SPECIFIC SERVICES IN DETAIL

1. LEGAL CONSULTANCY SERVICES

This service is new service introduced w.e.f. 1st September, 2009.

65(105) "taxable service" means any service provided or to be provided:

(zzzzm) to a business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner.

Provided that any service provided by way of appearance before any court, tribunal or authority shall not amount to taxable service.

Explanation. — For the purposes of this sub-clause, "business entity" includes an association of persons, body of individuals, company or firm, but does not include an individual.

Analysis of above definition.

No service tax shall be levied in all of the following cases:

• Service provided by way of appearance before any court, tribunal or authority.
• Service provider is an individual.
• Service recipient is an individual.

 

1. COMMERCIAL TRAINING OR COACHING SERVICES

This service is new service introduced w.e.f. 1st July 2003.

65(105) "taxable service" means any service provided or to be provided:

(zzc) to any person, by a commercial training or coaching centre in relation to commercial training or coaching.

"Commercial training or Coaching" means any training or coaching provided by a commercial training or coaching center [Section 65(26)].

“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 recognised by law for the time being in force [Section 65(27)].

 

Exemption Notifications:

Notification No. 24/2004-ST, dated: September 10, 2004

Taxable services, provided in relation to commercial training or coaching by:

• vocational training institute;[1]
• a recreational training institute;[2]

to any person are exempt from the whole of the service tax leviable thereon.

However, no exemption would be available to computer training institute[3].

Notification No. 23/2010 - Service Tax, dated 29th April, 2010

Central Government, exempts the taxable service referred to in section 65(105)(zzc) when provided in relation to ‘Modular Employable Skill courses’ approved by the National Council of Vocational Training, by a Vocational Training Provider registered under the Skill Development Initiative Scheme with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India, from the whole of the service tax leviable thereon under section 66 of the Finance Act.

 

Notification No. 10/2003 ST dated 20.06.2003

The taxable services provided by a commercial training or coaching centre, in relation to commercial training or coaching, which form an essential part of a course or curriculum of any other institute leading to issuance of any certificate or educational qualification recognised by law are also exempt from the whole of the service tax leviable thereon.

However, this exemption shall not be applicable if the charges for such services are paid by the person undergoing such course or curriculum directly to the commercial or coaching centre.

Clarifications:

Circular No. 107/01/2009–ST dated 28.01.2009

Over a period of time, certain doubts /disputes have arisen on the chargeability of service tax under this category of CTCC. Some of such issues were clarified by department in this circular.

1. Commercial nature of institute

Issue

Many service providers argue that the word ‘commercial’ appearing in the name of service , suggests that to fall under this definition, the establishment or the institute must be commercial (i.e. having profit motive) in nature. It is argued that institutes which are run by charitable trusts or on no-profit basis would not fall within the phrase commercial training or coaching center and none of their activities would fall under the taxable service.

Clarification

This argument is clearly erroneous. As the phrase ‘commercial training or coaching center ‘has been defined in a statute, there is no scope to add or delete words while interpreting the same. The definition commercial training or coaching center has no mention that such institute must have ‘commercial’ (i.e. profit making) intent or motive. Therefore, there is no reason to give a restricted meaning to the phrase. Secondly, service tax, unlike direct taxes, is chargeable on the gross amount received towards the service charges, irrespective of whether the venture is ‘profit making, loss making or charity oriented’ in its motive or its outcome.

1. Post school education

• Institutes which issue diploma or certificate recognized by the law are not taxable under the category of “commercial coaching and training services”

Following institutes are not taxable under the category of “commercial coaching and training services”.

1. University as defined under section 2(f) of the UGC Act, 1956
2. Deemed University as defined under section 3 of the UGC Act, 1956
3. A college or institution,

• Which is recognized by UGC;
• run by a trust/registered society/body corporate/body incorporated under Central or State Act,
• as an institution affiliated to or form as constituent member with a university; and
  • Which provides education up to a bachelor’s degree, master’s degree or diploma of a duration of minimum 1 academic year.

4. Autonomous colleges as per National Policy on Education, 1986.

(b)        An institution or establishment which is derecognized by the professional councils (such as All India Council for Technical Education-AICTE, Medical Council of India-MCI, Indian Council for Agricultural Research-ICAR, Bar Council of India-BCI)created through independent Union Acts is taxable under the category of “commercial coaching and training services”.

(c)        Due to change in legal provisions, an institute/establishment may be recognized by the law at one time and not recognized at other. However, the taxability of the courses conducted would depend on the legal status of such institute or establishment at the point of time when such service is provided (i.e. course is conducted).

1. Vocational Training Institutes - whether institutes offering general course on improving communication skills, how to be effective in group discussions or personal interviews, personality development, general grooming and finishing etc are covered

The circular clarifies that such institutes are not covered under the definition of vocational training institute because they only improve the chances of success for a candidate possessing required skill and do not impart training to enable the trainee to seek employment or self-employment.

[1] “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).

[2] “Recreational training institute” means a commercial training or coaching centre which provides coaching or training relating to recreational activities such as dance, singing, martial arts, hobbies.

[3] “Computer training institute” means a commercial training or coaching centre which provides coaching or training relating to computer software or hardware.

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