Service Tax Exemption Allowed as Skill-Based Film Training Qualifies as Vocational Education

LV Prasad Film & TV Academy Vs Commissioner of GST & Central Excise (CESTAT Chennai)

The appeals arise from orders confirming service tax demands, interest, and penalties against an institute providing training in film direction, cinematography, editing, and sound design for the period 2005–06 to 2014–15. The core issue before the Tribunal was not the classification of services—which was undisputedly “Commercial Training or Coaching Service”—but whether the appellant was entitled to exemption under Notification No. 24/2004-ST and subsequent legal provisions.

For the period 01.04.2005 to 26.02.2010, the Department denied exemption on the ground that the courses did not guarantee employment and only enhanced prospects, arguing that entry into the film industry depends on talent and experience. The Tribunal rejected this reasoning, holding that the notification did not require assured employment. It emphasized that vocational training involves imparting practical skills that enable employability or self-employment. Applying a liberal and purposive interpretation consistent with beneficial legislation, the Tribunal concluded that the courses provided technical and industry-relevant skills, thereby qualifying as vocational training. Accordingly, exemption was allowed for this period.

For the period 01.04.2010 to 31.03.2012, the dispute centered on the amendment made by Notification No. 03/2010-ST, which restricted exemption to institutes affiliated with the National Council for Vocational Training (NCVT) offering designated trades. The Department contended that the appellant lacked such affiliation. The appellant argued that the amendment became effective only upon its publication in the Official Gazette on 22.01.2011, not on 27.02.2010. The Tribunal accepted this contention, noting that the appellant established a high degree of probability regarding the publication date, which the Department failed to rebut. Since the appellant obtained NCVT affiliation on 10.11.2010, prior to the effective date of the amendment, the conditions stood satisfied. Further, the Tribunal found that the courses offered were covered as designated trades under the Apprentices Act, 1961. Hence, exemption was held applicable for this period as well.

For the period 01.07.2012 to 30.09.2014, the issue related to the negative list regime under Section 66D(l)(iii) of the Finance Act, 1994, which exempts services by way of education forming part of an “approved vocational education course.” The Department denied exemption on the ground that the courses were not “approved vocational education courses.” The Tribunal observed that under Section 65B(11), the definition is disjunctive and satisfied if any one condition is met. Since the appellant was an NCVT-affiliated institute offering courses in designated trades, it fulfilled the statutory requirement without needing additional approvals. The Tribunal also held that vocational education falls within the scope of “education” in this context. Consequently, exemption under the negative list was allowed.

Regarding the extended period of limitation and penalties, the Tribunal found that the demands were based on interpretational issues. There was no evidence of wilful suppression or intent to evade tax. Mere non-registration or non-payment was insufficient to invoke the extended period. Accordingly, the invocation of the extended period and imposition of penalties were held to be unsustainable.

The Tribunal also addressed the Department’s reliance on an advance ruling to deny exemption. It held that such rulings are binding only on the applicant in that case and do not have general precedential value. Further, judicial precedents relied upon by the appellant clarified that actual employment of trainees is not a prerequisite for claiming exemption; it is sufficient if the training imparts employable skills.

In conclusion, the Tribunal held that the appellant satisfied the conditions for exemption across all relevant periods. The impugned orders were set aside on merits, and the appellant was granted consequential relief.

FULL TEXT OF THE CESTAT CHENNAI ORDER

These appeals challenge Order-in-Appeal No. 47/2015 (STAX-II) dated 10.02.2015 and Order-in-Appeal Nos. 68 to 71/2016 (STAX-II) dated 13.06.2016 passed by the Commissioner of Service Tax (Appeals-II), Chennai (impugned orders).

2. The Appellant provides training and coaching in direction, cinema photography, and film processing and collects course fees. It appeared that the Appellant neither registered with the Department nor paid Service Tax on the fees collected. Accordingly, three Show Cause Notices (SCN), dated 08.09.2009, 12.09.2009, and 27.09.2010 were issued for the period 2005-06 to 2009-10, proposing levy of Service Tax under the category of ‘Commercial Training or Coaching Service.’ The Adjudicating Authority confirmed demands along with interest and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Appellant’s appeal against the said Order was rejected by the Commissioner (Appeals), leading to Appeal No. ST/40911/2015 filed along with an application for additional evidence.

2.1 Appeals Nos. ST/41709 to 41712/2016 arise from SCN’s for the periods 2010-11, 2011-12, July 2012 to September 2013, and October 2013 to September 2014, for the same activity, demanding service tax along with interest and penalties. These demands were confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals), giving rise to the present appeals.

2.2 The appellant filed Miscellaneous Application (M.A.) No. ST/MISC/40057/2025 in Appeal No. 40911/2015, placing on record documents to substantiate that vocational training imparted by a VTI was exempt from service tax under Notification No. 24/2004-ST dated

PERIOD	REASON FOR DENYING EXEMPTION	APPELLANT’S SUBMISSIONS
01.04.2005 – 26.02.2010	The Department’s case is that – entry into film industry is largely based on individual skill, talent, and experience. – the courses merely enhance employment prospects and do not assure employment upon completion. – The exemption is available only where training ensures employment.	The courses impart skill to the trainees and exemption is available for this reason, regardless of whether the trainees obtain employment post completion of courses offered by the Appellant.

