Custom, Excise & Service Tax Tribunal
Soft Dot Hi Tech Educational And ... vs Delhi Iii on 6 June, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH- COURT NO. I
SERVICE TAX APPEAL NO. 51748 OF 2017
[Arising out of Order-in-Original No. DLI-SVTAX-003-COM-98-16-17 dated 21.06.2017
passed by the Commissioner, Customs, Indore (M.P.)]
M/s. Soft Dot Hi-Tech Educational ....Appellant
and Training Institute
(A Unit of De Unique Educational Society),
K-16, South Extension, Part-1,
New Delhi-110049
versus
Commissioner of Service Tax, ....Respondent
Commissionerate, Delhi-III
APPEARANCE:
Shri Atul Gupta, Shri Anmol Gupta and Shri Varun Gaba, Advocates for the
Appellant
Ms. Jaya Kumari, Authorised Representative for the Department
CORAM:
HON‟BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON‟BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 10.01.2025
Date of Decision: 06.06.2025
FINAL ORDER NO. 50853/2025
JUSTICE DILIP GUPTA:
M/s. Soft Dot Hi-Tech Educational and Training Institute1 has filed
this appeal for setting aside the order dated 21.06.2017 passed by the
Commissioner, Service Tax, Delhi-III Commissionerate2 adjudicating the
show cause notice dated 16.10.2015 issued to the appellant for the
period from 01.04.2010 to 31.03.2015. The Commissioner has
confirmed the demand of Rs. 3,05,92,676/-, out of the total demand of
Rs. 4,31,53,154/- that was proposed in the show cause notice after
1. the appellant
2. the Commissioner
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invoking the extended period of limitation contemplated under the
proviso to section 73(1) of the Finance Act 19943. The Commissioner
has also directed for recovery of interest under section 75 of the Finance
Act and also imposed penalty of Rs. 10,000/- under section 77 of the
Finance Act and a further penalty of Rs. 3,05,92,676/- under section 78
of the Finance Act.
2. The appellant claims to have been running Study Centres under
Distance Education Mode for various Universities for imparting education
in various courses such as B.Com, BBA and MBA and it is the
Universities that award the degrees or diplomas to students undertaking
education at such centres.
3. It was noticed by the department that though the appellant
provided "commercial training or coaching centre" service as defined
under section 65(26) of the Finance Act and made taxable under section
65(105)(zzc) of the Finance Act but the appellant was not paying
service tax and was filing „nil‟ ST-3 returns on the premise that this
service was exempted under a Exemption Notification dated
20.06.20034 prior to 01.07.2012 and, thereafter, it was included in the
negative list of services under section 66D(l) of the Finance Act.
Accordingly, investigation was initiated against the appellant in the year
May 2012.
4. A show cause notice dated 16.10.2015 was issued to the appellant
calling upon the appellant to pay service tax on the fee collected from
the students over and above the University expenses during the period
2010-11 to 2014-15 to the extent of Rs. 3,05,92,676/-. The show cause
notice also mentions that the balance sheet for the year 2014-15 shows
3. the Finance Act
4. the Exemption Notification dated 20.06.2012
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that the appellant had received skill development amount of Rs.
10,16,21,987/- but the appellant could not provide any information
regarding the fee received as skill development. Therefore, the
appellant was further required called upon to pay service tax of Rs.
1,25,60,478/- on the said amount.
5. The extended period of limitation contemplated under the proviso
to section 73(1) of the Finance Act was also invoked for the following
reasons:
"Whereas, it further appears that the Noticee has
deliberately and willfully suppressed the facts with
intent to evade the payment of service tax inasmuch as
they never disclosed to the Department the fact of
provision of taxable service engaged in providing
„Commercial Training and Coaching Service‟ under
Section 65(105)(zzc) of the Finance Act, 1994 to M/s.
Jamia Hamdard University M/s. Guru Jambheshwar,
University of Science & Technology, Hissar M/s. Punjab
Technical University, M/s. Sikkim Manipal University &
M/s. M.D. University, Rohtak. Thus, the services
provided by the party escaped the assessment for
the purpose of levy of service tax and subsequent
payment thereof to the Government. These facts
would not have come to the notice of the
Department had the Department had the
Department not conducted investigation against
the Noticee. It, therefore, appears that extended
period of five years under proviso to Section
73(1) of the Act ibid invocable in this case for
recovery of Service Tax from the Noticee."
(emphasis supplied)
6. The appellant filed a reply to the aforesaid show cause notice.
Apart from contesting the demand on merits for the reason that
„commercial training and coaching‟ service provided by the appellant
was exempted from service tax, the appellant also contended that the
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extended period of limitation could not have been invoked in the facts
and circumstances of the case.
7. The Commissioner adjudicated the show cause notice by order
dated 21.06.2017.
8. The Commissioner found that the appellant could not take the
benefit of the Notification dated 20.06.2003 for the following reasons:
"46. xxxxxxxxxx. It can be observed from the said
Notification No.10/2003-ST dated 20.06.2003 that,
exemption was granted to the taxable service provided
to any person by a commercial training or coaching
centre, in relation to commercial training or coaching,
which form an essential part of a course or curriculum
of any other institute or establishment, leading to
issuance of any certificate or diploma or degree or
educational qualification recognised by law for the time
being in force subject to the condition that the charges
for such services were not paid by the person
undergoing such course or curriculum directly to the
commercial training or coaching centre. In the instant
case, admittedly the fee has been collected by the
Noticee themselves directly from the students
which is being shared by them with the concerned
Universities, thereby, they have contravened the
condition prescribed under the said exemption
Notification No.10/2003-ST dated 20.06.2003.
