Custom, Excise & Service Tax Tribunal
Shri Ram Centre For Industrial ... vs C.C.E. Delhi Iv on 12 October, 2023
1 ST/217/2012
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
~~~~~
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 217 Of 2012
[Arising out of OIA No. 253//ST/DLH/2011 dated 28.10.2011 passed by the
Commissioner (Appeals) of Central Excise, Delhi-I]
Shri Ram Centre for Industrial
Relations and Human Resources : Appellant (s)
4, Safdar Hasmi Marg, New Delhi-110001
Vs
CCE-Delhi-IV : Respondent (s)
Block D, CGO Complex NH-IV, Faridabad, Haryana APPEARANCE:
Shri Aman Pratap Singh, Advocate, Shri Tushar Mittal, CA for the Appellant Shri Raman Mittal, DR for the Respondent CORAM : HON'BLE Mr. S. S. GARG, MEMBER (JUDICIAL) HON'BLE Mr. P. ANJANI KUMAR, MEMBER (TECHNICAL) ORDER No. A/60490/2023 Date of Hearing:27.06.2023 Date of Decision:12.10.2023 Per : S. S. GARG The present appeal is directed against the impugned order dated 28.10.2011 passed by the Commissioner (Appeals) of Central Excise, Delhi-I whereby the Ld. Commissioner has confirmed the demand of Service Tax of Rs. 6,90,989/- along with interest and equal penalty under Section 76 of the Finance Act, 1994 and Rs. 5,000/- under Section 77 of the Finance Act, 1994.
2. Briefly the facts of the present case are that the appellant is a society incorporated vide its Memorandum of Association with the objects including imparting of education in management. It is a non- profit organisation and does not have any profit motive. It is registered under Societies Registration Act, 1860 w.e.f. 26.08.1963 as 2 ST/217/2012 well as under Section 12 A(a) of the Income Tax Act, 1961. The Appellant was operating as an institution recognised under Section 80 G of the Income Tax Act. 1961 during the relevant period and the certificate to that effect has been annexed. To achieve its objective, Appellant got recognition from Punjab Technical University vide letter dated 11.08.2006 to undertake MBA programmes and to issue degree of PTU. Accordingly, appellant imparted education in Management subjects for MBA programme through its Shri Ram Institute of Management during the period 01.07.2003 to 31.03.2006 (relevant period). The fees received by Appellant from students during relevant period were not subject to levy of service tax as during the relevant period, positive tax regime was in force and only provision of service by way of Commercial training or coaching were brought under the tax net vide Notification No. 07/2003 dated 20.06.2003 w.e.f. 01.07.2003.
2.1 A Show cause notice dated 23.10.2008 was issued to the appellant proposing demand of Service tax of Rs. 7,59,270/- under Section 74, interest under Section 75, Penalty under Section 76 and 77 on the premise that the services provided by the Appellant falls within the scope of the Commercial training or coaching services and are exigible to service tax.
2.2 The Appellant filed a detailed reply to the Show Cause Notice on 01.12.2008 but in the meantime the appellant deposited to entire amount of tax in three instalments.
2.3 After following due process, the Additional Commissioner vide order dated 10.12.2009 has confirmed the demand against the appellant along with interest and penalty.
3 ST/217/2012 2.4 Aggrieved by the said order, the appellant filed appeal before the Ld. Commissioner (Appeals) and the Ld. Commissioner vide impugned order modified the tax demand on the ground on cum tax benefit to Rs. 6,90,989/- and partly allowed the appeal. 2.5 Aggrieved by the said order, the appellant is before us.
3. Ld. Counsel appearing on behalf of the appellant submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submits that the appellant was imparting education and not coaching/ training services. Further, 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. 3.1 He further submitted that since the Appellant is registered under Societies Registration Act for educational purposes and was a non- profit company; its activities could not be considered as "commercial". He further submitted that the demand of Service tax confirmed in the impugned order by invoking the extended period of limitation, is not sustainable.