10.09.2004. The said notification was amended by Notification No. 03/2010-ST dated 27.02.2010, which, as per the Appellant, took effect only from the date of its publication in the Gazette of India on 22.01.2011.

3. The learned Advocate Shri Raghavan Ramabhadran appeared for the appellant and Ld. Authorized Representative Smt. Anandalakshmi Ganeshram, appeared for the respondent.

3.1 Shri Raghavan Ramabhadran Ld. Counsel for the appellant submitted two Tables showing a summary of the demand involved (Table – I), and the issues under dispute (Table – II), in both the appeals. Table -II summarises the findings by the Revenue and their (appellants) response in brief. The same are reproduced below:

Table I: Summary of Demand

Details	ST/40911/2015			ST/41709-417712/2016
Impugned Order	OIA No. 47/2015 (STAX-II) dated 10.02.2015 [Page 16, Appeal Typed Set]			OIA No. 68 to 71 of 2016 dated 13.06.2016 [Page 27, Appeal Typed Set]
Order-in- Original	OIO No. 49, 49A, 49B dated 26.05.2011 [Page 25, Appeal Typed Set]			OIO No. 28 to 31 of 2015-16-ST-II dated 21.02.2015 [Page 109, Appeal Typed Set]
Show Cause Notice	363/2009 dt. 08.09.2009 [Page 45, Appeal Typed Set]	444/2009 dt. 12.10.2009 [Page 49, Appeal Typed Set]	524/2010 dt. 27.09.2010 [Page 54, Appeal Typed Set]	317/2011 dt. 09.09.2011 [Page 42, Appeal Typed Set]	296/2012 dt. 11.10.2012 [Page 52, Appeal Typed Set]	179/2014 dt. 28.07.2014 [Page 57, Appeal Typed Set]	63/2015 dt 09.09.2015 Page 65, Appeal Typed Set]
Period of Dispute	01.04.2005- 31.03.2008	01.04.2008- 31.03.2009	01.04.2009- 31.03.2010	01.04.2010- 31.03.2011	01.04.2011- 31.03.2012	01.07.2012- 30.09.2013	01.10.2014- 30.09.2014
Demand (INR)	25,27,397/-	12,05,100/-	10,55,750/-	16,51,608/-	9,69,398/-	35,86,872/-	28,73,700/-
Penalty	Under S. 78	Under S.76	Under S.76	Under S.76	Under S.76	Under S.76	Under S.76

TABLE -II

27.02.2010 – 21.01.2011	27.02.2010-31.03.2010: The Appellant did not obtain affiliation with the NCVT as required by the Amendment Notification. [ST/40911/2015]	The Amendment Notification did not take effect until its publication on the official gazette on 22.01.2011.
	01.04.2010-21.01.2011: The Appellant was affiliated with NCVT, but the courses are not “approved vocational education courses” [ST/41709/2015]	The courses offered by the Appellant are notified as designated trades under the Apprentices Act, 1961. The Impugned OIA has applied the provisions in the negative list regime to deny exemption for the period prior to the negative list.
22.01.2011 – 31.03.2012	The Appellant was affiliated with NCVT, but the courses are not “approved vocational education courses” [ST/41709-41710/2015]	The courses offered by the Appellant are notified as designated trades under the Apprentices Act, 1961. The Impugned OIA has applied the provisions in the negative list regime to deny exemption for the period prior to the negative list.
01.04.2012 – 30.06.2012	No demand, since no fees were collected by the Appellant.	No Demand.
01.07.2012 – 30.09.2014	The Appellant was affiliated with NCVT, but the courses are not “approved vocational education courses” [ST/41711-41712/2016]	The courses offered by the Appellant are notif tion of “approved vocational education course” in Section 65B(11) is separated by a disjunctive ‘Or’. Hence, there is no need to obtain course-wise approvals from NCVT.

The Ld. Counsel further submitted that the courses on which the exemption was denied are:

a. 2 Year Post Graduate Diploma Courses on Direction

b. 2 Year Post Graduate Diploma Courses on Cinematography

c. 1 Year Post Graduate Diploma in Editing & Sound Design rendered in collaboration with Arcadia University

I. Period: 01.04.2005 to 26.02.2010 (Impugned OIA dated 10.02.2015 – ST/40911/2015)

A. The exemption was denied on the grounds that:

i. the film industry does not require the qualifications provided;

ii. the Appellant’s courses do not assure employment but merely enhance prospects; and

iii. as per Board Circular No. 107/1/2009-ST, exemption applies only where training enables direct employment or self-employment.

B. The reasoning is erroneous. The issue is squarely covered by judicial precedent. In IILM Film & Media School v. CST [2013 (32) STR 321 (Tri-Del)], it was held that confirmation of employment is not a condition for exemption; imparting employable skills is sufficient. Reliance on CAE Flight Training (India) Pvt. Ltd. [2010 (18) STR 785 (AAR)] is misplaced, as an AAR ruling is binding only on the applicant therein.

C. The principle stands conclusively settled by Frankfinn Aviation Services Pvt. Ltd. [2017 (5) GSTL 154 (Tri-Del)], upheld by the Supreme Court [2018 (16) GSTL J171 (SC)], and consistently followed thereafter. The Appellant’s courses impart specialised skills requiring institutional training and industry familiarity and therefore qualify as vocational training under the Exemption Notification.

