2025 (7) TMI 1004 - AT - Service Tax

Exemption from service tax under N/N. 25/2012-ST dated 20.06.2012 - approved vocational education course or not - programme is approved by the Ministry of Skill Development Entrepreneurship Government of India - invocation of extended period of limitation. HELD THAT - The programme undertaken by the appellant is approved by the Government and hence the activity undertaken by them is eligible for the exemption from payment of Service tax as the said activity are covered under Sl. No. 9A of Notification No. 25/2012-S.T. dated 20.06.2012. It is found that the programme of Skill Development Initiative Scheme (SDIS) based on Modular Employable Skills is approved by the Ministry of Labour and Employment Government of India. The appellant has undertaken this programme as a training partner approved by the National Skill Development Corporation and thus the appellant are eligible for the exemption from payment of service tax as provided under of Sl. No. 9A of Notification No. 25/2012-S.T. dated 20.06.2012. Similar issue has already been dealt with by the Tribunal at Hyderabad in the case of SRK Innovatives School of Information Pvt. Ltd. v. Pr. Commissioner of Central Tax Visakhapatnam G.S.T. 2025 (5) TMI 262 - CESTAT HYDERABAD where it was held that it is an admitted fact that NSDC is not only implementing training programme on it s own but is also funding and supporting the skill development component of other programmes run by other central government ministries and state governments as long as it is consistent with their objective for which the said specialised agency has been created. NSDC is associated with skill development component of NULM being implemented by various state governments. Therefore we find that the activity being undertaken by the appellant would be covered within the scope of Serial No. 9A of Notification No. 25/2012-ST. The appellant have undertaken the programmes as designed by the National Skill Development Corporation (NSDC) - the appellant is entitled to the exemption from Service Tax on the services rendered by them in terms of Notification No. 25/2012-S.T. dated 20.06.2012 Sl. No 9A . Appellant falls within approved vocational education course or not - applicability of exemption under Section 66D(l)(iii) of Finance Act 1994 - HELD THAT - As the services rendered by the appellant are exempted in terms of Notification No. 25/2012-S.T. dated 20.06.2012 Sl. No 9A it is not required to discuss this ground raised by the appellant. Extended period of limitation - HELD THAT - The appellant had sought clarification on the issue vide their letter dated 05.08.2013 and to that letter the Superintendent Malda Range had replied that Service Tax is not leviable when a VEC is offered by the Government or local authority. Thus it is evident from the above that the Department was well aware of the activity undertaken by the appellant. As the activity undertaken by the appellant was well within the knowledge of the Departmental authorities there is no suppression of facts involved in this case. Thus the invocation of extended period of limitation is not sustainable. Consequently the demand confirmed against the appellant set aside by invoking the extended period of limitation. Consequently no Service Tax is liable to be confirmed against the appellant being barred by limitation. Appeal disposed off.

Summary

ISSUES:

1. Whether services provided by a vocational training provider under the Skill Development Initiative Scheme (SDIS) qualify for exemption from Service Tax under Notification No. 25/2012-ST, specifically Entry 9A relating to National Skill Development Corporation (NSDC) and its approved partners.
2. Whether the vocational training courses conducted qualify as "approved vocational education course" under Section 66D(1)(iii) read with Section 65B(11) of the Finance Act, 1994, thus exempting them from Service Tax.
3. Whether the extended period of limitation can be invoked for demanding Service Tax where there was no suppression of facts or intention to evade tax, especially when prior clarifications were sought from the Department.
4. Whether issuance of multiple Show Cause Notices on the same issue invoking extended limitation period is permissible.

RULINGS / HOLDINGS:

1. The appellant's services rendered as a training partner under the SDIS, approved by the Ministry of Skill Development & Entrepreneurship and registered with state-level implementing agencies linked to NSDC, fall within the exemption provided under Sl. No. 9A of Notification No. 25/2012-ST dated 20.06.2012. The exemption covers services by "a training partner approved by the National Skill Development Corporation or the Sector Skill Council" in relation to NSDC schemes.
2. The vocational training courses conducted by the appellant are "Modular Employable Skill Courses" approved by the National Council for Vocational Training (NCVT) and run by a person registered with the Directorate General of Employment and Training (DGE&T), fulfilling all conditions under Section 65B(11)(ii) of the Finance Act, 1994. Therefore, such services constitute "approved vocational education course" exempt under Section 66D(1)(iii) of the Finance Act, 1994.
3. Extended period of limitation cannot be invoked as there was no suppression of facts or intention to evade tax; the appellant had filed NIL Service Tax returns in good faith based on specific clarifications from the Department, including a letter dated 05.08.2013 confirming exemption applicability.
4. Issuance of a subsequent Show Cause Notice on the same issue invoking extended limitation period is barred by law, as held by the Apex Court, and thus the second demand notice is not sustainable.

RATIONALE:

1. The Court applied the provisions of Notification No. 25/2012-ST dated 20.06.2012, particularly Entry 9A, which exempts services provided by NSDC, Sector Skill Councils, approved assessment agencies, and training partners in relation to NSDC-implemented schemes. The Court relied on the appellant's registration with state agencies acting as implementing arms of SSC and NSDC, and on the precedent set by the Tribunal in SRK Innovatives School of Information Pvt. Ltd., which interpreted the exemption purposively, recognizing both funded and non-funded partners.
2. Section 66D(1)(iii) of the Finance Act, 1994 was interpreted in light of Section 65B(11)(ii), which defines "approved vocational educational course" to include MES courses approved by NCVT and run by persons registered with DGE&T. The appellant's registration and conduct of NCVT-approved MES courses under SDIS fulfilled these statutory conditions, thereby excluding their services from taxable services.
3. The Court emphasized the principle that exemption notifications must be construed purposively to effectuate legislative intent, citing the distinction drawn in Mother Superior Adoration Convent (SC) and rejecting a narrow technical approach. The appellant's transparent conduct and prior Departmental clarifications negated any presumption of suppression or evasion, thus precluding invocation of extended limitation under Section 73(1) of the Finance Act.
4. The Court followed binding precedents including Nizam Sugar Factory v. Collector of Central Excise and Raychem RPG Ltd. v. Commissioner, holding that once the Department is aware of all relevant facts, subsequent notices on the same issue cannot be treated as arising from suppression, thereby barring extended limitation demands.