M/S. Niit Ltd vs C.S.T., Delhi

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes

Appeal No.ST/644/2008-CU[DB]

[Arising out of Order-in-Original No.58 & 59/VKG/CST/2008, dated 30.06.2008 passed by the C.S.T., Delhi]

M/s. NIIT Ltd. Appellant

Vs.

C.S.T., Delhi Respondent

Appearance

Shri B.L. Narasimhan, Advocate - for the appellant

Ms. Suchitra Sharma, DR - for the respondent

CORAM: Honble Mr. R.K. Singh, Member (Technical)

Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No.52690/2015, dated 07.08.2015

Per Mr. R.K. Singh :

Appeal has been filed against Order-in-Original dated 30.06.2008 in terms of which service demand of Rs.33,38,829/- in respect of Show Cause Notice dated 25.04.2006 and Rs.71,50,372/- in respect of Show Cause Notice dated 24.08.2007 were confirmed along with interest and penalties on the ground that the appellant had not paid the service tax under Commercial Training or Coaching Services [Section 65 (27)/65 (105) (zzc) of the Finance Act, 1994]. The details of the impugned demands are as under:-

Sl.

No. Particulars Relevant period and date of Show Cause Notice Demand of Service Tax

(Rs.)

1.

Demand of Service Tax under Commercial Training or Coaching Service on the ground of denial of Exemption Notification No.24/2004-ST, dated 10.09.2004

10.09.2004 to 09.03.2005

SCN dated 25.04.2006

33,39,829.00

2.

10.09.2004 to 09.03.2005

SCN dated 24.08.2007

71,50,372.00

2. The appellant has contended that the issue of liability to tax under Commercial Training or Coaching Service on the service rendered by a computer institute is no longer res integra and decided against the appellant by the Supreme Court in the case of CCE Vs. Sunwin Technosolution P. Ltd. [2011 (21) STR 97 (SC)]. However, ld. advocate stated that Notification No.9/2003-ST, dated 20.06.2003 exempted the services rendered by the computer training institute as well as vocational training institute and recreational training institute. Vide Notification No.24/2004-ST, dated 10.09.2004, computer training institutes were removed from Notification No.9/2003-ST. However, that the Notification (No.24/2004-ST) was amended vide Notification No.19/2005-ST, dated 07.06.2005 (effective from 16.06.2005), which added a proviso as under:-

Provided that nothing contained in this notification shall apply to the taxable services provided in relation to commercial training or coaching by a computer training institute;

The ld. Advocate stated that after the introduction of the said proviso, it started paying service tax and prior to that date it was under bona fide belief that the training being provided by it fell within the scope of vocational training and therefore it was covered within the scope of vocational training institute and so it did not pay any service tax. He stated that this was a reasonable belief on its part and the same view was held by Uttarakhand High Court in the case of Commissioner Vs. Doon Institute of Information Tech P Ltd. [2014 (35) STR 711 (Uttarakhand)]. He stated that as the issue has been settled by the Hon'ble Supreme Court, the judgement of Uttarakhand High Court is of no consequence except that it showed that there was a genuine ambiguity and confusion and therefore the extended period of limitation is not invokable making the demand of Rs.71,50,372/- totally time-barred. He stated that it is also eligible for the benefit of Section 80 of the Finance Act.

3. Ld. Departmental Representative strenuously argued that there was suppression of facts and the appellant did not mention the value of the exempted service and exemption Notification in the ST-3 returns. It also did not provide the information timely when asked in spite of protracted correspondence and in respect of demand of Rs.71,50,372/- it provided the information after more than two years from the date it was sought. In response, ld. advocate for the appellant stated that during the relevant period, there was no provision to mention the value of exempted service and exemption Notification in the ST-3 returns and that such provision was introduced in ST-3 return format vide Notification No.31/2005-ST, dated 20.10.2005.

