Custom, Excise & Service Tax Tribunal
National Institute Of Bank Management vs Pune Iii on 18 June, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/684/2011
[Arising out of Order-in-Original No: 16/P-III/ST/COMMR/2011-12 dated 17/10/2010passed by the Commissioner of Central Excise, Pune III.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Anil Choudhary, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
National Institute of Bank Management
Appellant
Vs
Commissioner of Central Excise
Pune III
Respondent
Appearance:
Shri S. Ananthan, Chartered Accountant for the appellant Shri Shobha Ram, Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 18/06/2013 Date of decision: 12/07/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
The appeal is directed against Order-in-Original No: 16/P-III/ST/COMMR/2011-12 dated 17/10/2010passed by the Commissioner of Central Excise, Pune III.
2. The appellant M/s. National Institute of Bank Management (NIBM) was established by the Reserve Bank of India in consultation with the Government of India in 1969 as an autonomous non-profit institution in the arena of banking and finance. The principal objective of NIBM is to help translate national policies relating to the banking sector into meaningful training programmes at the level of individual bank and implementation of those policies by creating a climate of intellectual appreciation and emotional dedication. The major activities of the Institute include research, training and consultancy. The Institute is also recognized as a centre for post graduate research by the University of Pune and by the Department of Scientific and Industrial Research. The appellant conducted a number of training programs for the officials of various banks and also a post-graduate diploma programme for students in banking management. The appellant charged lumpsum amount for conducting these programmes from the participants or their sponsors. The department was of the view that the service rendered by the appellant came under the category of Commercial Training or Coaching and accordingly a show cause notice dated 06/04/2009 was issued demanding service tax of ` 3,58,38,984/- on a gross amount of consideration received of ` 30,72,93,330/- during the period 01/10/2003 to 30/09/2008. The notice was adjudicated vide the impugned order and the demands were confirmed along with interest thereon. However, the adjudicating authority waived the penalties proposed in the show cause notice under Sections 76, 77 and 78 of the Finance Act, 1994. Aggrieved of the said order the appellant is before us.
3. The learned consultant for the appellant made the following submissions:
3.1. The appellant is not a commercial coaching or training centre as they are an organisation promoted by the Reserve Bank of India and are working as a non-profit organisation. Though training programmes are undertaken by the appellant, the certificates awarded by the appellant are not recognized under any law. Therefore the activity undertaken by the appellant cannot be considered as a commercial coaching or training. In majority of the cases, training programmes are conducted for people who are already employed in various banks and the banks sponsor participants and in accordance with the requirements of the bank, the training programme is conceived and training imparted. Thus the appellant does not prepare trainees for any particular vocation. The trainees are already employed and only skills in the banking sector are enhanced. Therefore, the activity does not come under the purview of commercial training or coaching. The activity undertaken by the department was known to the department and the department had clarified that the activity undertaken by the appellant would not come under the purview of commercial training or coaching. Therefore, bulk of the demand would get time-barred.
3.2. The appellant has charged a lump-sum amount for the courses conducted which includes charges for boarding and lodging. Therefore, even if the activity undertaken by the appellant is held to be taxable, the charges recovered for boarding and lodging should be excluded from the taxable value of the services rendered.
3.3. The appellant also relies on the decisions of this Tribunal in the case of Administrative Staff College of India, Hyderabad vs. Commissioner of Customs & Central Excise, Hyderabad 2008-TIOL-2007-CESTAT-BANG; Magnus Society vs. Commissioner of Customs & Central Excise, Hyderabad [2009] 18 STT 193; Institute of Chartered Financial Analysis of India vs. Commissioner of Customs & Central Excise, Hyderabad [2008] 17 STT 501; I2IT (P) Ltd. vs. Commissioner of Central Excise, Pune [2010] 28 STT 343 and few other decisions.
4. The learned Additional Commissioner (AR) appearing for the Revenue, on the other hand, submits that the definition of commercial coaching or training centre was amended retrospectively vide Finance Act, 2010. As per the amended definition, the expression commercial training or coaching centre occurring in sub-clause (zzc) of clause (105) of Section 65 and in clauses (26), (27) and (90a) of Section 65 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.
4.1. Accordingly, he contends that whether the organisation imparting the coaching or training makes profit or not, or is a non-profit organisation, is not relevant for the purpose of levy of service tax. If the training or coaching is imported for a consideration, service tax levy is attracted. Only the coaching or training imparted which is recognized under law is excluded from the purview of service tax. In the appellants case, it is an undisputed fact that the various training programmes organised by the appellant were not recognised by or under any law. Therefore, the activity undertaken by the appellant is leviable to service tax. He relies on the decision of this Tribunal, in the case of ICFAI , Hyderabad; ICFAI University, Dehradun, ICFAI Foundation, Hyderabad; ICFAI University, Tripura; Indian School of Business, Hyderabad where in similar circumstances, the demand of service tax was upheld vide order Nos. 514-520/2012 dated 31/07/2012 by the South Zonal Bench at Bangalore. The same ratio was followed by this Bench in I2IT Pvt. Ltd. vs. CCE, Mumbai in final order No. A/418/13/CSTB/C-1 dated 11/03/2013. Accordingly he submits that the argument advanced by the appellant that they are not liable to service tax is not sustainable in law.
