Custom, Excise & Service Tax Tribunal
Ansal Institute Of Technology vs Service Tax - Delhi on 6 September, 2018
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
Date of Hearing:6.9.2018
Date of Decision:6.9.2018
Service Tax Appeal No.54905/2014 Cus (DB)
[Arising out of Order-in-Original No.83-85/ST/SRB/2014 dated 19.06.2014 passed
by the Commissioner (Adj.), Service Tax Commissionerate, New Delhi]
M/s.Ansal Institute of Technology ...Appellant
Rep. by Shri K. Vaish. CA for the appellant.
VERSUS
CST, Delhi ...Respondent
Rep. by Shri G.R. Singh, DR for the respondent.
CORAM : HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. V. PADMANABHAN, MEMBER (TECHNICAL) Final Order No.53103/2018 PER ANIL CHOUDHARY :
The appellant is engaged in providing education for different degree courses like BBA, BCA, B.Tech, which were recognised by law during the period under dispute i.e. 2005-2006 to 2010-2011. In addition, the appellant was also providing diploma courses - (Business Administration, Bio-technology etc. under the agreement with North Dakota State University USA (NDSU). Students studying in these courses are eligible to seek admission in North Dakota State University USA (NDSU) for higher studies. These courses do not result into a degree recognised by Law in India.
2. With the 3 different show cause notices, as detailed below, the Service Department demanded duty on the activity of teaching for the diploma courses, which were not recognized by law in India by the University or the AICTE:- 2
Date Period Amount (Rs.) Demand Penalty (Rs.)
confirmed (Rs.)
18.04.2011 2005-06 to 80,12,485.00 80,12,485.00 80,12,485.00
2009-2010
20.04.2012 2010-2011 43,64,951.00 43,64,951.00 Rs.200/day or
2%per month
22.08.2012 2011-2012 1,56,96,230.00 NIL NIL
As tax was paid
Total 2,80,83,666.00 1,23,77,436.00
3. It is argued by the Revenue that education/coaching for diploma courses facilitating admission to a general study in USA is taxable under the category of commercial coaching or training services falling under Section 65(27) of the Finance Act read with Section 65 (105) (zzc) of the Act.
4. The show cause notice was adjudicated on contest, and it was held that sofar as the BBA/BCA and B.Tech courses are concerned, for which the appellants are affiliated to Guru Govind Singh Indraprastha University (GGSIU) and or/approved by AICTE, the appellants are covered by Exclusion Clause under Section 65(105)(zzc) contained under Explanation therein. However, it was held that the appellants are liable to pay service tax with respect to diploma courses not recognized by University or body like AICTE in India.
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5. The Ld. Commissioner held that the Exclusion Clause did not exempt from levy of service tax, the services of imparting of skill knowledge or lessons in respect of courses, which were recognised by law. Rather the exclusion clause excluded/exempted the Institute, which is providing diploma degree or educational qualification recognised by law. As the appellant, in view of the change in the exclusion clause with effect from 1 May 2011, wherein in the definition of "Commercial Training and Coaching Centre" under section 65(27), the words "but does not include pre-school coaching and training Centre or any institute or establishment, which issues a certificate or diploma or degree or any educational qualification recognised by the law for the time being in force" were deleted.
6. Thus, even when coaching is provided by college or institution, which is provided degree or the diploma recognised by law, became liable to pay service tax on its activity of coaching. As the appellant have admittedly paid service tax w.e.f. 1st May 2011, the demand for the period 2011-2012 proposed by the show notice dated 22 August 2012 was dropped. However, for the period 2005-2006 and 2009- 2010 vide show cause notice dated 18.4.2011 and for the period 2010-2011 vide show cause notice dated 20.04.2012, demands were confirmed along with interest and further penalty was imposed under Sections 77 and 78 of the Act. With respect to show notice dated 18.04.2011 and 20.04.2012, instead of penalty under Section 78, penalty under Section 76 was imposed.
7. Being aggrieved, against the impugned order passed by the ld. Commissioner, the appellant is before this Tribunal.
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8. The ld. Counsel for the appellant, Mr. Kapil Vaish, CA draws our attention to circular No. 59/8/2003/TRU dated 20 June 2003, wherein in para .2.2.3 ,it has been clarified as follows:-
"Whether service tax is leviable on institutes providing commercial coaching in addition to recognized degree courses:
some institutes like collages, apart from imparting education for obtaining recognized degrees/diploma/certificates, also impart training for competitive examinations, various entrance tests, etc. It is clarified that by definition, such institutes or establishments, which issues a certificate, diploma or degree recognized by law, are outside the purview of "commercial training or coaching institute". Thus even if such institutes or establishments provide training for competitive examinations etc., such services rendered would be outside the scope of service tax."