II. Period: 01.04.2010 to 31.03.2012 (Impugned OIA dated 13.06.2016 – ST/41709-41712/2016)

A. Notification No. 24/2004-ST dated 10.09.2004 was amended by Notification No. 03/2010-ST dated 27.02.2010. The impugned OIA dated 10.02.2015 denied exemption for the period from 27.02.2010 on the ground that the appellant, being required (post-amendment) to be an NCVT-affiliated VTI offering designated trades under the Apprentices Act, 1961, was not full filled as the Appellant had not obtained NCVT registration as on 27.02.2010. The appellant, however, contends that under para 2 of the amending notification dated 27.02.2010, the amendment took effect only upon publication in the Official Gazette, which factually occurred on 22.01.2011—after the registration was obtained by them on 10.11.2010.

B. The impugned order records that the Appellant after possessing NCVT affiliation was in principle eligible for exemption. Exemption was however denied solely on the ground that the courses were allegedly not designated trades or not “approved vocational courses.”

C. For the period up to 31.03.2012, the only requirement under the Exemption Notification (as amended w.e.f. 22.01.2011) was that the institute be an NCVT-affiliated VTI offering courses in designated trades under the Apprentices Act, 1961. “Designated trade” under Section 2(e) includes any vocational course notified by the Central Government. The Appellant satisfies both conditions. The Appellant has been registered as a ‘VTI’ under the National Council for Vocation Training (‘NCVT’)with the NCVT on 10.11.2010for training courses as follows.

Sl.	Name of Sector	Name of the Course
1.	Media Sector	Digital Camera Photography
2.		Videography
3.		Mass Communication
4.	Electronics	Digital Videography (editing & mixing)

C. The impugned order wrongly imports the post-01.07.2012 requirement of “approved vocational educational courses,” which was introduced only under the negative list regime. Even otherwise, the Appellant satisfies the definition of “approved vocational education course” under Section 65B(11).

III. Period: 01.07.2012 to 30.09.2014

A. 04.2012 – 30.06.2012, no demand was raised, since no fees were collected by the Appellant.

B. With effect from 01.07.2012, services by way of education forming part of an approved vocational education course fall under the negative list in Section 66D(l)(iii). Section 65B(11) defines such courses disjunctively: satisfaction of either limb is sufficient. Since the Appellant is an NCVT-affiliated institute offering designated trades, no separate MES approval is required. The impugned order is therefore erroneous in excluding the Appellant from the negative list.

IV. Extended Period

Invocation of the extended period under the proviso to Section 73(1) is unsustainable. The Show Cause Notices merely allege suppression based on non-registration and audit detection, without establishing any wilful intent to evade tax. It is settled law that the extended period requires a positive act of suppression or misstatement, not mere non-payment or interpretational dispute (Padmini Products; Uniworth Textiles). The Appellant acted under a bona fide belief and without mala fide intent. Where the issue involves interpretation of law, allegations of suppression are untenable. Accordingly, the demands raised for FY 2005–06 and 2006–07 aggregating to ₹37,32,497 are liable to be set aside

V. Miscellaneous Application (M.A.), No. ST/MISC/40057/ 2025.

A. In the M.A. filed by the appellant has stated that in terms of paragraph 2 of the Amendment Notification No. 03/2010-ST dated 27.02.2010 to Exemption Notification No. 24/2004-ST dated 10.09.2004, the amendment takes effect from the date of its publication in the Gazette of India. Although dated 27.02.2010, it was published only on 22.01.2011. Consequently, the amended conditions became operative only from that date. To ascertain the publication date, the Appellant filed an RTI application on 22.10.2024. Upon non-response, a first appeal was filed on 02.12.2024, followed by a hearing on 17.12.2024. As the response dated 06.01.2025 was incomplete, a second appeal dated 10.02.2025 was filed and remains pending before the Central Information Commission.

B. The Ld. Counsel stated that the impugned order, having disregarded the settled position, is liable to be set aside. The appellant filed a written submission post the hearing as permitted by the Bench, summarizing the averments made during the hearing.

3.2 Smt. Anandalakshmi Ganeshram the Ld. Authorized Representative submitted on behalf of the Revenue

A. M/s L.V. Prasad Film & TV Academy has been imparting training in film craft, photography, sound recording and editing since 2005 and has collected course fees from students for such training.

B. The appellant provides training for consideration and therefore falls within the definition of “Commercial Training or Coaching Service” under Sections 65(26), 65(27) and 65(105)(zzc) of the Finance Act, 1994.

C. The appellant claims exemption under Notification No. 24/2004-ST on the ground that it is a vocational training institute.

D. As per the notification, exemption is available only where training directly enables the trainee to obtain employment or undertake self-employment upon completion of the course.

E. The decisive test is whether the training itself qualifies a trainee to take up a specific job or self-employment without the need for further experience or qualification.

F. The appellant imparts training in Direction, Cinema Photography and Film Processing, where employment in the film industry depends on experience, talent and personal skill rather than completion of any prescribed course.

G. The training imparted merely enhances opportunities and does not directly enable employment or self-employment; hence it does not qualify as vocational training.

H. CBIC Circular No. 107/1/2009-ST clarifies that exemption is not available to institutes offering courses that only improve prospects and do not confer direct employability.

