Service Tax Exemptions to Training / Coaching In Recreational Activities

Dr. Sanjiv Agarwal

Services by way of training or coaching in recreational activities relating to arts, culture or sports are exempt from levy of service tax.

 These terms can be understood as follows:

Art: Art is a very broad expression and may include host of areas. According to American Heritage Dictionary, the conscious use of the imagination in the production of objects intended to be contemplated’ or appreciated as beautiful, as in the arrangement of forms, sounds, or words; Such activity in the visual or plastic arts; Products of this activity; imaginative works considered as a group; A field or category of art, such as music, ballet, or literature; A nonscientific branch of learning; one of the liberal arts; A skill that is attained by study, practice, or observation: the art of negotiation.

Coaching: According to Wikipedia, coaching, when referring to getting coached by a professional coach, is a teaching or training process in which an individual gets support while learning to achieve a specific personal or professional result or goal. The individual getting coached may be referred to as the client, the mentee or coachee, or they may be in an intern or apprenticeship relationship with the person coaching them. Coaching may also happen in an informal relationship between one individual who has greater experience and expertise than another and offers advice and guidance, as the other goes through a learning process.

Culture: According to American Heritage Dictionary, the arts, beliefs, customs, institutions, and other products of human work and thought considered as a unit, especially with regard to a particular time or social group: Japanese culture; These arts, beliefs, and other products considered with respect to a particular subject or mode of expression: musical culture; oral culture; Mental refinement and sophisticated taste resulting from the appreciation of the arts and sciences; Special training and development: voice culture for singers and actors; The cultivation of soil; tillage :the culture of the soil; The breeding or cultivation of animals or plants for food, the improvement of stock, or other purposes.

Training: According to Wikipedia, training refers to the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies. Training has specific goals of improving one’s capability, capacity, and performance. It forms the core of apprenticeships and provides the backbone of content at institutes of technology (also known as technical colleges or polytechnics).

Recreational: According to Wikipedia, recreation is an activity of leisure, leisure being discretionary time. The “need to do something for recreation” is an essential element of human biology and psychology. Recreational activities are often done for enjoyment, or pleasure and are considered to be fun. The term recreation implies participation to be healthy refreshing mind and body.

Sport: According to Wikipedia, sport means all forms of competitive physical activity which, through casual or organised participation, aim to use, maintain or improve physical fitness and provide entertainment to participants. Hundreds of sports exist, from those requiring only two participants, through to those with hundreds of simultaneous participants, either in teams or competing as individuals. Sport is generally recognised as activities which are based in physical athleticism or physical dexterity.

The exemption is to training or coaching. Such coaching or training must relate to any one or more of —

(a) arts, or

(b) culture, or

(c) sports

There is exemption from service tax to training or coaching in recreational activities relating to arts, culture or sports. The benefit is available to coaching or training relating to all forms of dance, music, painting, sculpture making, theatre and sports etc. However, activities by performing artists in folk or classical art forms of music, dance or theatre are not liable to service tax.

Therefore, any services by way of training or coaching in recreational activities in relation to arts, culture or sports are exempted from whole of the service tax. Service provider can be any person. Any person has been defined in the Act itself which includes an individual, HUF, company society, limited liability, partnership, firm, association of persons or body of individuals, whether incorporated or not, Government, local authority and every artificial juridical person.

If the dance classes are organized by any dance academy for other schools/companies, even then, the nature of activity remains the same i.e., coaching or training. However, if the academy supplies the dance trainers to other institutions for a consideration, it may be liable to Service Tax being considered as supply of manpower for any purpose.