Hence, I am of the considered opinion, that the Noticee
is also not entitled to the benefit of Notification
No.10/2003-ST dated 20.06.2003 for the period prior
to 01.07.2012 as well."
(emphasis supplied)
9. The Commissioner also examined whether the appellant was liable
to pay service tax upto 30.06.2012 under „commercial training and
coaching‟ service in view of the following submissions by the appellant:
"41. The upshot of the arguments made by the
Noticee was that till 30.04.2011, the services provided
by them fell under the exclusionary clause of the
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definition of "Commercial Training or Coaching Centre"
vide Section 65(27) of the Finance Act, 1994 and on or
after 01.05.2011 such services were exempt by a
Notification No. 33/2011-ST dated 25.05.2011.
Consequently, no service tax was payable by them till
30.06.2012 under "Commercial Training or Coaching
Service". Therefore, it would be useful to bring out the
definition of "Commercial Training or Coaching Service"
and the Notification No. 33/2011-ST dated 25.05.2011
prevalent during the relevant period."
10. In this connection, the Commissioner examined whether the
service provided by the appellant was exempted from service tax under
the Exemption Notification dated 25.04.20115. This Notification is
reproduced below:
"In exercise of the power conferred by sub-section (1)
of section 93 of the Finance Act, 1994 (32 of 1994), the
Central Government on being satisfied that it is
necessary in the public interest so to do, hereby
exempt,-
(i) any pre-school coaching and
training;
(ii) any coaching or training leading to
grant of a certificate or diploma or degree or
any educational qualification which is
recognised by any law for the time being in
force;
when provided by any commercial coaching or
training centre from the whole of the service tax
leviable thereon under section 66 of the Finance Act,
1994.
2. This notification shall come into force on
the 1st day of May, 2011."
11. The Commissioner denied the benefit of this Exemption
Notification dated 25.04.2011 for the following reasons:
5. the Exemption Notification dated 25.04.2011
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"42.1 Thus, it is unequivocally clear that, only
those institutes or establishments that are
providing coaching or training to their students
which result in issuance of any
certificate/diploma/degree or any educational
qualification recognized by the law in India after
successful completion of the course, are alone
excluded from levy of service tax as per the said
definition. In the instant case, it is an undisputed fact
that, the Noticee is a Study Centre engaged in
imparting educating qua courses of the various
Universities and the certificate or diploma or degree are
issued by such Universities to the students after
successful completion of their respective courses, and
not by the Study Centre of the Noticee. Hence, the
Noticee‟s claim that they fall under the exclusionary
clause of the said definition till 30.04.2011 is incorrect."
(emphasis supplied)
12. The Commissioner then examined the position from 01.07.2012 to
10.07.2014 and from 11.07.2014 onwards.
13. In respect of the period from 01.07.2012 to 10.07.2014, the
appellant had placed reliance upon serial no. 9 of the Mega Exemption
Notification No. 25/2012-ST dated 20.06.2012. The relevant portion of
this Exemption Notification dated 20.06.2012 at serial no. 9 is
reproduced below:
"9. Services provided to or by an educational
institution in respect of education exempted from
service tax, by way of,-
(a) auxiliary educational services; or
(b) renting of immovable property";
14. „Auxiliary educational services‟ is defined in clause (f) of the
Definition Clause as follows:
"(f) "auxiliary educational services" means any
services relating to imparting any skill, knowledge,
education or development of course content or any
other knowledge - enhancement activity, whether for
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the students or the faculty, or any other services which
educational institutions ordinarily carry out themselves
but may obtain as outsourced services from any other
person, including services relating to admission to such
institution, conduct of examination, catering for the
students under any mid-day meals scheme sponsored
by Government, or transportation of students, faculty
or staff of such institution‟."
15. „Educational institution‟ has been defined in clause (oa) of the
Definition Clause as follows:
"(oa) "educational institution" means an institution
providing services specified in clause (l) of section 66D
of the Finance Act, 1994 (32 of 1994)."
16. Section 66D(l) of the Finance Act is as follows:
"The negative list shall comprise of the following
services, namely:-
(l) services by way of-
(i) pre-school education and education up to higher
secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining
a qualification recognised by any law for the
time being in force;
(iii) education as a part of an approved vocational
education course;"
17. Serial no. 9 of the Exemption Notification dated 20.06.2012 was
amended with effect from 11.07.2014 and it is as follows:
"9. Services provided,-
(a) by an educational institution to its students,
faculty and staff;
(b) to an educational institution, by way of,-
(i) transportation of students, faculty
and staff;
(ii) catering, including any mid-day
means scheme sponsored by the
government;
(iii) security or cleaning or house-
keeping services performed in
such educational institution;
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(iv) services relating to admission to,
or conduct of examination by,
such institution."