I. Reliance is placed on CAE Flight Training (India) Pvt. Ltd., holding that training not directly leading to employment or self-employment does not qualify for exemption under Notification No. 24/2004-ST.

J. Notification No. 24/2004-ST was amended w.e.f. 27.02.2010 to restrict exemption to ITIs/ITCs affiliated with NCVT and offering designated trades under the Apprentices Act, 1961.

K. The appellant has not produced any evidence of NCVT affiliation and is therefore not eligible for exemption even for the post-amendment period.

L. Judicial precedents consistently hold that:

a. exemption notifications must be strictly construed;

b. the burden of proving eligibility lies on the assessee; and

c. training that merely enhances skills or prospects does not qualify as vocational training.

M. The appellant has collected course fees, failed to discharge service tax liability, and did not obtain registration under Section 69 of the Finance Act, 1994.

N. The sole defense of exemption under Notification No. 24/2004-ST is unsustainable in law.

O. Accordingly, the services provided are taxable under Commercial Training or Coaching Service, and the appellant is liable to pay service tax along with applicable consequences.

4. We have patiently heard the parties to the dispute and carefully considered their written and oral submissions in the appeals along with the Miscellaneous Application. It is not in dispute that the Appellant provides training in film craft, cinematography, editing and sound design for consideration. Accordingly, the activity squarely falls within the scope of Commercial Training or Coaching Service as defined under Sections 65(26), 65(27) and 65(105)(zzc) of the Finance Act, 1994. The main dispute is confined only to eligibility to exemption from Service Tax during the impugned period in its many facets and not to classification per se.

5. The issues for determination can be broadly summarised as follows:

I. Whether the services rendered by the Appellant qualifies for exemption under Notification No. 24/2004-ST for the pre-amendment and post-amendment periods.

II. Whether Notification No. 03/2010-ST dated 27.02.2010 amending Notification No. 24/2004-ST dated 10.09.2004 came into effect only on 22.01.2011, the date on which it was ostensibly published in the Official Gazette.

V. Whether with effect from 07.2012, services by way of education forming part of an approved vocational education course fall under the negative list under Section 66D(l)(iii).

VI. Whether taking recourse to the extended period and imposition of penalties is legal and proper.

6. It is useful at this stage to briefly trace the evolution of the relevant statutory provisions. “Commercial training or coaching service” was introduced with effect from 01.07.2003 through Sections 65(26) and 65(27) of the Finance Act, 1994, by defining the expression, “commercial training or coaching” and “commercial training or coaching centre” in sections 65(26) and 65(27) respectively of the Finance Act, 1994 (the Act) as reproduced below:

Section 65(26):

““Commercial training or coaching” means any training or coaching provided by a commercial training or coaching centre”.

Section 65(27):

““Commercial training or coaching centre” means any institute or establishment providing commercial training or coaching for imparting skill 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 preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for time being in force.”

6.1 Shortly after the introduction of the service tax levy on Commercial Coaching or Training Centres, the Board, vide Circular No. 59/8/2003-ST dated 20.06.2003, issued the following clarification:

“2.2 Vocational training and coaching Centers:

2.2.1 Commercial coaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams like entrance examinations for Indian Institute of Technology-Joint Entrance Examinations/Pre Medical Tests, Civil Services exams etc. are chargeable to service tax. However, services in relation to commercial coaching and training, provided by, –

a. vocational training institute;

b. computer training institute; and

c. recreational training institute;

have been exempted from service tax w.e.f. 1st July, 2003 vide Notification No.9/2003-Servtice Tax dated 20th June 2003. Therefore, vocational coaching and training services provided by typing and shorthand institutes, TV/ vehicle repair training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer-training centers, hobby classes, institutes teaching martial arts, painting, dancing etc., would not be chargeable to service tax. This exemption would remain in force up to 29th February 2004.”

(emphasis added)

6.2 Subsequently, Courts and Tribunals held that certain non-profit or charitable institutions were not liable to tax under this entry. To neutralise these rulings, the Finance Act, 2010 inserted an Explanation to Section 65(105)(zzc), with retrospective effect from 01.07.2003, clarifying that any institute imparting training for consideration would be covered, irrespective of profit motive or legal form as non-profit making or charitable institutions. TRU letter, D.O.F. No.334/1/2010-TRU, dated 26.02.2010 clarified the issue as under:

“6. Redefining the scope of commercial training and coaching service

6.1 Commercial training and coaching service was introduced in Budget 2003 with a view to tax the mushrooming coaching institutes and training centres which either provide coaching classes for examinations or unrecognized courses in various areas such as, management, marketing, engineering etc. The schools, institutes, colleges and universities providing courses that lead to award of recognized diplomas/degrees and sports education were kept out of tax net. These include universities created under a Central or State Act, institutes recognized by UGC as universities or deemed universities, institutes granted recognition professional councils like AICTE, Medical Council of India, Bar Council of India etc. To distinguish the former types of institutes/centres from the latter, the word ‘commercial’ was used in the definitions of ‘Commercial training and coaching’, ‘Commercial training and coaching centres’ and ‘taxable service’.

