Custom, Excise & Service Tax Tribunal
Jaipur-I vs Aayojan School Of Architecture on 26 September, 2018
1 A.No. ST/53428/15
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
Service Tax Appeal No. 53428 of 2015
(Arising out of Order-in-Original No. JAI-EXCUS-000-COM-002-15-16 dated
17.04.2015 passed by the Commissioner of Central Excise, Jaipur)
DATE OF HEARING : 26.07.2018
DATE OF DECISION : 26 .09.2018
CCE&ST, Jaipur-I .... Appellant
(Rep by Sh. Amresh Jain, DR)
VERSUS
Aayojan School of Architecture .... Respondents
(Rep. by Sh. Sameer Jain, Adv.) CORAM : HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) FINAL ORDER NO. 53039/2018 PER ANIL CHOUDHARY :
The present appeal is filed by the Revenue against the Order-in-Original No. JAI-EXCUS-000-COM-002-15-16 dated 17.04.2015 passed by the Commissioner of Central Excise, Jaipur, wherein the issue involved is - Whether the assessee-Respondents are liable to pay Service Tax under the category of „Commercial Training or Coaching Centre‟ in terms of Section 65(27) of the 2 A.No. ST/53428/15 Finance Act, 1994, as amended, and the degree of B.Arch offered by them is recognized by law for the time being in force?
2. The brief facts of the case are that, the assessee-
Respondents were providing Technical Education i.e. „Architectural Education‟ and running an institute in the name of M/s Aayojan School of Architecture, Jaipur. It was alleged in the show cause notice that the assessee-Respondents were offering degree of B.Arch., but not recognized by the All India Council of Technical Education (AICTE) and, therefore, covered under the definition of "Commercial Training or Coaching Centre" in terms of Section 65(27) of the Finance Act, 1994 read with Board Circular No. 107/1/2009-ST dated 28.01.2009, wherein it is clarified that, "from the year 2005 onwards, a technical institution or establishment (which is otherwise recognized being a university, or affiliate college) not having AICTE approval, cannot be called to be the one issuing any certificate or diploma or degree or any educational qualification recognized by the law, for the time being in force and thus be within the ambit of Service Tax". It was alleged that the assessee-Respondents were required to pay Service Tax under taxable service, namely, „Commercial Training or Coaching Service‟ [Section 65(105)(zzc) of the Finance Act, 1994 (now clause (44) of the Section 65B of the Finance Act, 1994)]. Accordingly, a show cause notice dated 19.09.2014 covering the period from 01.04.2009 to 30.09.2013 was issued for recovery of Service Tax amounting to Rs. 2,54,02,518/- under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 of the Finance Act, 1994.
In the show cause notice, penalty under Section 77 of the Finance 3 A.No. ST/53428/15 Act, 1994 for not taking registration, for not keeping/maintaining records, for not issuing proper invoices and for non-filing of statutory return in relation to the Service Tax and penalty under Section 78 of the Finance Act, 1994 for deliberate suppression of the material facts from the Department about the services rendered by them, were also proposed. Besides, penalty under Section 78A of the Finance Act, 1994 was also proposed against Shri K.S. Mahajani, Director-cum-Principal and Shri Prabhakar Singh Ranawat, Manager Finance of the assessee-Respondents.
3. The assessee-Respondents submitted the reply to the aforesaid show cause notice dated 19.09.2014 and submitted that they are not liable to pay Service Tax. The learned Commissioner passed the impugned order by dropping the show cause notice dated 19.09.2014 by holding that the assessee-Respondents are not liable to pay Service Tax. Being aggrieved, the Revenue is in appeal before this Tribunal.
4. The learned DR for the Department submitted that, the assessee-Respondents are liable to pay Service Tax inasmuch as the degree of B.Arch. is not recognized/approved by AICTE. He placed reliance on the Board‟s Circular No. 107/1/2009-ST dated 28.01.2009 wherein in para 3.5 of the said Circular, it has been clarified that, from the year 2005 onwards, a technical institution or establishment (which is otherwise recognized being a university, or affiliate college) not having AICTE approval cannot be called to be the one issuing any certificate or diploma or degree or any educational qualification recognized by the law for the time being in 4 A.No. ST/53428/15 force and thus be within the ambit of Service Tax. He further placed reliance on Section 2(g) of AICTE Act, 1987 which defines „Technical Education‟ as "programmes of education, research and training in engineering, technology, architecture, town planning, management, pharmacy and applied arts and crafts and such other programme or areas as the Central Government may, in consultation with the Council, by notification in the Official Gazette, declare". He further submitted that there is no doubt that imparting education in architecture is covered within the definition of „technical education‟ as per Section 2(g) of AICTE Act, 1987 and hence governed by the regulations notified thereunder. He, therefore, submitted that, though the degree of B. Arch. is a recognized degree, however, the same has to be approved by AICTE in view of the clarification issued by the CBEC vide Circular dated 28.01.2009. He further submitted that, the present demand can be bifurcated into two periods i.e. one is prior to 01.07.2012 and another is after 01.07.2013 i.e. under negative regime. He submitted that, in both the regimes, if the degree is recognized by any law for the time being in force, then the Respondent is liable to pay Service Tax. He further submitted that, as per the website of Human Resource & Development, the role of COA (Council of Architecture) is mentioned as recommending authority, whereas AICTE is termed as regulatory body. Therefore, he submitted that the impugned order is liable to be set aside and appeal be allowed.