18. This issue was decided by the Commissioner in the following
manner:
"52. In this context, I find that Section 65B(44) of
the Act defines the term "service" which means 'any
activity carried out by a person for another for
consideration, and includes a declared service but shall
not include,----. Thus, any activity carried out by a
person for another for consideration, is a service. It is
inherent that the consideration in lieu of services
provided or agreed to be provided should be paid by
the service recipient to the service provider. As
discussed, supra, educational auxiliary services
provided by the service provider under the said
Notification are exempt only when such services are
provided by him to the educational institutions. Thus,
it becomes clear that the S.No.9 (a) of the said
exemption Notification No.25/2012-ST dated
20.06.2012 is applicable only when the
consideration in lieu of services provided by the
service provider is paid by the educational
institution, and not by the students of such
institution. As the Noticee has received the fee
directly from the students and not from the
universities in question, I am of the considered
view that, they are not eligible to the benefit
sought from 01.07.2012 to 10.07.2014 under
S.No.9(a) of the said exemption Notification
dated 20.06.2012. I further find that the services
provided by the Noticee from 11.07.2014 also do
not fall under Sr. No.9 of Notification No.
25/2012-ST dated 20.06.2012, as amended by
the Notification No.6/2014-ST dated 11.07.2014
simply because none of the specified services
under S.No.9 (b) relates to imparting of education
provided by the service provider to the
educational institution.
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53. In view of the foregoing, I hold that the Noticee
is liable to pay service tax amounting to Rs.
3,05,92,676/- as alleged in the SCN."
(emphasis supplied)
19. The Commissioner, however, dropped the demand of Rs. 1,
25,60,478/- proposed in the show cause notice for the period 2014-15
for the following reason:-
"55. I find that the Noticee has now produced copy of
certificates showing registration as a Training Partner
for a vocational skill development course under National
Skill Certification and Monetary Reward Scheme with
the various skill councils such as Retail Associations
Skill Council of India (RASCI), Gem & Jewellery Skill
Council of India, Telcom Sector Skill Council (TSSC),
Security Sector Skill Development Council (SSSDC).
The Noticee‟s Chartered Accountant has also certified
the amount of fee of Rs. 1016.22 lacs received by them
in lieu of skill development programme during the
period 2014-15. Therefore, I am of the view that the
Noticee is entitled to the benefit exemption under S.
No. 9A to Notification No. 25/2012-ST dated
20.06.2012 as amended by Notification No. 13/2013-ST
dated 10.09.2013. Accordingly, service tax of Rs.
1,25,60,478/- is not liable to be recovered from them."
20. Regarding the invocation of the extended period of limitation, the
Commissioner observed:
"57. xxxxxxxxx. Thus, the afore mentioned statutory
provisions of service tax cast an obligation upon the
assessee to get registration; to pay service tax; and to
file periodical returns. The assessee in the instant case
had failed to do so. They had never disclosed to the
department about the impugned taxable services
provided. All these facts narrated above go to
show that the party suppressed the facts, by non-
compliance of the obligations cast upon them by
the statutory provisions. The suppression of the
facts clearly gives one conclusion that the party
had intention to evade the tax, and nothing else.
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58. As far as the contention that, the Noticee had
strong, belief that the impugned services were not
amenable to tax under „Commercial Coaching Centre
Service‟ is concerned, I find that there is no complex
legal provision which requires interpretation. The
proceedings unfolded above clearly establish that the
services in question of the Noticee were taxable. There
is no evidence as to whether the Noticee had at
any point of time approached the department to
ascertain the applicability of tax. xxxxxxxxx.
Thus, forming a view, suomotu, without
approaching the Department at any given time
that service tax was not payable on the impugned
services, is not a bonafide belief, especially when
the assessee is registered with the Department.
In the era of self- assessment, the statutory
provisions of service tax casts an obligation upon
the assessee to comply with provisions and Rules
made there under, to self-assess their liability
and pay it to the government exchequer and to
file periodical returns correctly. The Noticee in the
instant case has failed to do so. They had never
disclosed to the department about the provision
of impugned taxable service. All these facts
narrated above go to show that, the Noticee
suppressed the facts, by non-compliance of the
obligations cast upon them by the statutory
provisions. The suppression of facts clearly
indicates that the Noticee had no intention to pay
the tax. Had the department not investigated the
case, the evasion of tax would have not come to
the fore. Hence, it is concluded that, the Noticee had
contravened the said provisions of the Finance Act with
the intention of not paying service tax at the
appropriate time."
(emphasis supplied)
21. The Commissioner also held that interest would be payable by the
appellant under section 75 of the Finance Act. The Commissioner also
held that penalty would be leviable on the appellant under sections 78
and 77 of the Finance Act.
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22. Shri Atul Gupta, learned chartered accountant appearing for the
appellant assisted by Shri Anmol Gupta and Shri Varun Gaba made the
following submissions:
(i) The appellant functions as a study center of
various Universities for the students registered
under Distance Education Mode of Study of these
Universities. The degrees provided to the students
are recognized by law during the entire period of
dispute. Hence the services provided by the
appellant are not covered under the category of
„commercial training or coaching‟ services under
section 65(105)(zzc) read with section 65(27);
(ii) The appellant is acting as a college and preparing
students to appear in the examinations in various
Universities and on passing the students are
provided degrees/certificates by the Universities,
which degrees/certificates are recognized by law
for the time being in force. The coaching or
training provided by the appellant is in relation to
the curriculum of the Universities and leads to
issuance of certificate or diploma or degree
recognized by law;
(iii) The appellant is taking care of all the facilities,
amenities, infrastructure and formalities to
educate the students to enable them to appear in
the examinations at the Centers allocated by the
Universities. Thus, the appellant can be equated
with any college affiliated to any University.