5. We have considered the submissions made by both the sides very carefully.
5.1. Sections 65 (26) and 65 (27) of the Finance Act, 1994 define the activities as follows:
(26) Commercial training or coaching means any training or coaching provided by a commercial training or coaching centre;
(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 institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force.
Section 65 (105) (zzc) defines the taxable service as any service provided or to be provided to any person by a commercial training or coaching centre in relation to commercial training or coaching.
5.2. Vide Section 76 of the Finance Act, 2010 a retrospective amendment was made to sub-clause (zzc) of clause (105) as follows:
The following explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2003, namely:
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 organization 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. 5.3. From the retrospective amendment cited above, it is clear that any centre or institute, by whatever name called, where training or coaching is imparted for a consideration is liable to service tax. There is no dispute in the present case that the appellant herein is charging for the training programmes/courses conducted by them. It is also an accepted fact that the courses conducted by the appellant were not recognized by law during the relevant period.
5.4. The view taken by this Tribunal in the case of ICFAI [2009(14) STR 220(Tri.-Bang)] and Indian School of Business (ISB in short) reported in 2010 (17) STR 83 (Tri-Bang) was that imparting knowledge and conducting courses at higher level such as post graduate level cannot be termed as commercial training or coaching centre irrespective of whether the degrees so offered were recognized by law or not. In these cases, it was further held that since the institutions were registered under Societies Registration Act for educational purposes (in the case of ICFAI) and was a non-profit company (in the case of ISB), their activities could not be considered as commercial. However, these decisions of the Tribunal were set aside by the honble apex Court vide order dated 14/5/2010 in civil appeal no. 579 of 2010 (Commissioner Vs. ISB) and order dated 14/2/2011 in civil appeal nos. 4820-4823 of 2009 (Commissioner Vs. ICFAI institutions).These cases were remanded back to the Tribunal for fresh consideration in the light of the newly inserted Explanation in section 65(105)(zzc) of Finance Act, 1994 by Finance Act, 2010, which was made effective from 1st July, 2003. This decision of the apex court was in pursuance to the earlier decision of the honble supreme court where a three judges bench of the Court allowed the appeal filed by the Commissioner of Service Tax against the order of this Tribunal in the case of Great Lakes Institute of Management reported in 2010(19) STR 481. It is in the context of remand by the honble apex Court that the matter was once again considered by the South Zonal Bench of this Tribunal at Bangalore in the case of ICFAI, Hyderabad and Others vide Final order No.514-520/2012 dated 31/07/2012. All the averments made before us in the present case were also made before the Tribunal in the case of ICFAI with respect to the educational nature of the activity undertaken and this Tribunal observed as follows:-
12. We have given careful consideration to the submissions. The substantive issue which has arisen before us in these de novo proceedings is whether the assessees can claim exemption from service tax liability under Section 65(105)(zzc) read with the definition of commercial training or coaching under Section 65(26) and the definition of commercial training or coaching centre under Section 65(27) of the Finance Act, 1994 (as this provision stood during the period of dispute) in respect of the fees/charges collected by them from the students who underwent various courses offered by the assesses during the period of dispute.
13. The above issue has got to be examined on the facts of these cases in the light of the explanation added by the Finance Act, 2010 to Section 65(105)(zzc) of the Finance Act, 1994 with retrospective effect from 01/07/2003. As per this explanation, the expression commercial training or coaching centre appearing in Section 65(26) and (27) of the Finance Act, 1994 shall include ---
- any centre or institute, by whatever name called,
- where training or coaching is imparted for consideration, with or without profit motive,
- whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force.
Certain aspects which, before the above amendment, were material to consideration of the question whether a given centre or institute would fit in the definition of commercial training or coaching centre under Section 65(27) and whether its activities would fit in the definition of commercial training or coaching under Section 65(26) have been rendered immaterial by the amendment. Whether or not the centre or institute is registered as a trust or a society or a similar organization under any law is immaterial now. The name of the centre or institute is immaterial. Whether the activity of the centre or institute is with or without profit motive is also immaterial. Upon the above amendment, what matters is whether the centre or institute has imparted training or coaching for a consideration. If it has done so, it will get covered by the definition of commercial training or coaching centre and its activity will get covered by the definition of commercial training or coaching. The consideration for training or coaching per se determines the commercial character of the activity. To the same effect is the Budget instruction noted in para (5) of this order. What is reflected in the amendment seems to be a conceptual change with regard to the term commercial used in Section 65(26) and (27). The change of law, which is substantial, has come about with retrospective effect from 1/7/2003. We must now proceed to determine whether the ICFAI entities, the ISB, the BIFT and the IIRM had been imparting training or coaching to their students for a consideration during the respective periods of dispute.
