Shri Chanakya Education Society vs Commissioner Of Customs & Ce

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appeal No. ST/216/09

(Arising out of Order-in-Original No. 2-3/P-III/STC/COMMR/ 2009-10 dated 29.06.2009 passed by Commissioner of Central Excise, Pune III)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

Shri Chanakya Education Society Appellant Vs.

Commissioner of Customs & CE Pune III Respondent

Appearance:

Shri M.H. Patil, Advocate Ms Aparna H, Advocate for appellant Shri K.S. Mishra, Addl. Commissioner (AR) for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

Date of Hearing: 10.07.2015 Date of Decision: 10.07.2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against order-in-original 2-3/P-III/STC/COMMR/2009-10 dated 29.06.2009 vide which the adjudicating authority has confirmed the demands raised in the two show-cause notices dated 31.01.2007 and 21.10.2008 for the period 01.07.2003 to 01.4.2006 and 01.04.2006 to 31.3.2008 respectively.

2. The issue involved in this case is regarding the service tax liability under the category of Commercial Training and Coaching Services. The show-cause notices sought to raise the demand on the ground that the appellant is liable to pay service tax as the services rendered, though charitable, are covered under the definition of Commercial Training or Coaching Services. Appellant contested the show-cause notices on merits as well as on limitation. Adjudicating authority after following due process of law, confirmed the demand raised along with interest and appropriated an amount of Rs.5 lakhs paid and also imposed equivalent penalty under the provisions of Section 78 of the Finance Act, 1944.

3. Learned Counsel appearing on behalf of the appellant would draw our attention to the facts of the case. It is his submission that in respect of show-cause notice dated 31.01.2007, the period of demand is from 01.09.2005 to 31.03.2006 and would be within the limitation and in respect of show-cause notice dated 21.08.2008 demand within the period of limitation would be 1.04.2007 to 31.03.2008. He would submit that the other demands raised in both the show-cause notices are hit by limitation. He would submit that during the relevant period, question as to whether charitable institute would be considered under the category of Commercial Training or Coaching Services was agitated before various judicial forums, which was subsequent retrospective amendment by the Finance Act, 2010 decided once and for all that charitable Institutes have also to pay service tax. It is his submission that the Larger Bench of this Tribunal in the case of Great Lakes Institute of Management Ltd. v. CST, Chennai - 2013 (32) STR 305 (LB) may be against him. It is his submission that as regards the demands raised within limitation, the lower authorities have not given the benefit of reduction of service tax liability that may arise on Hostel fees, fees refunded and Courses which were approved by All India Council for Technical Education for the period 2006-07. It is his submission that the demand for within the limitation in respect of both the show-cause notices needs to be worked out based upon the calculation along with CAs certificate. It is also his submission that the lower authorities have not considered the cum-tax calculation i.e. service tax based upon the amount received. It is his submission that reduction on hostel fees and refunded fees and cum-tax, the judgement in the case of I2IT Pvt Ltd. v. CCE - 2014 (34) STR 214 (Tri.  Mum) will be applicable. It is also his submission that in any case penalty is not imposable under Section 78 as during the relevant period the appellant was under bonafide belief that being a charitable institutes, service tax liability does not arise under the category of Commercial Training or Coaching Services.

3.1 Learned Advocates further submission is that one demand in respect of Teaching English as one of foreign language is also involved in this case. It is his submission that the amount received as fees for teaching English are covered under the provisions of Notification 9/2003-ST as vocational training as also CBEC Circular dated 20.06.2003. He also claims question of limitation on this point.

4. Shri K.S. Mishra, learned D.R. on the other hand would draw our attention to the findings recorded by the adjudicating authority. It is his submission that appellant had got themselves registered under the category of Commercial Training or Coaching Services on 6.6.2006 but neither they filed any returns nor they informed the department about nature of their activities. It is also his submission that despite seeking information from the appellant repeatedly, they did not approach the department for clarification. Hence extended period is correctly invoked. It is his submission that penalties imposed under Section 78 are to be sustained as the appellant had suppressed the activities undertaken by them and did not come forward to deposit any amount despite being reminded by various letters from the department. On the question of amount of service tax liability on English Speaking courses conducted by the appellant, he would rely upon the judgement in the case of Prof Ulhas Vasant Bapat v. CCE - 2013-TIOL-1510-CESTAT-MUM which is in favour of the Revenue. It is his submission that extended period is correctly invoked and the demand be confirmed.

5. Considered the submissions made at length by both sides and perused the records.

6. The main issue involved in this case is regarding the claim of the appellant that they are a charitable Institute and they are not liable for taxation under the Commercial Training or Coaching Services. In our considered view the detailed submissions made by the learned Counsel needs to be rejected at the outset as the Larger Bench of this Tribunal in the case of Great Lakes Institute of Management (supra) has specifically held that the service tax liability arises on the charitable institutes which has now been affirmed by retrospective amendment. To that extent we reject the claim and uphold that they are liable for service tax liability under the category Commercial Training or Coaching Services.

6.1 Now reverting to the claim of the appellant that the demand of service tax liability beyond the period of limitation in both the show-cause notices is hit by majority decision of the Tribunal in the case Shri Chaitanya Educational Committee v. CC - 2015-TIOL-1175-CESTAT-Bang. We find that this submission is having a strong force. In that case there was a difference of opinion between the Members and the 3rd Member held that there being quite a few judgements during the relevant period holding as to that charitable institutes cannot be taxed under Commercial Training or Coaching Services, would help the appellant in claiming the benefit of extended period and the same cannot be invoked. In our view in both the show-cause notices the demands raised beyond the limitation period are liable to be set aside as per the ratio of majority decision in the case of Shri Chaitanya Educational Committee (supra). Since the demand for extended period is set aside consequently, interest and penalties are also get set aside.

6.2 Now reverting to the demand of service tax liability within the limitation period, we find that there are voluminous records which requires detailed study by the lower authorities to come to a correct service tax liability. In our view the exact calculation of demand and payable should be left to the lower authorities and we do so.

6.3 We do find that the appellant has given C.A certificate, balance sheet and various records indicating the amount which needs to be considered for calculation of tax liability. We also find that the claim as regards reduction of service tax liability on hotel fees and refund of fees which they have claimed as per the approval of the All India Council of Technical Institute for Indira College of Science needs to be considered in its correct perspective. The claim of the appellant that reduction of hotel fees and refund fees and cum-tax is upheld by the Tribunal in the case of I2IT Pvt. Ltd. (supra) is correct and we hold that the appellant is eligible for this benefit from the tax liability which needs to be recalculated. As regards the tax liability on English language course, we do find that in that case also the tax liability within the limitation period, upheld by the Tribunal in the case of Prof Ulhas Vasant Bapat (supra) would apply, but the extended period cannot be invoked.

6.4 In respect of the question of imposition of penalty under Section 78 within the limitation period, we hold that the judgement of the Tribunals majority decision in the case of Great Lakes Institute of Management (supra) being applied and the penalties which are imposable under Section 78 are set aside. Interest on the service tax liability needs to be recalculated by the adjudicating authority for within the limitation period and has to be discharged by the appellant.

6.5 With the above observation, we dispose of the appeal and remand the matter back to the adjudicating authority for limited purpose for calculating the service tax liability as indicated therein above.

7. Appeal is disposed of in the above terms.

(Dictated in Court)

(Raju) Member (Technical) (M.V. Ravindran) Member (Judicial)

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