Hence, the services provided by the appellant are
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not covered under the category of „commercial
training or coaching‟ services;
(iv) With effect from 01.05.2011, the exclusion clause
was deleted from the definition of „commercial
training or coaching centre‟. The said amendment
brought institutes providing educational
qualification recognized by law for the time being
in force under the purview of service tax, including
the appellant. However, the Government by
Notification dated 25.04.2011 specifically
exempted „commercial coaching and training
center‟ providing any coaching/training leading to
grant of certificate/diploma/degree/educational
qualification recognized by any law for the time
being in force for the levy of service tax. The
services provided by the appellant would be
covered by the said Notification;
(v) With effect from 01.07.2012 the services provided
by the appellant would be covered under clause
(I) sub-clause (ii) of the section 66D (Negative
List) of the Finance Act;
(vi) The service provided by the appellant would be
exempted under entry 9 of Notification 25/2012
dated 20.06.2012;
(vii) Investigation was initiated against the appellant in
2012, whereas the show cause notice was issued
to the appellant on 16.10.2015. Therefore, no
suppression can be leveled against the appellant.
Thus, the demand confirmed by invoking the
extended period is not sustainable;
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(viii) No suppression can be alleged as there were
divergent views with respect to the issue involved.
The extended period has, therefore, wrongly been
invoked;
(ix) The appellant had also recorded all transactions in
books and supporting documents were made
available to the investigation team, which beyond
reasonable doubts proves that there was never an
intention on the part of the appellant to evade the
payment of service tax;
(x) Service tax demand should be calculated on Cum
Tax basis;
(xi) Penalty under section 78 of the Finance Act is not
imposable; and
(xii) Penalty under section 77 of the Finance Act is not
sustainable.
23. Ms. Jaya Kumari, learned authorised representative appearing for
the department made the following submissions:
(i) The appellant is a Study Centre engaged in imparting
education for courses of various Universities and the
certificate or diploma of degree are issued by such
Universities to the students after successful completion
of their respective courses, and not by the Study
Centre of the appellant. Hence, the claim of the
appellant that it falls under the exclusionary clause of
the definition till 30.04.2011 is incorrect;
(ii) The law laid down is that an exemption Notification has
to be interpreted strictly and the onus lies on the
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assessee to prove fulfillment of the conditions laid down
therein;
(iii) Notification dated 20.06.2003 grants exemption to the
taxable service provided to any person by a
„commercial training or coaching centre‟, in relation to
„commercial training or coaching‟, which form an
essential part of a course of curriculum of any other
institute or establishment, leading to issuance of any
certificate or diploma or degree or educational
qualification recognized by law for the time being in
force subject to the condition that the charges for such
services are not paid by the person undergoing such
course or curriculum directly to the commercial training
or coaching centre. In the instant case, admittedly the
fee has been collected by the appellant directly from
the students, which is being shared by the appellant
with the concerned Universities. Thus, the appellant has
not fulfilled the condition prescribed under the
exemption Notification dated 20.06.2003;
(iv) Educational auxiliary services provided by the service
provider under the said Notification are exempt only
when such services are provided to the educational
institutions;
(v) The services provided by the appellant from 01.07.2012
to 10.07.2014 are not exempted under Serial No. 9(a)
of the Notification dated 20.06.2012; and
(vi) The services provided by the appellant from 11.07.2014
do not fall under Serial No. 9 of Notification dated
20.06.2012 or under the amended Notification dated
11.07.2014, since none of the specified services under
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Serial No. 9(b) relates to imparting education provided
by the service provider to the educational institution;
(vii) The extended period of limitation was correctly
invoked; and
(viii) Penalties were correctly invoked.
24. The submissions advanced by the learned chartered accountant
appearing for the appellant and the learned authorized representative
appearing for the department have been considered.
25. The appellant claims that it is running study centres for various
Universities for imparting education in courses such as B.Com, BBA and
MBA. The appellant does not dispute that degrees or diplomas to the
students who undertake coaching at the study centres are awarded by
the Universities.
26. The issue that arises for consideration is whether the appellant
provided „commercial training or coaching centre‟ services.
27. Section 65(26) of the Finance Act, which was inserted w.e.f.
01.07.2003, defines „commercial training or coaching‟ and it is
reproduced:
"65(26) ‟Commercial Training or Coaching‟
means any training or coaching provided by commercial
training or coaching centre;"
28. „Commercial training or coaching centre‟ has been defined in
section 65(27) of the Finance Act and it is reproduced:
"65(27) ‟Commercial training or coaching
centre‟ means any institute or establishment providing
commercial training or coaching for imparting skill or
knowledge or lessons on any subject or field other than
the sports, with or without issuance of a certificate and
includes coaching or tutorial classes but does not
include preschool coaching and training centre or any
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institute or establishment which issues any certificate
or diploma or degree or any educational qualification
recognised by law for the time being in force;"
29. „Taxable Service‟ under section 65(105)(zzc) of the Finance Act
has been defined to mean „any service provided or to be provided to any
person, by a commercial training or coaching centre in relation to
commercial training or coaching‟. An Explanation was inserted by
Finance Act, 2010 with retrospective effect from 01.07.2003. It is
reproduced below:
"65(105)(zzc) to any person, by a commercial
training or coaching centre in relation to commercial
training or coaching."