5. On the other hand, the learned counsel for the assessee-Respondents, submitted that the learned Commissioner 5 A.No. ST/53428/15 has rightly dropped the demand proposed in the Show Cause Notice. He submitted as follows :
(i) That the show cause notice alleging suppression of facts, non-payment and evasion of tax for the period 2009 to 2012 is bad in law as well as on facts.
(ii) That the framers of show cause notice has not gone into gravity of the matter on facts as well as on law as on perusal of definition of commercial coaching centers as given under section 65(27) of the Act it is categorically written "but does not include pre-school coaching and training centre or any institute of establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being In force".
On perusal of the exclusion clause of the statutory definition it is beyond any doubt that any institute or establishment if the same is rendering any education under a curriculum which is recognized by law and degree or diploma or certificate is issued in pursuance to the same, the same being not a training or coaching centre as defined U/s 65(105) (zzc) will be outside the definition of taxable services prior to 1/7/2012.
(iii) That in the present matter UGC has recognized "B.Arch." i.e. Bachelor of Architecture as a degree U/s. 22(3) of the Act of 1956 which is governed by Architect Act of 1972 which has laid down curriculum, syllabus, minimum standards of education, norms, parameters of its own, which 6 A.No. ST/53428/15 have to be made inconformity with the norms specified by Rajasthan Technical University, Kota whom the noticee is affiliated to. The fixation of fee, the strength of students, the syllabus, the enrolment, registration of qualified students etc., all these and nothing is in the hand of notice, he/ it has to abide by what is provided in the law and hence by any stretch of imagination he/ it does not fall under the definition of commercial coaching centre and its taxable service.
(iv) That education is a right which is defined under Article 21A and Article 41 of the Constitution of India and the powers are given under Union list 63-66, 70 of the 7th Schedule along with entry 25 of the Constitution of India. Thus, the activity of running a college of Architecture under license and approval of COA i.e. Council of Architecture, a statutory body and affiliation of Rajasthan Technical University by any stretch of imagination cannot be termed as a taxable service u/s. 65 (105)(zzc) of the Act as it is recognized by law and a degree is issued in pursuance to the same, secondly the noticee is also not carrying out any commercial training or coaching rather they are carrying out activity under a curriculum which is recognized by law.
(v) That therefore for the period prior to 1.7.2012 the noticee is not only falling under the exclusion of commercial training or coaching centre, but they are also not falling under the definition of taxable service as they are not providing any service of commercial training or coaching as they are giving full fledged education as minimum standard of 7 A.No. ST/53428/15 education specified by the affiliated university, UGC, COA for the given period.
(vi) That the contention that the noticee is not recognized by law as he is not registered with AICTE in terms of AICTE Act and the public notice issued by them and in the light of circular dated 28.1.2009. It is submitted that the Hon‟ble High Court of Bombay at Aurangabad has categorically held that COA under the Act of 1972 is a special Act, complete code and having overriding effect over the General Law of AICTE and hence the approval by COA is right in law and recognized by law. Alternatively also the exclusion clause of section 65 (105) (zzc) and the definition given U/s 66D which defines negative list of services at clause-l categorically says that services by way of "Education as a part of curriculum for obtaining a qualification recognized by any law for the time being inforce" will be the outside the net of service tax. That the reference of circular dated 28.1.2009 is merely illustrative and is not stating that the colleges which are having approval and permission from COA and affiliation from Rajasthan Technical University, Kota will be a commercial coaching centre. It is very important to submit that the usage of word any law in the negative list and in the definition of commercial coaching or training centre is of great importance.
The present show cause notice is not denying the fact that noticee is a approved college by COA and registered with RTU who has granted affiliation and fixed the fee and given the enrollment number. After observing the curriculum 8 A.No. ST/53428/15 as specified by COA and the university the degree is granted by the RTU which is recognized by all the statutory agencies including UGC, UPSC, RPSC etc. In the present facts and circumstances from the period since inception, noticee is rendering services as per curriculum and issuing qualification which is recognized by law and which is admitted from the fact that its students are even accepted by UPSC, RPSC and other competitive examinations and forums.
(vii) That the allegations levelled in the show cause notice that the letter of RTU in respective clause of permission requires AICTE approval in letter dated 7.11.2009 pertaining to appointment of staff and building is stereotype letter which is issued to all colleges rendering technical knowledge but it is noteworthy to mention that in the first paragraph they have made reference of COA permission with regard to minimum standards of Education an applicability of act. It is also important to submit that the office orders are issued in a stereotype fashion and cannot override the law specially when after 2005 the position of taking approval has changed and MOU in between AICTE and COA has come to an end. That it is also noteworthy to mention that issuance of degree and continuation of approval itself goes to show the contention of noticee vis-à-vis RTU that the reference of AICTE in the letters is merely a topographical error.