6.2 The use of the word ‘commercial’ in these definitions has led to certain unintended consequences. A view has been taken that the term ’commercial’ appearing in various definitions implies that the institute must be run with a profit motive to fall under the taxable service. A number of taxpayers resisted paying tax on this ground. TRU by D.O.F. No.334/1/2010-TRU, Dated: 26.02.2010 clarified the reason for amendment as under: “In order to clarify the legislative intent, the definition of the taxable service is being suitable amended, through insertion of an Explanation, to clarify that the word ‘commercial’ means any training or coaching that is provided for a consideration irrespective of the presence or absence any profit motive. This amendment is being carried out retrospectively (from July 2003) so as resolve the disputes pending at different levels of the dispute settlement system.” Thus, the relevant provisions read as follows:

Section 65(105)(zzc):

““Taxable service” means any service provided or to be provided to any person, by a commercial training or coaching centre in relation to commercial training or coaching.

Explanation.—For the removal of doubts, it is hereby declared that the expression “commercial training or coaching centre” occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force and carrying on its activity with or without profit motive and the expression “commercial training or coaching” shall be construed accordingly.”

(emphasis added)

Further, with effect from 01.05.2011, the Finance Act, 2011 amended Section 65(27) by deleting the exclusionary portion of the definition, while simultaneously exempting such excluded institutions through Notification No. 33/2011-ST dated 01.05.2011.

6.3 The issue under challenge pertains to exemption from duty to Commercial Training or Coaching Service provided by vocational/ recreational training institute. The notification is reproduced below:

“Notification No. 24/2004-S.T., dated 10-9-2004 – Service tax exemption to commercial training or coaching services provided by vocational/recreational training institute.

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being ST/947/2011, 26195/2013 satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services provided in relation to commercial training or coaching, by, –

a. a vocational training institute; or

b. a recreational training institute, to any person, from the whole of the service tax leviable thereon under section 66 of the said Act.

Explanation. – For the purposes of this notification, –

(i) “vocational training institute” means a commercial training or coaching centre which provides vocational training or coaching that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching;

(ii) “recreational training institute” means a commercial training or coaching centre which provides training or coaching relating to recreational activities such as dance, singing, martial arts or hobbies.”

(emphasis added)

7. The appellant has stated that during the first disputed period i.e. from 01.04.2005 to 26.02.2010, the courses for which the exemption under Notification No. 24/2004-S.T., was denied pertain to three Post Graduate Diploma Courses in (i) film Direction; (ii) Cinematography and (iii) Editing & Sound Design. The Department’s case is that entry into film industry is largely based on individual skill, talent, and experience. The courses merely enhance employment prospects and do not assure employment upon completion. The exemption is available only where training ensures employment.

7.1 We find that the Apex Court, in its recent judgment in URMILA
DIXIT Vs SUNIL SHARAN DIXIT AND ORS. [2025 INSC 201 / CIVIL APPEAL NO. 10927 OF 2024, Dated: 02.01.2025], examined the rules of interpretation to be applied when interpreting a beneficial legislation, as under:

“8. To answer the issue at hand, it is imperative for this Court to discuss the rules of interpretation to be applied when interpreting a beneficial legislation akin to the Act at hand. While dealing with certain provisions of the Motor Vehicles Act, this Court, in Brahmpal Vs National Insurance Company [(2021) 6 SCC 512], observed that a beneficial legislation must receive a liberal construction in consonance with the objectives that the concerned Act seeks to serve.

9. This Court in K.H. Nazar Vs Mathew K. Jacob [(2020) 14 SCC 126], reiterated the above expositions and stated that:

“11. Provisions of a beneficial legislation have to be construed with a purpose-oriented approach. [Kerala Fishermen’s Welfare Fund Board Vs Fancy Food, (1995) 4 SCC 341] The Act should receive a liberal construction to promote its objects. [Bombay Anand Bhavan Restaurant Vs ESI Corpn., (2009) 9 SCC 61 : (2009) 2 SCC (L&S) 573 and Union of India Vs Prabhakaran Vijaya Kumar, (2008) 9 SCC 527 : (2008) 3 SCC (Cri) 813] Also, literal construction of the provisions of a beneficial legislation has to be avoided. It is the Court’s duty to discern the intention of the legislature in making the law. Once such an intention is ascertained, the statute should receive a purposeful or functional interpretation [Bharat Singh Vs New Delhi Tuberculosis Centre, (1986) 2 SCC 614 : 1986 SCC (L&S) 335]

**** **** *****

13. While interpreting a statute, the problem or mischief that the statute was designed to remedy should first be identified, and then a construction that suppresses the problem and advances the remedy should be adopted. [Indian Performing Rights Society Ltd. Vs Sanjay Dalia, (2015) 10 SCC 161 : (2016) 1 SCC (Civ) 55] It is settled law that exemption clauses in beneficial or social welfare legislations should be given strict construction [Shivram A. Shiroor Vs Radhabai Shantram Kowshik, (1984) 1 SCC 588] . It was observed in Shivram A. Shiroor Vs Radhabai Shantram Kowshik [Shivram A. Shiroor v. Radhabai Shantram Kowshik, (1984) 1 SCC 588] that the exclusionary provisions in a beneficial legislation should be construed strictly so as to give a wide amplitude to the principal object of the legislation and to prevent its evasion on deceptive grounds. Similarly, in Minister Administering the Crown Lands Act Vs NSW Aboriginal Land Council [Minister Administering the Crown Lands Act Vs NSW Aboriginal Land Council, 2008 HCA 48: (2008) 237 CLR 285], Kirby, J. held that the principle of providing purposive construction to beneficial legislations mandates that exceptions in such legislations should be construed narrowly.” (emphasis supplied)

10. More recently, in Kozyflex Mattresses (P) Ltd. Vs SBI General Insurance Co. Ltd. [(2024) 7 SCC 140], this Court held the definition of a consumer under the Consumer Protection Act, 1986 to include a company or corporate person in view of the beneficial purpose of the Act.