Explanation. - For the removal of doubts, it is
hereby declared that the expression "commercial
training or coaching centre" occurring in this sub-clause
and in clauses (26), (27) and (90a) shall include any
centre or institute, by whatever name called, where
training or coaching is imparted for consideration,
whether or not such centre or institute is registered as
a trust or a society or similar other organisation under
any law for the time being in force and carrying on its
activity with or without profit motive and the expression
"commercial training or coaching" shall be construed
accordingly."
30. It is, therefore, clear from the aforesaid definitions that
„commercial training or coaching‟ means any training or coaching
provided by a commercial training or coaching centre. A „commercial
training or coaching centre‟ has been defined to mean, any institute or
establishment providing commercial training or coaching for imparting
skill or knowledge or lessons on any subject or field with or without
issuance of a certificate and includes coaching or tutorial classes, but
does not include any institute or establishment which issues any
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certificate or diploma or degree or any educational qualification
recognized by law for the time being in force.
31. The first issue that arises for consideration in this appeal is
whether the appellant can take the benefit of the Notification dated
20.06.2003 to support the plea that service tax was not leviable under
„commercial training or coaching centre‟ services.
32. It would, therefore, be useful to reproduce the Notification dated
20.06.2003 and it is as follows:
"In exercise of the powers conferred by section 93 of
the Finance Act, 1994 (32 of 1994), the Central
Government, being satisfied that it is necessary in the
public interest so to do, hereby exempts the taxable
services provided by a commercial training or coaching
centre, in relation to commercial training or coaching,
which form an essential part of a course or curriculum
of any other institute or establishment, leading to
issuance of any certificate or diploma or degree or
educational qualification recognised by law for the time
being in force, to any person, from the whole of the
service tax leviable thereon under sub-section (2) of
section 66 of the said Act:
Provided that this exemption shall not be applicable if
the charges for such services are paid by the person
undergoing such course or curriculum directly to the
commercial training or coaching centre:
2. This notification shall come into force on the 1st
day of July, 2003.
[Notification No. 10/2003-S.T., dated 20-6-2003]"
33. It is not in dispute that the students are directly paying charges
to the appellant. The aforesaid Notification dated 20.06.2003 specifically
excludes the benefit of the exemption to centres where the charges are
directly paid to the "commercial training or coaching centre". The
appellant would, therefore, not be entitled to the exemption granted
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under the Notification dated 20.06.2003. This is precisely what has been
held by the Commissioner in the impugned order dated 21.06.2017.
There is, therefore, no error in the finding recorded by the
Commissioner.
34. The second issue that arises for consideration is whether the
appellant can claim the benefit of the Notification dated 25.04.2011.
This Notification has been referred to in paragraph 10 of this order. The
appellant is a study centre imparting education for some of the courses
of the Universities. It is the Universities that award certificate, diploma
or degree and not the appellant. The finding recorded by the
Commissioner that in such circumstance the appellant would not be
entitled to the benefit of the Notification dated 25.04.2011, therefore,
also does not suffer for any illegality.
35. The third issue that arises for consideration is whether the
appellant would be entitled to exemption from 01.07.2012 to
10.07.2014 in terms of serial no. 9 of the Exemption Notification dated
20.06.2012. It is clear from the aforesaid Notification that the
exemption would be available to a coaching centre only when the
consideration in lieu of services provided by the service provider is paid
by the University and not by the students. The appellant directly
receives the fees from the students and the consideration is not
received from the Universities. The benefit of this Notification would,
therefore, not be available to the appellant. This is what has been held
by the Commissioner in the impugned order for denying the benefit of
this Notification. There is, therefore, no error in the finding recorded by
the Commissioner.
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36. The next issue that arises for consideration is whether the
appellant is entitled to exemption from 11.07.2014 onwards in terms of
the Notification dated 11.07.2014 that amends the earlier Notification
dated 20.06.2012. The amended Notification has been reproduced in
paragraph 17 of this order. The benefit of clause 9(b) is not available to
the appellant as none of the conditions are satisfied. The conditions do
not relate to imparting of education provided by the service provider to
the educational institution. The finding recorded by the Commissioner,
therefore, that the benefit of this Notification cannot be taken by the
appellant does not suffer for any illegality.
37. The last issue that arises for consideration is whether the
extended period of limitation contemplated under the proviso to section
73(1) of the Finance Act could be invoked by the department.
38. The relevant portion of the show cause notice dealing with this
aspect has been reproduced in paragraph 5 of this order. All that the
show cause notice mentions is that the appellant deliberately and
willfully suppressed facts with an intention to evade the payment of
service tax as the appellant did not disclose to the department that it
was providing "commercial training or coaching centre" service which is
a taxable service and this fact would not have come to the notice of the
department had the department not conducted investigation against the
appellant.