14. It has been argued on behalf of the assessees that they are educational institutions and were imparting education, and not training or coaching, to the students. Per contra, it has been argued on behalf of the Revenue that education necessarily includes the process of imparting knowledge or lessons on any subject and hence the same would get covered within the ambit of the expression training or coaching appearing under clauses (26), (27) and (105)(zzc) of Section 65 of the Finance Act, 1994. In this connection, the learned Special Consultant has relied on P. Ramanatha Aiyers THE MAJOR LAW LEXICON wherein some connotations of the word education have been provided. The learned counsel has referred to WHARTONS LAW LEXICON. It cannot be disputed that the act of imparting skill or knowledge or lessons on any subject or field (other than sports) is the stated purpose of commercial training or coaching vide Section 65(27) of the Act. Both the law lexicons cited before us present various shades of meaning of education. According to one meaning appearing in MAJOR LAW LEXICON, education means the act or process of imparting or acquiring particular knowledge or skills and it is the result produced by instruction, training or study. (This meaning is seen culled out from Padmanav Dehury vs. State of Orissa [AIR 1999 Orissa 99].) WHARTONS LAW LEXICON quotes Swamy Vivekananda: The end of all education, all training, should be man-making. The end and aim of all training is to make the man grow. The training by which the current and expression of will are brought under control and become fruitful is called education. As rightly submitted by the learned Special Consultant, education can be seen as the result of study, instruction, training, coaching etc. and the websites of at least two ICFAI varsities have been shown to acknowledge this. Therefore a line cannot be drawn to separate education from training or coaching. It is also pertinent to note that Section 65(27) as it stood during the period of dispute excludes institutes/establishments which issue any certificate or diploma or degree or any educational qualification recognized by law for the time being in force. The converse of this would be that institutes/establishments which do not issue any certificate or diploma or degree or any educational qualification recognized by law for the time being in force as well as institutes/establishments which issue certificates/diplomas /degrees/educational qualifications not recognized by law stand included in the definition of commercial training or coaching centre under Section 65(27) of the Act. Institutes and establishments issuing educational qualifications can certainly be called educational institutions. But the ICFAI entities before us were imparting lessons or skills or knowledge in various subjects to students by collecting fees and other charges but they did not issue to them any certificate, diploma, degree or other educational qualification recognized by law for the time being in force on account of which they were not covered by the exclusion clause of Section 65(27) and remained within the definition of commercial training or coaching centre. Institutions which -
- are established by, or under, or in accordance with, any law to impart education;
- offer one or more courses of study with specific curriculum for each course and specific syllabus for each subject;
- conduct examinations periodically and evaluate them;
- organize extracurricular activities to develop skills in arts, sports etc;
- create various fora to help the students imbibe social and democratic values;
- issue certificates or diplomas or degrees recognized by law, to the successful students;
are generally perceived as educational institutions. In our view, only such institutions were covered by the exclusion clause of the definition of commercial training or coaching centre under Section 65(27) of the Finance Act, 1994 as this provision stood during the period of dispute.
15. Any certificate/diploma/degree issued in the name of ICFAI UNIVERSITY as a consortium or conglomerate of the ICFAI institutions cannot be held to have been issued by any of these institutions and also cannot be considered to be a certificate/diploma/degree recognized by law inasmuch as the so-called ICFAI UNIVERSITY has not been shown to be a legally constituted body authorized by law to issue the same. We have, thus, found great force in the submissions made by the learned Special Consultant. As regards other assessees, it has not been established that the degrees/certificates/diplomas issued by them to their students during the relevant period were recognized by law. Acceptance of any such degree/certificate/diploma by any varsity or other institution abroad cannot mean recognition thereof by Indian law. Thus a conspectus of facts presented to us would clearly disclose the real character of the assessees activity training or coaching for a consideration.