3.2 He further submitted that the appellant being non-profit organisation and also registered under Section 12A(a) of the Income Tax Act, 1961, are primarily engaged in charitable activities without any profit motive, and therefore, the question of evasion of tax does not arise. He also submitted that the phrase 'Commercial Training or Coaching' has been defined in Section 65(26) of Finance Act, 1994 to mean any training or coaching provided by a commercial training or coaching centre. The term 'Commercial Training or Coaching centre' is further defined in Section 65(27). The taxable entry under such 4 ST/217/2012 category of service has been defined in Section 65(105)(zzc) to mean service provided or to be provided to any person, by a commercial training or coaching centre in relation to commercial training or coaching. He also submits that the usage of the word 'commercial' in the above definition clause created confusion on the issue, whether non-commercial institutions having no motive to earn profit should also fall under the taxable entry or not. To bring about clarity in the definition of commercial training or coaching centre, an Explanation was inserted by the Finance Act, 2010 on dated 08.05.2010. 3.3 Ld. Counsel further submitted that during the relevant period, in absence of any clarification, the Appellant was under the bonafide belief that no service tax is payable on the impugned services. For this submission, he relied upon the following decisions:-
M/s Chanakya Mandal Pariwar vs. Commissioner of C. Ex., Pune-l; 2021 (44) G.S.T.L. 280 (Tri. - Mumbai) Pr. Commr. of Service Tax v. Shree Chanakya Education Society; 2018 (362) E.L.T. 741 (Bom.) Sri Chaitanya Educational Committee (SCEC) vs. C.C., C. E. & S.T., Guntur;
2016 (41) S.T.R. 241 (Tri. - Bang.) 12IT Pvt. Ltd. vs. Commissioner of Central Excise, Mumbai; 2014 (34) S.T.R. 214 (Tri. - Mumbai) National Institute of Bank Management vs. Commr. of C. Ex., Pune-III;
2013 (32) S.T.R. 340 (Tri. - Mumbai) 3.4 Ld. Counsel further submits that demand of interest upheld in the impugned order is liable to be set-aside because the demand of interest can only be sustained when demand of tax itself is confirmed. 3.5 As far as the imposition of penalty is concerned, the Ld. Counsel submits that the penalty cannot be imposed in cases involving interpretation of law as the appellant was under a bonafide belief that the service tax on the impugned transactions was not payable.
5 ST/217/2012
4. On the other hand, the Ld. DR reiterated the findings in the impugned order and filed written submissions. He further submitted that the appellant was providing taxable service of Commercial Training and Coaching Service and was not paying tax to the Government exchequer. Had the enquiry against the said institute been not conducted by department, the service tax payable by the appellant could have escaped. The appellant himself has produced an affiliation with PTU which was effective w.e.f 2006-2007 but the period involved in the instant appeal is 2003 to 2006, which clearly shows that the appellant was not providing education during the relevant period but was proving taxable service on which service tax was payable. In support of his submission, he relied upon the decision of the Larger Bench of the Tribunal in the case of M/s Sri Chaitanya Educational Committee vs. Commissioner of Customs, Central Excise & Service Tax, Guntur 2019 (29) GSTL 712 (Tri.-LB). He further submits that the appellant neither took registration of service tax nor informed the department, and therefore, the extended period was rightly invoked. For this submissions, he relied upon the decision in the case of Bharat Roll Industry Pvt. Ltd. vs. Commissioner of Central Excise, Haldia 2008 (229) ELT 107 (Tri.-Kolkata).
5. After considering the submissions of both the parties and perusal of material on record, we find from the documents produced by the appellant on record that the appellant is registered under Society Registration Act, 1860 w.e.f. 26.08.1963 as well as under
Section 12A(a) of the Income Tax Act, 1961. It is also a fact that the Appellant was operating as an institution recognised under Section 80 G of the Income Tax Act. 1961 during the relevant period.
6 ST/217/2012 5.1 Further, we find that during the relevant period 2003-2004 to 2005-2006 there were contrary decisions regarding whether the service tax is leviable on the Commercial Training and Coaching Service provided by non-profit and charitable institutions. Thereafter, the Tribunal by majority decision in the case of Sri Chaitanya Education Committee cited (supra) has held that the service tax is leviable in respect of coaching provided by the appellant through junior colleges under its management or under the management of others also. The majority view held that the extended period is not invokable and the demand is limited to the normal period of limitation. 5.2 Further, we find that the Larger Bench of the Tribunal in the case of Sri Chaitanya Educational Committee cited (supra) wherein the Larger Bench in paras 53 and 54 has held as under:-
"53. In our opinion, for an institute to claim that it is not a 'commercial training or coaching centre', it must also be issuing certificates recognized by law for the time being in force. The appellant does not issue the certificates. In such circumstances, it is clearly a 'commercial training or coaching centre' providing 'commercial training or coaching'. It is providing a taxable service. All decisions of the Tribunal taking a contrary view stand overruled.
54. Accordingly, the reference is answered as follows :
"The decision of the Tribunal in Sri Chaitanya Educational Committee lays down the correct law."
