Service Tax Fully Exempt For Rural Skill And Vocational Training Under DDU-GKY: CESTAT Ahmedabad

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad, on 27 February, ruled that training services under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) are exempt from service tax if covered by the applicable notifications.

A Bench of Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Satendra Vikram Singh, allowed the appeal by Checkmate Services Pvt. Ltd., confirming that providing skill and vocational training to rural youth under DDU-GKY was fully exempt from service tax for the relevant period.

The Bench held:

“As per this entry, services provided by training providers under this scheme were granted full exemption from payment of service tax for the period from 01.04.2016 till June 2017.”

The dispute arose after the Department alleged that Checkmate Services, providing training and placement services under the DDU-GKY scheme through Gujarat Livelihood Promotion Company Ltd., was liable to pay service tax under “Commercial Training and Coaching Services.”

A show cause notice was issued demanding service tax along with interest and penalties. While the Commissioner (Appeals) partly reduced the demand, a portion of the tax liability for the later period was still upheld.

Before the Tribunal, Checkmate Services contended that its services were covered by Government exemption notifications for training providers under the DDU-GKY scheme. It submitted that Notification No. 01/2019-ST granted retrospective exemption for earlier periods, and Entry 9D inserted in Notification No. 25/2012-ST via Notification No. 09/2016-ST provided exemption for services offered under the scheme.

The Tribunal accepted this contention, noting that the notifications together covered the entire period mentioned in the show cause notice. It observed that once these exemptions are applied, the activities carried out by Checkmate Services under the DDU-GKY scheme were not liable to service tax.

The Tribunal held that training services provided under the government skill development scheme were fully exempt, and the demand for service tax, along with interest and penalty, could not be sustained.

Accordingly, it set aside the remaining demand and allowed the appeal.

Appearance for the Appellant: Shri Saurabh Dixit, Advocate

Appearance for the Respondent: Shri Neil Prakash G Makwana, Superintendent (AR)