39. The impugned order dated 21.06.2017 passed by the
Commissioner has dealt with this issue and the relevant portion of the
order has been reproduced in paragraph 20 of this order. The
Commissioner found as a fact that the appellant had not approached the
department to ascertain whether it was liable to pay service tax under
20
ST/51748/2017
"commercial training or coaching centre" service and, therefore, forming
an opinion without consulting of the department is not a bona fide belief
of the appellant. The Commissioner further held that in the era of self-
assessment it is the liability of the assessee to correctly assess the duty
and file the periodical returns but the appellant failed to do so. Thus, the
appellant had suppressed facts with an intention to avoid service tax
and had the department not conducted an investigation, the evasion of
service tax would not have come to the notice of the department.
40. In connection with the extended period of limitation, the appellant
has provided a chart in the synopsis to demonstrate which part of the
demand is covered by the normal period of limitation under section
73(1) of the Finance Act and which part is covered by the extended
period of limitation contemplated under the proviso to section 73(1) of
the Finance Act. This Chart is reproduced below:
Table Showing the normal period and the extended period
S.No. Period Date of 18 months Actual date No. of days Covered by
return period of SCN delay Extended
Period or
not
1. Apr‟ 10 to Sept‟ 10 20-Oct-10 10-Apr-12 16-Oct-15 1284 Yes
2. Apr‟ 11 to Sept‟ 11 20-Oct-11 20-Apr-13 16-Oct-15 909 Yes
3. Oct‟ 11 to Mar‟ 12 12-Apr-12 12-Oct-13 16-Oct-15 734 Yes
4. Apr‟ 12 to Jun‟ 12 11-Nov-12 11-May-14 16-Oct-15 523 Yes
5. Jun‟ 12 to Sept‟ 12 26-May-13 26-Nov-14 16-Oct-15 324 Yes
6. Oct‟ 12 to Mar‟ 13 11-Aug-13 11-Feb-15 16-Oct-15 247 Yes
7. Apr‟ 13 to Oct‟ 13 13-Oct-13 13-Apr-15 16-Oct-15 186 Yes
8. Oct‟ 13 to Mar‟ 14 12-Apr-14 12-Oct-15 16-Oct-15 4 Yes
9. Apr‟ 14 to Oct‟ 14 11-Oct-14 11-Apr-16 16-Oct-15 -178 No
10. Oct‟ 14 to Mar‟ 15 23-Apr-15 23-Oct-16 16-Oct-15 -373 No
41. The contention of the learned counsel for the appellant is that the
necessary ingredients for invoking the larger period of limitation
contemplated under the proviso to section 73 (1) of the Finance Act,
namely wilful suppression of facts with an intent to evade payment of
21
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service tax do not exist and, therefore, the extended period of limitation
could not have been invoked.
42. There is substance in the contention advanced on behalf of the
appellant that mere suppression of fact is not enough as it has also to
be conclusively established that suppression was wilful with an intent to
evade payment of service tax.
43. It is correct that section 73 (1) of the Finance Act does not
mention that suppression of facts has to be "wilful‟ since "wilful‟
precedes only misstatement. It has, therefore, to be seen whether even
in the absence of the expression "wilful" before "suppression of facts"
under section 73(1) of the Finance Act, suppression of facts has still to
be willful and with an intent to evade payment of service tax. The
Supreme Court and the Delhi High Court have held that suppression of
facts has to be "wilful‟ and there should also be an intent to evade
payment of service tax.
44. Before adverting to the decisions of the Supreme Court and the
Delhi High Court, it would be useful to reproduce the proviso to section
11A of Central Excise Act, 1944, as it stood when the Supreme Court
explained "suppression of facts" in Pushpam Pharmaceutical Co. vs.
Commissioner of Central Excise, Bombay6. It is as follows:
"11A: Where any duty of excise has not been levied or
paid or has been short-levied or short-pain or
erroneously refunded, by the reason of-
(a) fraud; or
(b) collusion; or
(c) any wilful misstatement; or
(d) suppression of facts; or
6. 1995 (78) E.L.T. 401 (SC)
22
ST/51748/2017
(e) contravention of any of the provisions of this Act of
the rules made thereunder with intent to evade
payment of duty
by any person chargeable with the duty, the Central
Excise Officer shall, within five years from the relevant
dated, serve notice on such person requiring him to
show cause why he should not pay the amount
specified in the notice along with interest payable
thereon under Section 11AA and a penalty equivalent to
the duty specified in the notice."
45. In Pushpam Pharmaceuticals Company, the Supreme Court
examined whether the Department was justified in initiating proceedings
for short levy after the expiry of the normal period of six months by
invoking the proviso to section 11A of the Excise Act. The proviso to
section 11A of the Excise Act carved out an exception to the provisions
that permitted the Department to reopen proceedings if the levy was
short within six months of the relevant date and permitted the Authority
to exercise this power within five years from the relevant date under the
circumstances mentioned in the proviso, one of which was suppression
of facts. It is in this context that the Supreme Court observed that since
"suppression of facts‟ has been used in the company of strong words
such as fraud, collusion, or wilful default, suppression of facts must be
deliberate and with an intent to escape payment of duty. The
observations are as follows;
"4. Section 11A empowers the Department to re-open
proceedings if the levy has been short-levied or not
levied within six months from the relevant date. But
the proviso carves out an exception and permits
the authority to exercise this power within five
years from the relevant date in the circumstances
mentioned in the proviso, one of it being
suppression of facts. The meaning of the word both
in law and even otherwise is well known. In normal
23
ST/51748/2017
understanding it is not different that what is explained
in various dictionaries unless of court the context in
which it has been used indicates otherwise. A perusal
of the proviso indicates that it has been used in
company of such strong words as fraud, collusion
or wilful default. In fact it is the mildest
expression used in the proviso. Yet the
surroundings in which it has been used it has to
be construed strictly. It does not mean any
omission. The act must be deliberate. In taxation,
it can have only one meaning that the correct
information was not disclosed deliberately to
escape from payment of duty. Where facts are
known to both the parties the omission by one to do
what he might have done and not that he must have
done, does not render it suppression."
