2026-VIL-81-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Sections 65(27), 65(105)(zzc), 75, 76 and 77 of Finance Act, 1994 – Imparting of training – Demand of tax – Appellant is an administrative unit of Society for Social Education & Research – Department viewed that first year foundation course conducted by Appellant did not lead to an educational qualification recognized by law in India and hence fell under Commercial Training or Coaching Service – Department issued show cause notices proposing demand of service tax along with interest and penalties – Adjudicating Authority confirmed demands proposed in show cause notice – Commissioner (Appeals) upheld order passed by Adjudicating Authority – Whether Appellant is liable to pay service tax under category of Commercial Training or Coaching Service – HELD – Section 65(27) of the Act define Commercial Training or Coaching Centre. Exclusion under Section 65(27) of the Act applies only to institutes which issue certificates, diplomas or degrees recognized by law. Certificate offered by Appellant does not confer MBA degree. Degree is awarded only by Missouri State University upon completion of second year abroad. Exclusion under Section 65(27) of the Act is not available to Appellant. Appellant’s reliance on charitable status and lack of profit motive is rendered untenable in view of retrospective Explanation inserted under Section 65(105)(zzc) of the Act, which expressly provides that any centre imparting training for consideration is taxable, irrespective of profit motive or charitable character. Services rendered by Appellant are classifiable under Commercial Training or Coaching Service and are liable to service tax. Demands confirmed in impugned orders are upheld along with interest payable under Section 75 of the Act – Appeals partly allowed - Imposition of penalties – Sustainability – Whether penalties imposed under Sections 76 and 77 of the Act upon Appellant are sustainable – HELD – Issue involved in present appeals has been the subject matter of prolonged litigation with divergent judicial views prevailing during relevant period on taxability of educational institutions imparting management education. Records clearly show that Appellant had disclosed all material facts relating to nature of course, fee structure and arrangement with foreign university. Dispute essentially arises from interpretation of statutory provisions. It is well settled that when the issue is interpretational and has given rise to conflicting views, invocation of penal provisions is not justified. Penalties imposed under Sections 76 and 77 of the Act are set aside.
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