He has also drawn our attention to the clarifications issued by the Department with D.O.F. No.334/3/2011-TRU dated 28th Feb., 2011, wherein in para 3, it had been provided as follows:-
3. Commercial Training or Coaching Service (Section 65(105)(zzc)]:
3.1 The levy in its present form keeps outside its purview unrecognized education which is imparted by an institute that issues any certificate or diploma or degree or any educational qualification recognized by law. Thus two identical courses may be treated differently merely because one of the institutes also conducts another course that is recognized by law. This anomaly is proposed to be corrected by subjecting all such unrecognized education to tax."5
Ld. Counsel further relies on the finding of the Larger Bench of this Tribunal in Great Lakes Institute of Management Ltd. - 2013 (32) STR 305 (Tribunal- LB), wherein the issue of interpretation of Commercial training or coaching - taxable service specified in Section (65) (105)(zzc) read with Section 65(26) read with Section 65(27) considering the explanation appended to Section 65 (105) (zzc) with effect from 1st July 2003, wherein the Division Bench in Magnus Society Vs. CC & CE, Hyderabad - 2009 (13) STR 509 (Tribunal-Bang.), which tried to mark a distinction between activities of an institution imparting a particular skill such as in computers, computer operations, spoken English or accountancy on the one hand and a proper format of education imparted by institutions imparting "higher learning" such as MBA, management, computer science and such other disciplines, and concluded that institutions imparting higher learning like MBA etc. cetera cannot be characterised as commercial training or coaching centres; that institutions preparing students for entrance examination to various universities could be called commercial training or coaching centre, but no such institutions recognised by law. The Larger Bench answered the reference as follows:-
"25. On the aforesaid analysis, we answer the reference as follows :
(i) The taxable service of "commercial training or coaching" occurs when any institute or establishment is engaged in the activity of imparting skill, knowledge or lessons on any subject or field (excluding sports), irrespective of whether such imparting of skill, knowledge or lessons is in respect of particular discipline or a broad spectrum of disciplines/academic areas; irrespective of the 6 nomenclature or description of the institute or establishment, as a coaching or training centre or an educational institution; regardless of whether an institute or establishment is incorporated by or registered under any law; and irrespective of distinctions on the basis of curriculum, course content, teaching methodology, course duration or otherwise. Activities of imparting skills, knowledge, lessons on any subject or field or when provided by any entity, institution or establishment which is excluded by a specific and legislated exclusionary clause would alone be outside the fold of the taxable activity.
9. Thus, as the appellant did not qualify as a commercial coaching institute prior to 1st May 2011, there can be no tax liability under the admitted fact that they will imparting education and awarding degrees like BBA, BCA etc. recognised by law. The learned counsel also states that the demand is bad for invoking the standard of limitation as there is no allegation for suppression etc. under the facts and circumstances.
10. The ld. AR for Revenue relies on the impugned order. He further relies on the ruling of the Division Bench of this Tribunal in CST, Delhi Vs. M/s.Indian Institute of Planning & Management vide Final Order No.51033/2018 dated 20.03.2018 on the fact that IIPM was engaged in conducting management courses leading to the award of Certificate of Associate/Fellow in Indian Institute of Planning and Management (AFIIPM), Fellow Indian Institute of Planning and Management (FIIPM) of IIPM and also MBA, BBA Degrees of International Management Institute (IMI), Europe, but not paid the service tax on the fee collected for the various academic courses and also for training courses. This Tribunal held that the Adjudicating Authority have erred in dropping the demand 7 of service tax by considering the activities as falling outside the scope of Commercial Training or Coaching Centre as they have not been providing any degree or diploma recognized by law in India as required under the Exclusion Clause under Section 65(27) of the Finance Act.
11. Having considered the rival contentions, we find that the appellant is an Institute, which issues certificates, degree or diploma on educational qualifications recognized by law, as in force, during the relevant time and accordingly, were not a Commercial Training or Coaching Centre as defined under Section 65(27) of the Finance Act. Thus, consequently, the appellant was not liable to pay service tax on its activities of educating for diploma courses enabling the students to secure admissions in University in USA. Accordingly, the appeal is allowed and the impugned order is set aside along with penalties. As the appeal is allowed on merits, we leave the issue of limitation open.
12. The appellant shall be entitled for consequential benefit in accordance with law.
(Operative part of the order already pronounced in open court) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (V. PADMANABHAN) MEMBER (TECHNICAL) Ckp 8