Dr. Chittaranjan Satapathy, Technical Member - Heard both sides.

2. Shri P. Rajendra Kumar, learned CA appearing for the appellants states that they are a Charitable and Educational Trust, who are conducting classes for students enrolled under the distance education programmes of Alagappa University. He further states that the students who take coaching in the classes conducted by the appellants pay separately to the appellants as well as to the University and they appear for the university examination and obtain Diploma/Degree from the University which is recognized by law. As such, he states that their institution is like a parallel college where students, who are not able to go to regular colleges, either because they do not have sufficient money or because they do not have sufficient time to attend regular courses, come to their coaching centre and benefit from attending the classes for obtaining University Diploma/Degree. He pleads that since the regular colleges are exempted from paying the service tax, the appellants should also be exempted from paying Service Tax being in the nature of parallel colleges and no discrimination should be made between students attending the regular colleges and students attending the institution run by the appellants, as both categories of students obtain similar degrees from the University. The only difference is that the students attending the institution run by the appellants are obtaining degree from the University through the Distance Education Programme. He also states that there is a Memorandum of Understanding executed between the Alagappa University and the institution run by the appellants, which recognizes the institution run by the appellants as a Centre for Enrolling Candidates for Distance Education Programme. He also cites the decision of the Hon’ble Kerala High Court in the case of Malappuram District Parallel College Association v. Union of India [2006] 3 STT 90 in support of his contention.

3. Heard the learned SDR who supports the impugned order.

4. We have considered the arguments advanced on behalf of the appellants. Their claim that the institution run by them is like a parallel college and that the students are obtaining degrees from the Alagappa University through the Distance Education programme is supported by the Memorandum of Understanding submitted by them. We have perused the decision of the Hon’ble Kerala High Court in the cited case of Malappuram District Parallel College Association (supra). It has been held by Hon’ble Kerala High Court in the cited case that the provisions of the Finance Act, 1994 authorizing levy of Service Tax on parallel colleges are arbitrary and violative of Article 14 of the Constitution of India. It has also been held by the Hon’ble Kerala High Court that levy of Service Tax for services rendered by parallel colleges, which indirectly falls on students, but by simultaneously providing exemption to regular affiliated colleges allowing students therein to study free of tax, is patently discriminatory and violative of Article 14 of the Constitution of India.

5. Following the ratio of the cited decision of the Hon’ble Kerala High Court, we are of the view that the levy of Service Tax in respect of the training and coaching provided by the appellants which form an essential part of a course or curriculum of a University, leading to issuance of certificate or Diploma or Degree to the students recognized by law is not justified, even though the same is obtained by the students of the institution run by the appellants through Distance Education Programme. Hence, the impugned order is set aside and the appeal is allowed.