11. While considering the provisions of the Medical Termination of Pregnancy Act, this Court in X2 Vs State (NCT of Delhi) [(2023) 9 SCC 433], reiterated that interpretation of the provisions of a beneficial legislation must be in line with a purposive construction, keeping in mind the legislative purpose. Furthermore, it was stated that beneficial legislation must be interpreted in favour of the beneficiaries when it is possible to take two views.

(emphasis added)

The Supreme Court in the case of Government of Kerala and Anr. Vs Mother Superior, (2021) 5 S.C.C. 602 it is contended that any ambiguity in the interpretation of such beneficial provisions must be construed for the benefit of the taxpayer.

7.2 The exemption Notification No. 24/2004-ST dated 10.09.2004 is broadly worded, without any condition, reflecting a legislative intent to cover skill-enhancing vocational training during the period from 01.04.2005 to 26.02.2010. Moreover there is no basis to conclude that trainees completing the appellant’s courses are incapable of securing employment or self-employment. The assertion that entry into the film industry depends solely on individual talent and experience, and that the courses merely enhance employment prospects without leading to employment, is speculative and misconceived. By their nature, vocational courses emphasise practical, hands-on skill development. Training in film direction, cinematography, and editing and sound design equips students with essential technical skills, creative discipline, and familiarity with industry tools, enabling entry-level engagement as assistants, interns, or freelancers. These courses also promote self-employment through independent projects and digital content creation, particularly in the expanding streaming and online media sectors. Structured instruction and a shortened learning curve directly enhance employability. By adopting a liberal and purposive interpretation consistent with the beneficial object of the notification, we find that the appellant’s training squarely falls within its scope. Hence the appellant is eligible for exemption in the pre-amndment period.

8. The dispute during the period 01.04.2010 to 31.03.2012 was caused by amending Notification No. 03/2010-ST dated 27.02.2010 which substitutes Explanation (i) of Notification No. 24/2004 dated 10.09.2004 so as to to modify the meaning of vocational training institute (VTI), as those institutes or centres affiliated to the National Council for Vocational Training notified under the Apprentices Act, 1961. The substituted explanation reads:

“(i) vocational training institute” means an Industrial Training Institute or an Industrial Training Centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961(52 of 1961).”

in place of:

(i) “vocational training institute” means a commercial training or coaching centre which provides vocational training or coaching that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching; (Notification No. 24/2004)

8.1 The impugned order found that the Appellant lacked National Council for Vocational Training (NCVT), affiliation as required under the Amendment Notification. Per contra the Appellant contends that up to 31.03.2012, the Exemption Notification (as amended only w.e.f. 22.01.2011 and not 27.02.2010 – which is discussed below), required only that the courses offered be designated trades under the Apprentices Act, 1961. We find that ‘Designated Trades’ are defined under Section 2(e) of the Apprentices Act, 1961 to mean “any trade or occupation or any subject field in engineering or non-engineering or technology or any vocational course which the Central Government, after consultation with the Central Apprenticeship Council, may, by notification in the Official Gazette, specify as a designated trade for the purposes of this Act.”. The sole conditions were that the Appellant be an NCVT-affiliated vocational training institute and impart courses in designated trades. The Appellant has been affiliated with the NCVT since 10.11.2010. They have stated that all its courses are notified as designated trades as given in the Table submitted by them and reproduced below:

Sl.	Courses on which exemption is denied [paragraph 7(iii): page 30]	Description of Course & curriculum	Whether notified as designated trade(s)	Whether approved MES Courses
1.	Direction	Duration: 2-year PG Curriculum: photography, videography, editing, screenwriting, sound design, film theory, production planning & management.	The elements of the course are individually notified as Designated trades, as follows: Digital photographer Audio-Visual Technician Digital camera photography & digital videography	Yes. Digital Camera Photography [MDA101] Videography [MDA102] Digital Videography (Editing & Mixing) [ELC203]
2.	Cinematography	Duration: 2 Year PG Curriculum: photography  videography, lighting techniques, editing, direction.	Yes. Notification dated 06.09.1980, published on 27.09.1980	No.
3.	Editing & Sound Design rendered in collaboration with Arcadia University	Duration: 1 Year PG Curriculum: sound design, editing, trimming, photography & videography, dubbing, recording and noise cleaning. Sound editing and sound design are specialised components within the broader field of sound engineering.	Yes. Sound Engineering was notified under Notification dated 06.09.1980, published on 27.09.1980.	Yes. Media [MDA] Mass Communication [MDA103]

Accordingly, both conditions under the Exemption Notification—(i) recognition as a vocational training institute and (ii) offering courses in designated trades—are seen satisfied. However the date of effect of notification No. 03/2010-ST dated 27.02.2010, needs to be resolved, since the appellant got registered as a VTI with NCVT only on 10.11.2010. The issue is discussed above.