(viii) That the noticee is also falling under exemption notification No.25/2012 as it is an entity 9 A.No. ST/53428/15 registered U/s. 12AA and 10(23C) of the Income Tax Act.
(ix) That it is also noteworthy to mention that by virtue of Article-41 read in conjunction with entry 63-66 and further read with entry-25 of the concurrent list of the 7th schedule to the Constitution of India, any Architectural college which is run in India and imparting education has to be recognized as per law in accordance with Architect Act of 1972 and norms of UGC, which is fulfilled by the noticee in the present case.
(x) That it is very surprising and shocking that all over India only the noticee college whose rendering architectural education under a curriculum is given a show cause and none of the colleges as specified of hand book of professional documents issued by COA is alleged on account of having no permission from AICTE, which strengthens the viewpoint of noticee.
(xi) That UGC which is the apex organization and a constitutional body working in harmony with Entry-25 of concurrent list Schedule-7 of Constitution of India recognizes COA, RTU and the degrees issued by them as in accordance with law in spite of the fact that there is no permission from AICTE with regard to approval of college etc.
(xii) That the noticee also submit that AICTE is governed by Act of 1987 which is a General Law and takes care of technical colleges in other fields wherein special law is absent but in the given case under the Architect Act of 1972 there is existence of special law which governed and recognized the 10 A.No. ST/53428/15 qualification curriculum and permits to issue degree.
(xiii) That the noticee strongly refutes the allegation levelled in the show cause notice that he has short paid, evaded service tax for the given period and had not filed the ST-3 return and has also suppressed and intended to evade tax. In this regard the noticee submit that it is a society registered under Act of 1958 which is non-profit making body, charitable in nature as evident from 12(AA) registration certificate, the bonafide reason that is explained above for which the noticee believes that he/ it is till date not liable for service tax and is falling under the exclusion clause and the negative list for the period after 1.7.2012. Each and every record was on documents which was resumed, the bonafides of not paying tax were explained in the statements rendered U/s. 14 as well as a representation was submitted for withdrawal of proceedings prior to issue of show cause notice which was not considered.
(xiv) That the personal penalty alleged upon Shri. K. S. Mahajani, Director cum Principal and Prabhakar Singh Ranawat, Manager-Finance for Act of Commission and Omission are also not applicable as no positive ingredients are reflected in the show cause notice regarding the same and the co- noticees for the above said reasons were always under the belief that no service tax is liable to be paid as on date on the activities of college rendered by their society. They have fully co- operated with the authorities as and when called for.
11 A.No. ST/53428/15(xv) That in the light of above facts it may be concluded that the noticee for the period to 1.7.2012 was neither a commercial coaching and training centre nor was providing taxable services as it was a college who was imparting education which was recognized by law and issuing degree certificate as per the prescribed policy of the particular act. After 1.7.2012 the noticee falls under clause-l of section 66D wherein negative list of services are spelled out. Further noticee is registered u/s 12AA of the Income Tax and falling under exemption notification No.25/2012
6. Having considered the rival contentions, we find that it is not in dispute that the said degree B. Arch. is a recognized degree under UGC Act (University Grants Commission) and also recognized by Rajasthan Technical University, Kota; Council of Architecture;
and Yashwantrao Chavan Maharashtra Open University. However, the only case of the Department is that, the said degree is not recognized by AICTE by relying upon the Board Circular dated 28.01.2009. We have gone through the judgment dated 08.09.2004 in W.P. No. 5942 of 2004 wherein the issue was - Whether the All India Council of Technical Education Act, 1987 over rides the provisions of Architects Act, 1972 in the matter of prescribing and regulating norms and standards of architectural institutions?. The Hon‟ble High Court in para 20 has held as under :
"20. In the light of the above observations it is obvious that the Legislature never intended to confer on the AICTE a super power undermining the status, authority 12 A.No. ST/53428/15 and autonomous functioning of the existing statutory bodies in areas and spheres assigned to them under the respective legislations. There is nothing in the AICTE Act to suggest a legislative intention to belittle and destroy the authority or autonomy of Council of Architecture which is having its own assigned role to perform. The role of the AICTE vis-a-vis the Council of Architects is advisory and recomenadatory and as a guiding factor and thereby subscribing the cause of maintaining appropriate standards and qualitative norms. It is impossible to conceive that the Parliament intended to abrogate the provisions of the Architects Act embodying a complete code for architectural education, including qualifications of the architects by enacting a general provision like Section 10 of the AICTE Act. It is clear that the Parliament did have before it the Architects Act when it passed AICTE Act and Parliament never meant that the provisions of the Architects Act stand pro tanto repealed by Section 10 of the AICTE Act.........."
7. In view of the above observations rendered by the Hon‟ble Bombay High Court and taking into account the facts and circumstances of the present case, we do not find any infirmity in the impugned order and the same is hereby upheld along with the reasons mentioned therein.
8. In the result, the appeal filed by the Revenue is dismissed.
(Pronounced in the open court on .09.2018) (C.L. MAHAR) (ANIL CHOUDHARY) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Golay