TMI BlogLevy of service tax on educational institutions- regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... and education centers. Some of such issues have been discussed below. 2. COMMERCIAL NATURE OF INSTITUTE The first issue arises from the very name i.e. Commercial training or coaching center'. Many service providers argue that the word 'commercial' appearing in the aforementioned phrase, 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. 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, irrespect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of clause (f) of section 2. Also, UGC, with the approval of Central Government and under the Recognition of College in Terms of Regulations, 1974 framed under the UGC Act, can grant recognition to a college or institution run by a trust, a registered society or a body corporate or body incorporated under Central or state Act as an institution affiliated to or form as constituent member with a university, providing education up to a bachelors degree, masters degree or diploma of a duration of minimum one academic year As per National Policy on Education, 1986, a scheme of autonomous colleges was promoted. In the autonomous colleges, whereas the degree continues to be awarded by the university, the name of college is also included. These colleges develop and submit new courses of study for approval by the university. These autonomous colleges are fully responsible for the conduct of examination. As all these institutions or establishment are either created or recognized in terms of the power conferred by statutes, they would fall in the category of institutes/ establishments which issues diploma or certificate recognized by the law for the time being in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997 and 2000. Under Regulation 4 (Requirement of Grant of approval) of these Regulations, AICTE prescribed that,- "After the commencement of these regulations,- a. No new Technical Institution or University Technical Department shall be started; or b. No course or programme shall be introduced by any Technical Institution, University including a Deemed University or University Department or Collage; or c. No Technical Institution, University or Deemed University or University Department or College shall continue to admit students for Degree or Diploma course; or d. No approved intake capacity of seats shall be increased or varied; Except with the approval of the council. The powers to issue regulations for approval are conferred on AICTE under Section 23 read with Section 10 of the AICTE Act. 3.5 In 2003, when service tax was first imposed on commercial training and coaching centers, the AICTE regulations required that for (a) starting or establishing new technical institutions; (b) introduction of additional programmes; or (c) increase in 'intake' in the existing programmes of AICTE approved institutions, a 'no objection certificate' from the concerned State gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any educational qualification recognized by the law for the time being in force and thus be within the ambit of service tax. However 'Deemed to be University' have been exempt from this requirement. As per the said notification for the institutes 'Deemed to be University', it is not a pre-requisite to obtain the approval of AICTE to start any programme in technical or management education leading to an award, including degrees in disciplines covered under the AICTE Act, 1987. However, such institutes are required to ensure the maintenance of the minimum standards prescribed by the AICTE for various courses under the jurisdiction of the said council. 3.6 Similar would be the situation in case of other Statutory Councils. 3.7 A related issue is, that since the concept of recognition of an educational qualification in India has been dynamic in nature (i.e. the degree/ diploma/ certificate an institute or establishment may be recognized by the law at one time and not recognized at other, due to change in legal provisions) 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 ..... 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