, we cannot insert a restrictive interpretation by referring to the trade/fields as categorized by the NCVT. During the material time, exemption was available only in terms of the above-mentioned notifications.

8. In view of the above analysis, we find that the impugned order is without merits and accordingly, the same is set aside and the appeal is allowed.”

4.1 From the above decisions, it can be observed that the training in the present case imparting the foreign languages is at par with the training in English language. Therefore, both the judgments are squarely applicable in the facts of the present case. On perusal of the impugned order, we find that the learned Commissioner (Appeals) after examining the scope of the Board circular, has given a clearing finding and also relying on the Tribunal’s judgment in the case of Col’s Calibre – 2011 (24) STR 427 (Tri.-Chennai), which was the issue of training centre for communicative English, personality enhancement etc., has given a detailed finding for setting aside the demand confirmed in the original order.

5. Therefore, we do not find any infirmity in the impugned order, hence the same is upheld. Revenue’s appeal is dismissed.

(Pronounced in court on 11.4.2018)

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