Reprieve for college over service tax on commercial coaching

Kamaraj College of Engineering and Technology in Virudhunagar had submitted that in addition to the activities of conducting regular classes in engineering courses, the college also provides coaching classes to students in Entrepreneurship Development Course, placement training program and personality development program and were collecting fees for the said courses.

However, since the same is subjected to levy of service tax from July 01, 2010, a show-cause notice was issued on October 19, 2015 as to why Rs 93.48 lakh should not be paid on the value of Rs 7.83 crore charged and collected towards commercial training. Subsequently, based on written submissions by the college, the adjudicating authority on March 28, 2017 had dropped the entire proceedings initiated in the show-cause notice. Challenging this, the department filed an appeal and the appellate authority remitted the case back to the original adjudicating authority. Aggrieved by the said order, the college had appealed before Customs Excise and Service Tax Appellate Tribunal (CESTAT) after depositing the pre-deposit amount of 10 per cent as required by the statute and the same is pending.

But not withstanding this, the department directed the college to provide details of amount collected under various commercial coaching services from April 08, 2011 to June 30, 2012 and April 01, 2013 to July 10, 2014 for denovo (new trial) adjudication by the Commissioner (Appeals), Madurai.

Based on this, the college through its counsel submitted that when CESTAT is seized of the matter, the original authority conducting denovo proceedings is illegal and unsustainable. Subsequently, if the CESTAT passed any order, it will affect the college’s interest.

Justice M Dhandapani before whom the plea came up, said “Considering the fact that the college had already complied with the pre-deposit condition and when the appellate authority is seized of the matter, the original authority conducting denovo proceedings is unsustainable.”

“This court directs the CESTAT to dispose of the appeal, within six months from the date of receipt of a copy of this order. Till the disposal of the said appeal, the respondents shall not take any coercive steps against the college,” Justice Dhandapani added.