16. It was argued by he learned counsel that the ICFAI Universities, Dehradun and Tripura, were established under the respective State Acts and recognized by the UGC and should ipso facto be considered to be establishments authorized to issue certificates, degrees etc. Though it is true that these universities were, by UGCs notification, included in the list of private/self-financed universities under Section 2(f) of the UGC Act, there is no evidence of any of them having issued any certificate, diploma, degree or other educational qualification to the students from whom they collected fees and other charges during the period of dispute. It was not even shown that these so-called universities were authorized, by or under the State Acts, to issue certificates/ diplomas/degrees/other educational qualifications to the students. It was claimed that the certificates, degrees, etc. were issued to the students by these universities in the name of ICFAI UNIVERSITY. We have already rejected this claim as untenable, given the fact that what was called ICFAI UNIVERSITY was a legally unrecognized consortium or conglomerate of the ICFAI societies and universities, with no legal sanction to issue such certificates, degrees etc. Therefore, none of the so-called universities can claim immunity to levy of service tax under Section 65(105)(zzc) of the Finance Act, 1994 on the ground of being covered by the exclusion clause of the definition of commercial training or coaching centre under Section 65(27) of the Act.
17. For the reasons already stated, we hold that the assessees were providing to their students training or coaching for a consideration and would ipso facto fall within the ambit of commercial training or coaching centre envisaged in the explanation to Section 65(105)(zzc) of the Finance Act, 1994. As this explanation has retrospective effect from 01/07/2003, the activities undertaken by all the assessees during the periods of dispute would get covered within the meaning of the phrase training or coaching imparted for consideration occurring in the text of the explanation. In other words, the explanation to Section 65(105)(zzc) of the Act has very wide scope to encompass the activities of the assessees and render them exigible to service tax under Section 65(105)(zzc) of the Act. In the result, the assessees have no case on merits.
5.5. In view of the above decision of the Tribunal in ICFAI case, we are bound to follow the same as a matter of judicial discipline. The Apex Court in U.P. Gram Panchayat Adhikari Sangh & amp; others v. Dayal Ram Saroj & others, (2007) 2 SCC 138 and also in Maharashtra University of Health Sciences represented by Deputy Registrar v. Paryani Mukesh Jawaharlal & others, (2007) 10 SCC 201 ruled that Judicial discipline is self discipline. It is an inbuilt mechanism in the system itself. Judicial discipline demands that when the decision of a co-ordinate Bench of the same High Court is brought to the notice of the Bench, it is respected and is binding, subject of course, to the right to take a different view or to doubt the correctness of the decision and the permissible course then often is to refer the question or the case to a larger Bench. This is the minimum discipline and decorum to be maintained by judicial fraternity. Since the facts/issues involved are identical in the cases decided by the Bangalore bench and the case before us, the decision of the co-ordinate bench at Bangalore is binding on us and therefore, we can not take a contrary view.
6. In view of the above, we hold that the activity undertaken by the appellant falls within the definition of commercial coaching or training as defined in Section 65(26) and (27) of the Finance Act, 1994 and taxable service as defined in Section 65(105)(zzc) of the said Finance Act.
7. The next issue for consideration is whether the demand is hit by time-bar.
7.1. The show cause notice has been issued on 06/04/2009 demanding service tax for the period 01/10/2003 to 13/09/2008. The evidence available on record indicates that the matter had been enquired into by the Pune III Commissionerate and the department was aware of the activities undertaken by the appellant and the department was also of the view that the said activity does not come under the category of commercial or training or coaching. Further during the impugned period, there were a number of decisions by various benches of this Tribunal which also took the same view. However, in view of the amendment made in the Finance Act, 2010, the law underwent a change consequent to which the activity undertaken by the appellant became taxable. In such circumstances, there cannot be any suppression of facts on the part of the appellant and, therefore, the service tax demand has to be restricted to the normal period of limitation. In this case, since the notice had been issued on 06/04/2009, only the demand for the period October, 2007 to September, 2008 would fall within the normal period of limitation and, therefore, the demand of service tax has to be restricted to this period only.
8. As regards the claim of the appellant that they have charged a lumpsum amount including the charges for boarding and lodging and the same should be excluded while computing the tax liability merits consideration. However, it is for the appellant to lead evidence in this regard and substantiate their claim with regard to the amounts charged for boarding and loading expenses from the trainees. On submission of such evidences, the same shall be considered by the adjudicating authority and the demand quantified after giving abatement for the boarding and loading expenses.
9. To sum up:
(a) We hold that the services rendered by the appellant is exigible to service tax under commercial coaching or training service;
(b) However, service tax demand shall be restricted to the normal period of limitation inasmuch as the appellant was under the bona fide belief that they are not liable to service tax and evidences on record also support this fact;
(c) The appellant is eligible for abatement towards the amounts levied for boarding and lodging expenses charged from the trainees subject to submission of satisfactory evidences in this regard. On such evidences being furnished the service tax demand shall be re-computed and the appellant shall be liable to pay such recomputed service tax along with interest thereon.
10. The appeal is disposed of in the above terms.
(Pronounced in Court on 12/07/2013) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 2