8.2 The Appellant has submitted that the amendment Notification was not in force on 27.02.2010 and became effective only upon its publication on 22.01.2011. To confirm the publication date, the Appellant filed an RTI application, currently pending at the second appellate stage, and independently searched the Gazette of India website. A search by ‘publish date’ for 27.02.2010 yielded no result, while a search by ‘notification date’ produced 15 entries. Serial No. 7 related to an Extraordinary Notification issued on 27.02.2010 but published on 22.01.2011. The Gazette, at page 139, contains the relevant Amendment Notification (Notification No. 3/2010-Central Excise). Therefore, the Amendment Notification took effect only from 22.01.2011, the date of publication in the Official Gazette, as provided in paragraph 2 of the notification.

8.3 It is a settled principle of law that the burden of proof lies on the
party who asserts a fact. [See: Section 101, Indian Evidence Act, 1872; Section 104 in Bharatiya Sakshya Adhiniyam, 2023; Anil Rishi Vs Gurbaksh Singh, (2006) 5 SCC 558; Rangammal Vs Kuppuswami, (2011) 12 SCC 220]. The burden of proof is hence on the appellant to prove he date of publication of the amending notification was on the date as claimed by him. However while the burden of proof remains static, the onus of proof is dynamic and shifts in the course of appreciation of evidence during adjudication. [See: Mahakali Sujatha Vs Future Generali India Life Insurance Co. Ltd. – (2024) 8 SCC 712]. Once the Appellant in this case creates a high degree of probability, the onus shifts to the Revenue, and failure to discharge it results in the Appellants burden being deemed discharged. We find that the date of publication is a fact within the knowledge of Revenue. It would not be difficult for Governmental Authorities to rebut the alleged day of publication as stated by the appellant being different from the date mentioned in the notification, as they would be maintaining the date and time stamp of the creation of electronic Gazette Notification. By failure of Revenue to rebut the claim, the Appellant discharges his burden and the fact of publication of the Notification on 22.01.2011 stands proved. The Appellant has stated that they had diligently applied for registration as a ‘VTI’ under the National Council for Vocation Training (‘NCVT’) on 28.07.2010. The registration was granted to the Appellant on 10.11.2010. This being so no tax demand survives during the period.

9. As regards the period with effect from 01.07.2012, it is the case of the Revenue that the Appellant was affiliated with NCVT, but the courses are not “approved vocational education courses”. Per Contra the appellant submits that, services by way of education forming part of an approved vocational education course fall under Section 66D(l)(iii) and are eligible for exemption.

9.1 Section 66D(l)(iii) of the Finance Act 1994, states as under:

“66D. Negative list of services. – The negative list shall comprise of the following services, namely:

(l) services by way of –

i. pre-school education and education up to higher secondary school or equivalent;

ii. education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

iii. education as a part of an approved vocational education course;”

(emphasis added)

Section 66D(l)(iii) has two limbs. To fall within this provision, the Appellant must establish that it provides: (i) services by way of education, and (ii) such education is part of an approved vocational education course.

9.2 Section 65B(11) defines approved vocational education course as follows:

65B. In this Chapter, unless the context otherwise requires,––

**** ***** *****

(11) “approved vocational education course” means,–

**** ***** *****

i. a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961; or

ii. a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Union Ministry of Labour and Employment; or

iii. a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India;

(emphasis added)

Hence to be an approved vocational education course, satisfaction of any one of the three parts is sufficient. It is the Appellants submission that since they are an NCVT-affiliated institute offering designated trades, no separate MES approval is required.

9.3 The Appellant submitted that although the Finance Act, 1994 does not define “education,” the term has been judicially interpreted to include comprehensive moral, intellectual, and physical training beyond formal instruction, as noted in Advanced Law Lexicon by P. Ramanatha Aiyar and affirmed by the Supreme Court in P.A. Inamdar Vs State of Maharashtra (2005) 6 SCC 537. Vocational education is likewise recognized as “education” under the Income-tax regime. In CIT (Exemptions) Vs Unique Educational Society [2024] 168 Taxmann 448 (P&H), the Punjab and Haryana High Court held that vocational education is essential for livelihood and is on par with other forms of education.

9.4 Constitutional Courts have consistently held that “education”, in its narrower, legal and constitutional sense, denotes systematic, curriculum-based scholastic instruction aimed at intellectual development, and does not extend to mere training in trades, skills, or vocations. [See: Sole Trustee, Loka Shikshana Trust v. CIT – (1976) 1 SCC 254 : 1976 SCC (Tax) 14 : (1975) 101 ITR 234] and T.M.A. Pai Foundation v. State of Karnataka – (2002) 8 SCC 481]. However in the impugned issue the expression “approved vocational education course” encompasses “education” and is hence used in a broad sense and is not confined to formal schooling. Vocational education involves education through the development of knowledge and skills necessary for earning a livelihood. In Unique Educational Society (supra) the Hon’ble Punjab and Haryana High Court stated:

“14. . . . . We are also of firm view that vocational education is a form of education which is necessary for the development of an individual for the purpose of earning his living. Vocational training has been now recognized to be as important as any other field of education, and it is for this reason that National Council for Vocational Training has been established to streamline and lay down a systematic pattern of providing education. As the institute is duly approved by the NCVT, it cannot be said that the institute is not imparting education.”

