1. After examining the records and hearing both sides, I find that the lower authorities have demanded service tax of Rs. 71,200/- in the category of "commercial training and coaching centre" under Section 65 (27) of the Finance Act, 1994, for the period July' 03-March' 05. They have also imposed on the assessee penalties under various provisions of the Finance Act. The appellants are a trust conducting coaching classes for students of Alagappa University. They were themselves not affiliated to the said university. The demand of tax is on the total amount of fees collected from the students who attended the coaching programme.
2. It is submitted by ld.counsel that the appellants have been exempted from payment of income tax under the Income Tax Act as they are a charitable trust. He has, however, not cited any Exemption Notification in respect of service tax. Ld.counsel has further made an endeavour to claim support from the decision of the Kerala High Court in the case of Malappuram District Parallel College Association v. UOI 2006 3 STT 90 (KER.). In the cited case, the Hon'ble High Court found discrimination by the State between the regular colleges and parallel colleges in the matter of levy of service tax. However, his lordships judgment was not meant to be cited as a precedent by any educational institution outside Kerala, which position is clear from the following clarification made in the judgment: However, I make it clear that the judgment is rendered on the peculiar facts applicable to parallel colleges in Kerala and this is not to be treated as declaring the section unconstitutional, insofar as any other category of educational institution or training centre is concerned.
Counsel has also referred to the Gujarat High Court's judgment in Noble Institute (Education) Pvt. Ltd. v. UOI 2006 (3) S.T.R. 497 (Guj.). In this case, the question considered by the High Court was whether service tax was leviable from the said educational institution under Section 66 of the Finance Act, 1994 prior to 1.7.2003. Again, this decision is not applicable to the facts of the present case inasmuch as the demand of tax on the appellant is for a period from 1.7.2003. It was on the said date that the levy of service tax on "commercial training or coaching centre" was introduced.
3. The appellants have not made out prima facie case against the above demand of tax. Hence they are directed to predeposit the service tax amount, which shall be deposited within 8 weeks from today.
In the event of due compliance, there will be waiver of predeposit and stay of recovery in respect of the penalties.