(emphasis supplied)
46. The Delhi High Court in Bharat Hotels Limited vs.
Commissioner of Central Excise (Adjudication)7 also examined at
length the issue relating to the extended period of limitation under the
proviso to section 73 (1) of the Finance Act and held as follows;
"27. Therefore, it is evident that failure to pay tax is
not a justification for imposition of penalty. Also, the
word "suppression‟ in the proviso to Section 11A(1) of
the Excise Act has to be read in the context of other
words in the proviso, i.e. "fraud, collusion, wilful
misstatement". As explained in Uniworth (supra),
"misstatement or suppression of facts" does not mean
any omission. It must be deliberate. In other words,
there must be deliberate suppression of
information for the purpose of evading of
payment of duty. It connotes a positive act of the
assessee to avoid excise duty.
xxxx
Thus, invocation of the extended limitation period
under the proviso to Section 73(1) does not refer
to a scenario where there is a mere omission or
7. 2018 (12) GSTL 368 (Del.)
24
ST/51748/2017
mere failure to pay duty or take out a license
without the presence of such intention."
xxxx
The Revenue has not been able to prove an
intention on the part of the Appellant to avoid tax
by suppression of mention facts. In fact it is clear
that the Appellant did not have any such intention
and was acting under a bonafide belief."
(emphasis supplied)
47. The Delhi High Court in Mahanagar Telephone Nigam Ltd. vs.
Union of India and others8, also observed as follows:
"28. In terms of the proviso to Section 73(1) of the
Act, the extended period of limitation is applicable only in
cases where service tax has not been levied or paid or
has been short-levied or short-paid or erroneously
refunded by reason of fraud, or collusion, or wilful
misstatement, or suppression of facts, or contravention
of any provisions of the Act or the Rules made
thereunder with an intent to evade payment of service
tax. However, the impugned show cause notice
does not contain any allegation of fraud, collusion,
or wilful misstatement on the part of MTNL. The
impugned show cause notice alleges that the
extended period of limitation is applicable as MTNL
had suppressed the material facts and had
contravened the provisions of the Act with an
intent to evade service tax. Thus, the main question
to be addressed is whether the allegation that MTNL had
suppressed material facts for evading its tax liability, is
sustainable.
*****
41. In the facts of this case, the impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the
8. W.P. (C) 7542 of 2018 decided on 06.04.2023 25 ST/51748/2017 officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL‟s contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return."
(emphasis supplied)
48. It is, therefore, clear from the aforesaid discussion that the extended period of limitation could have been invoked only if there was suppression of facts with intent to evade payment of service tax.
49. It is keeping in mind the aforesaid discussion that it would have to be examined whether the Commissioner was justified in holding that the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act was correctly invoked. The show cause notice mentions that the appellant deliberately and willfully suppressed facts with intent to evade payment of service tax since the appellant did not disclose to the department that it was providing taxable "commercial training or coaching centre" service and this fact would not have come to the notice of the department had the department not conducted an investigation.
50. The period involved in the present appeal is from 01.04.2010 to 31.03.2015. The show cause notice was issued to the appellant on 26 ST/51748/2017 16.10.2015. It is not in dispute that investigation was started in respect of the services provided by the appellant in May 2012 when the department noticed that though the appellant provided "commercial training or coaching centre" service as defined under section 65(26) of the Finance Act and made taxable under section 65(105)(zzc) of the Finance Act, but the appellant was not paying service tax and was filing „nil‟ ST-3 returns on the premise that the service provided by the appellant was exempted prior to 01.07.2012 under the Exemption Notification dated 20.06.2003 and was thereafter included in the negative list of services under section 66D(l) of the Finance Act. Thus, the department was aware in May 2012 about the actual service provided by the appellant. Thus, all the facts were in the knowledge of the department in May 2012. The chart submitted by the appellant shows that the period involved from April 2010 to March 2014 is beyond the normal period of limitation.
51. The contention of the learned counsel for the appellant is that it bona fide believed that it was entitled to avail the benefit of the Exemption Notification and it cannot be said that the belief of the appellant is a mala fide belief merely because it may ultimately be held that the appellant is not entitled to the benefit of the Exemption Notification. This contention deserves to be accepted.
52. In this connection, it may be pertinent to refer to the decision of the Supreme Court in Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd.9. The Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would
9. 2023 (385) E.L.T. 481 (S.C.) 27 ST/51748/2017 not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona fide manner. The relevant portion of the judgment is reproduced below:
"23. We are in full agreement with the finding of the Tribunal that during the period in dispute it was holding a bona fide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a mala fide belief particularly when such a belief was emanating from the view taken by a Division Bench of Tribunal. We note that the issue of valuation involved in this particular matter is indeed one were two plausible views could co- exist. In such cases of disputes of interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation by considering the assessee‟s view to be lacking bona fides. In any scheme of self-assessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basis of his own judgment and in a bona fide manner.