4. We have considered the contentions of both sides. As the issue is no longer res integra having been decided by the Supreme Court in the case of CCE Vs. Sunwin Technosolution P. Ltd. (supra) and as conceded by the ld. advocate the appellant has no case on merit. However, it is a fact that the proviso to Notification No.24/2004-ST, dated 10.09.2004 was added only on 16.06.2005, which stated that provided that nothing contained in this notification shall apply to the taxable services provided in relation to commercial training or coaching by a computer training institute. Indeed, CESTAT in the case of Commissioner Vs. Doon Institute of Information Tech P Ltd. (supra) held that during the period upto 15.06.2005, the service provided by the computer training institute was eligible for the benefit of Notification No.24/2004-ST, if the service provided was of the type which would cover computer training institute in the scope of vocational training institute. We find that the appellant has taken a plea even at the level of primary adjudication that it was under a belief that it was not liable to pay tax prior to 16.06.2005 as it provided vocational computer training.

The fact that even CESTAT held the same view and the same view was held by Uttarakhand High Court in the case of Doon Institute of Information Technology (supra) shows that the view held by the appellant was not unreasonable or hallucinatory. In these circumstances, the contention of the appellant that it was actually under a bona fide belief that the impugned service tax was exempted during the period prior to the insertion of the proviso in Notification No.24/2004-ST vide Notification No.19/2005-ST, with effect from 16.06.2005 cannot be discarded as baseless or untenable. The contention that it did not mention the value of exempted service and the exemption Notification numbers in the ST-3 returns is not valid because during the relevant time, the ST-3 return did not have the provision for mentioning such details. Ld. Departmental Representative also contended that information regarding rendition of service relating to its centres outside Delhi was sought in February, 2005 but was provided only in 2007 as a result of which the Show Cause Notice could not be issued earlier and thus the appellant is guilty of suppression of facts and so the extended period is invocable and the appellant cannot take advantage of time-bar having itself caused the delay in issuance of Show Cause Notice.

Prima facie, there is force in this contention of Revenue In the case of Chemphar Drugs Linemants [2002-TIOL-266-SC-CX], the Supreme Court held that something positive other than mere inaction or failure on the assessees part or conscious withholding of information when assessee knew otherwise is required for invoking extended period. Although there was delay on the part of the appellant in providing information which may have led to delay in issuance of Show Cause Notice, the appellant has claimed the delay was caused as data from large number of centres had to be complied. There is nothing to even suggest that the appellant was deliberately causing delay to take advantage of time-bar. The fact that Delhi data was supplied without delay further supports the view that delay in providing information about outside-Delhi centres was not intentional to evade service tax. However, for invoking the extended period what is required to be established is that there was wilful mis-statement/suppression of facts. So, one has to distinguish between wilful non-supply of information and mere delay in furnishing the information.

It has been repeatedly held by the judicial pronouncements that mere not telling is not tantamounting to suppression. As stated earlier, the appellant had good ground to have a reasonable belief that it was not liable to service tax prior to 16.06.2005. Thus, having regard to the overall circumstances, we are of the view that the allegation of wilful suppression of facts is not sustainable. Similar view was also been held by CESTAT in the case of Gargi Consultants Pvt. Ltd. Vs. Commissioner [2013 (32) str 654 (Tri.  Del.)]. As a consequence, the demand of Rs.71,50,372/- is hit by time bar and hence the same is not sustainable. Therefore, penalty related to the above demand is also not sustainable.

5. As regards demand of Rs.33,38,829/-, we find that the entire demand pertains to the normal period of one year and hence is sustainable. Regarding the contention that the appellant deserves the benefit of Section 80 ibid, we find that Section 76 ibid does not require wilful mis-statement or suppression of facts on the part of the appellant. Section 80 ibid can be invoked only when there is reasonable cause for failure to remit service tax. We find that even after the demand was confirmed and the issue no longer remained res integra, the appellant did not remit the said demand. It clearly shows that failure to remit of service tax was not because of any reasonable cause because had it been so, the appellant would have remitted the service tax after the issue was settled in favour of Revenue by Supreme Court. Therefore, the appellant is not eligible or qualified for the benefit of Section 80 ibid.

6. In the light of the foregoing discussion:-

(i) The demand, interest and penalties relating to Show Cause Notice dated 24.08.2007 are set aside and

(ii) The demand, interest and penalty (except penalty under Section 78 ibid) relating to Show Cause Notice dated 25.04.2006 are upheld.

The appeal is disposed of on above terms.

(R.K. Singh)

Member (Technical)

(Sulekha Beevi CS)

Member (Judicial)

SSK

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