CESTAT Ahmedabad Grants Full Service Tax Exemption for Rural Skill Training Under DDU-GKY Scheme
CESTAT Ahmedabad Grants Full Service Tax Exemption for Rural Skill Training Under DDU-GKY Scheme
Introduction
The Customs Excise and Service Tax Appellate Tribunal (CESTAT) has held that training services provided under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) are fully exempt from service tax when covered by the applicable exemption notifications.
A Bench comprising Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Satendra Vikram Singh allowed the appeal filed by Checkmate Services Pvt. Ltd., holding that skill and vocational training provided to rural youth under the government scheme was not liable to service tax for the relevant period.
Factual Background
Checkmate Services Pvt. Ltd. was engaged in providing skill development and placement services to rural youth under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY).
The training programmes were conducted through Gujarat Livelihood Promotion Company Ltd. as part of the government’s initiative to enhance employment opportunities for rural youth. The services involved vocational training and placement assistance aimed at improving employability and promoting skill development in rural areas.
Procedural Background
The tax department issued a show cause notice alleging that Checkmate Services was liable to pay service tax under the category of “Commercial Training and Coaching Services.” The notice demanded service tax along with interest and penalties for the relevant period. Although the Commissioner (Appeals) reduced part of the demand, a portion of the tax liability for the later period was still upheld. Aggrieved by this decision, Checkmate Services filed an appeal before the CESTAT Ahmedabad.
Issues
1. Whether vocational training services provided under the DDU-GKY scheme were liable to service tax under the category of commercial training and coaching services.
2. Whether the services provided by the appellant were covered by exemption notifications issued under the Finance Act, 1994.
3. Whether the demand for service tax, interest, and penalties was legally sustainable.
Contentions of the Parties
The appellant contended that the services provided under the DDU-GKY scheme were covered by government exemption notifications. It relied on Notification No. 01/2019-ST, which granted retrospective exemption for earlier periods, and Entry 9D inserted in Notification No. 25/2012-ST through Notification No. 09/2016-ST.
The appellant argued that these notifications collectively granted full exemption from service tax for services provided by training providers under the DDU-GKY scheme for the relevant period.
The Revenue contended that the services rendered by the appellant fell within the taxable category of “Commercial Training and Coaching Services” and were therefore liable to service tax.
Reasoning and Analysis
The Tribunal examined the relevant exemption notifications issued under the Finance Act, 1994 and noted that Entry 9D of Notification No. 25/2012-ST granted exemption to services provided by training providers under the DDU-GKY scheme. The Bench further noted that Notification No. 01/2019-ST extended retrospective exemption for earlier periods, ensuring that training services under the scheme remained exempt throughout the period covered in the show cause notice. In view of these notifications, the Tribunal held that the activities undertaken by Checkmate Services under the government skill development programme were not liable to service tax. The Bench observed that once the statutory exemptions were applied, the demand raised by the department, along with the associated interest and penalties, could not be sustained.
Decision
The CESTAT Ahmedabad allowed the appeal filed by Checkmate Services Pvt. Ltd. and set aside the service tax demand along with interest and penalties, holding that vocational training services provided under the DDU-GKY scheme were fully exempt from service tax for the relevant period.