(emphasis added)

The impugned courses are notified as designated trade(s) under the Apprentices Act, 1961 satisfying the provisions of Section 65B(11) of the Finance Act 1994 and are hence eligible for exemption from Service Tax during this period.

10. We find that the appellant has established that, under the law applicable during the disputed periods, the impugned vocational courses were entitled to exemption. Accordingly, the impugned orders are liable to be set aside on merits. In any event, as is clear from the discussions above, the dispute is purely interpretational, and a clear finding of wilful misstatement or suppression of facts based on ‘a positive act which betrays a negative intention of wilful default’ has not been established. [See: Uniworth Textiles Ltd. Vs Commissioner of Central Excise, Raipur, 2013 (288) E.L.T. 161 (S.C.) to invoke the extended time limit.

11. The Department relies on the AAR ruling in CAE Flight Training (India) Pvt. Ltd. [2010 (18) STR 785 (AAR)]. In that case, the applicant provided flight training services in Bengaluru and proposed to offer aircraft-specific “Type Rating Training” to trainee pilots. The applicant submitted that, on completion, they would issue a Course Completion Certificate, which must be produced under para 5 of Section J, Schedule II to the Aircraft Rules, 1937. The applicant sought a ruling on whether the course qualified it as a “vocational training institute”, and therefore exempt from service tax under Notification No. 24/2004-S.T., dated 10 September 2004. The AAR held that a pilot can fly an aircraft and seek employment with an airline only after the DGCA endorses the licence with the relevant aircraft rating. Merely undergoing training, without such endorsement by the competent authority, does not enable a pilot to fly or obtain employment. The training therefore does not directly result in employment or enable self-employment.

11.1 The Appellant submits that the citation is misplaced because an AAR ruling binds only the applicant in that matter. We agree. An advance ruling is an in personam tax decision and is authoritative only with respect to the facts specific to the applicant seeking the ruling. Under Section 23E of the Central Excise Act, 1944, an advance ruling is confined to the applicant and the jurisdictional Central Excise officers and is binding between the said parties solely in relation to the transaction in respect of which it is issued. The Income Tax Appellate Tribunal, Mumbai, in Assistant Director of Income Tax Vs Green Emirate Shipping and Travels [(2006) 100 ITD 203 (Mum) / [2006] 286 ITR 60 (Mum)], after referring to the Supreme Court’s decision in Union of India Vs Azadi Bachao Andolan [AIR 2004 SC 1107], held that the AAR, not being part of the judicial hierarchy, does not create binding precedent for the Revenue, assessees (except the applicant and the jurisdictional authority), or appellate authorities. Accordingly, the ruling does not have any general precedence value and is not relevant to this appeal.

11.2 The judgment cited by the appellant in IILM Film & Media School Vs CST [2013 (32) STR 321 (Tri-Del)], which is relevant to the issue of whether trainees are able to undertake self-employment directly (for the assessee to be eligible for the exemption) prior to the Negative List era, is reproduced below:

“4. The adjudicating authority denied the benefit of the exemption claimed by the appellant for the reasons set out in para 17.4 of the adjudication order. The reasons recorded by the adjudicating authority may be summarised. According to the adjudicating authority the course offered by the appellant cannot be described as a vocational course as by definition, such institute should provide training or coaching that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching; it is evident that on their own, the courses provided by the assessee per se do not enable employment or self-employment directly after such training or coaching. This conclusion is recorded by the adjudicating authority bereft of any reopening process. There is no process of reasoning that precedes this conclusion. It is a settled principle that every decision, in particular a decision recorded by a quasi-judicial or an assessing authority should disclose reasons for the conclusion. As pointed out by the Supreme Court in Union of India Vs. M.L. Capoor AIR 1974 SC 87, reasons are the links between the material on which certain conclusions are based and the actual conclusion. It is not evident from the adjudicating order how it became evident to the adjudicating authority that the courses offered by the appellant do not prepare students to take up employment or self employment directly after such training or coaching.

5. The appellant professes to impart coaching/training in several areas already enumerated which include imparting of skills in areas relevant to journalism, print or audio visual and documentary film making. The exemption Notification merely requires that to be eligible for such exemption the institution must be a commercial training or coaching centre (which the appellant admittedly is, even according to Revenue) which provides vocational coaching or training that imparts skills which would enable the trainee to seek employment or undertake self employment, directly after such training or coaching.

6.Ld. DR Shri Jain would lay emphasis on the word directly which precedes the phrase after such training or coaching, to contend that absent evidence of self employment or employment by the trainee after the course of instruction received, the assessee would not be entitled to the benefits of the exemption Notification. This contention by Revenue does not commend acceptance by this Tribunal. The exemption Notification, on true and fair construction merely requires that vocational coaching or training imparted must imparts skills which enable the trainee to seek employment or undertake self-employment. It does not require establishment of the fact whether one or some or all of the students of the assessee institute have obtained employment or have pursued self employment after conclusion of the course of instruction.

7. On the aforesaid analysis, the adjudication order dated 28.5.2010 as confirmed by the appellate order dated 4.6.2012 cannot be sustained. These orders are accordingly quashed. In the facts and circumstances however, there shall be no order as to costs.

12. As per the discussions above we set aside the impugned orders. The appellant is eligible for consequential relief as per law. The appeals along with the miscellaneous application are disposed of accordingly.

(Order pronounced in open court on 22.04.2026)