24. The extent of disclosure that an assessee makes is also linked to his belief as to the requirements of law. xxxxxxxxxxx. On the question of disclosure of facts, as we have already noticed above the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, as we noticed 28 ST/51748/2017 earlier there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee‟s action of including the value of deemed exports within the value of domestic clearances."
(emphasis supplied)
53. The Commissioner has in the impugned order also observed that in case the appellant had any doubts about the taxability of the service provided by the appellant it could have approached the department to ascertain whether it was liable to pay service tax or not. The Commissioner was not justified in forming such an opinion. No duty is cast upon the appellant to seek any clarification from the department. This is what was held by the Delhi High Court in Mahanagar Telephone Nigam and the relevant portion of the judgment is reproduced below:
"32. xxxxxxxxxxx. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious."
54. The Commissioner also observed that in an era of self-assessment an obligation is cast upon the assessee to self-assess the liability and file periodical returns correctly and since the appellant did not disclose that it was providing a taxable service, the appellant suppressed facts and knowingly failed to discharge the obligation cast upon the appellant.
55. This approach of the Commissioner cannot be countenanced. It is the duty of the officers scrutinizing the returns to examine the 29 ST/51748/2017 information disclosed by an assessee and the department cannot be permitted to take a plea that it is the duty of the assessee to disclose correct information and it is not the duty of the officers to scrutinize the returns.
56. In this connection, reference can be made to the decision of the Tribunal in M/s. Raydean Industries vs. Commissioner CGST, Jaipur10. The Tribunal, in connection with the extended period of limitation, observed that even in a case of self assessment, the department can always call upon an assessee and seek information and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the assessee. The Division Bench also noted that departmental instructions issued to officers also emphasis that it is the duty of the officers to scrutinize the returns. The relevant portion of the decision of the Tribunal is reproduced below:
"24. It would be seen that the ER-III/ER-I returns filed by the applicant clearly show that the applicant had categorically declared that it had cleared the final products by availing the exemption under the notification dated 17.03.2012. The applicant had furnished the returns on the basis of self assessment. Even in a case of self assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 20028 that the assessee is expected to self assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to
10. Excise Appeal No. 52480 of 2019 decided on 19.12.2022 30 ST/51748/2017 the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules.
25. Departmental instructions to officers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the Central Board of Excise & Customs on December 24, 2008 deal with "duties, functions and responsibilities of Range Officers and Sector Officers". It has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below:
xxxxxxxxx
26. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT.
xxxxxxxxxx
27. It is thus evident that not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so."
(emphasis supplied)
57. The view that has been taken by the Commissioner was also not accepted by the Tribunal in M/s G.D. Goenka Private Limited vs. The 31 ST/51748/2017 Commissioner of Central Goods and Service Tax, Delhi South11 and the observations are as follows:
"16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self- assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self- assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect self- assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment."
(emphasis supplied)
58. The Tribunal in Sunshine Steel Industries vs. Commissioner of CGST, Customs & Central Excise, Jodhpur12 also observed that the department cannot be permitted to invoke the extended period of limitation by merely stating that it is a case of self-assessment. The relevant observations are:
"20. The Department cannot be permitted to invoke the period of limitation by merely stating that it is a case of self-assessment as even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 that the assessee is 11 . Service Tax Appeal No. 51787 of 2022 dated 21.08.2023
12. (2023) 8 Centax 209 (Tri.-Del.) 32 ST/51748/2017 expected to self-assess the duty and sub-rule (3) of rule 12 of the Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules."
(emphasis supplied)
59. Civil Appeal No. 4246 of 2023 (Commissioner of CGST, Customs and Central Excise vs. Sunshine Steel Industries) filed by the department before the Supreme Court to assail the aforesaid decision of the Tribunal in Sunshine Steel Industries was dismissed by the Supreme Court on 06.07.2023 and the judgment is reproduced below:
"Delay condoned.
2. Heard learned counsel for the appellant.
3. This Court is not inclined to interfere with the impugned order of the High Court (Sic).
4. The appeal is dismissed.
5. Pending applications, if any, are disposed of."
60. The aforesaid discussion would, therefore, lead to the inevitable conclusion that the extended period of the limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked in the facts and circumstances of the case. 33
ST/51748/2017
61. The appellant has produced a chart which shows the period covered by the extended period of limitation under the proviso to section 73(1) of the Finance Act and the normal period provided for in section 73(1) of the Finance Act. It transpires from the chart that the period from April 2010 to 12.04.2014 is covered by the extended period of limitation. The demand of service tax for the extended period of limitation with interest and penalty, therefore, cannot be sustained. However, the demand for the normal period is confirmed.
62. The matter would, therefore, have to be remitted to the Commissioner to only examine what portion of demand falls within the normal period of limitation contemplated under section 73(1) of the Finance Act for it is such demand that has been confirmed and then consider whether penalty under sections 77 and 78 of the Finance Act should be leviable on the appellant for this period and if so then to determine amount of penalty.
63. The impugned order dated 21.06.2017 passed by the Commissioner is, accordingly, modified to the extent indicated above and the appeal is partly allowed.
(Order pronounced on 06.06.2025) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Jyoti