5.3 In view of the Larger Bench decision in the case of Sri Chaitanya Educational Committee cited (supra) which approved the decision of Division Bench of the Tribunal in the case of Sri Chaitanya Educational Committee cited (supra) decided by the Tribunal by majority decision, we hold that the appellant is liable to pay service tax under Commercial training and coaching Centre Service as provided under Section 65 (26) of the Finance Act, 1994.
7 ST/217/2012 5.4 Now coming to the argument of the Ld. Counsel that the entire demand is barred by limitation, we find that the commercial training and coaching service in service tax net was introduced in 2003 and the appellant had a bonafide belief that their activity is not covered within the definition of Commercial Training and Coaching Service. 5.5 Further, we find that during the relevant time, there were decisions in favour of the appellant and an explanation was inserted under Section 65 (105) (zzc) of Finance Act, 1994 with retrospective amendment by Finance Act, 2010 vide which it was clarified that Commercial Training and Coaching Centre shall include a trust or a society with or without profit motive. In these circumstances, it cannot be said that there was a suppression of facts with intend to evade payment of tax.
5.6 Further, a difference of opinion on the leviability of the service tax in the case of Sri Chaitanya Educational Committee would also support the bonafide view of the appellant regarding the leviability of the tax.
5.7 Further, the decisions relied upon by the appellant cited (supra) clearly holds that the extended period of limitation cannot be invoked under these facts and circumstances.
5.8 The majority decision of the Tribunal in the case of Principal Commissioner of Service Tax vs. Shree Chanakya Education Society cited (supra) was appealed against by the Revenue in the Hon'ble High Court of Bombay which vide its order reported in 2018 (362) ELT 741 (Bom.) held in para 7 as under:-
" 7. We find that it is undisputed before us that the issue of a charitable institution rendering the service of Commercial Training and Coaching being chargeable to service tax under the Act was a debatable issue before the decision 8 ST/217/2012 in Sri Chaitanya Educational Committee (supra) was rendered on 1st June 2015. In fact reference of the above issue to a third member in Sri Chaitanya Educational Committee (supra) itself evidences that fact that prior to its decision, a party could have a bona fide belief that a charitable institution rendering the service of Commercial Training and Coaching is not chargeable to service tax under the Act. Thus, no fault can be found in the present facts with the impugned order of the Tribunal restricting the demand only to that extent of normal period of limitation and deletion of equivalent penalty under Section 78 of the Act. This as the Tribunal found on facts and on the basis of the law that the respondent was under a bona fide belief that no service tax is payable by a charitable institution rendering the service of Commercial Training and Coaching."
5.9 Further, the Tribunal in the case of British Airways vs. Commissioner of Central Excise (Adjn) Delhi - 2014 (36) STR 598 (Tri.-Del.) has held in Para 52 as under:-
"52. I am also of the view that the demand, having been raised by invoking the longer period of limitation is hit by the provisions of Section 11A of the Act. My ld. Brother Shri D.N. Panda in his proposed order has held that inasmuch as the appellant was not registered under the Act and failed to file return periodically their plea of bona fide belief does not arise and there was a deliberate breach of law to cause evasion. I am afraid that I do not find myself in agreement with the said observations made by my brother. If non-registration and non-filing of returns is the criteria for rejecting the appellant's plea of bona fide belief and holding against them, the plea of limitation would not be available to any assessee, inasmuch as the Service Tax liabilities would arise only in those cases where the appellants are not registered and are not filing the returns.
Coming to the bona fide belief of the assessee, there are number of factors which are required to be considered. The issue involved is a complicated issue of legal interpretation and cannot be held to be a settled law. The fact that there is difference of opinion between the two Members of the original Bench, itself establishes the fact that the legal issue is complex issue requiring legal expertise to settle the same. In such a scenario, if an assessee entertained a bona fide belief that inasmuch as the service is not being received by him, and he is not required to pay any tax, he cannot be blamed for the same. Further the fact that the entire exercise was Revenue neutral is also one of the factors to be considered in 9 ST/217/2012 support of the appellant's plea of bona fide belief. If the appellant would have paid the said tax, they would have been entitled to the credit of the same and would have been in a position to use the same in discharge of their admitted Service Tax liabilities. In such a scenario, there are plethora of judgments by various Courts that no mala fide can be attributed to an assessee so as to invoke the longer period of limitation. Accordingly, I agree with the ld. Member (Technical) that the demand is barred by limitation and is required to be set aside along with setting aside of penalty."
5.10 By following the ratios of the above said decisions, we hold that on merit the issue is against the appellant but in the present case, the entire demand is barred by limitation and we hold so.
6. In view of this, we set-aside the demand being barred by limitation by disposing the appeal with consequential relief, if any, as per law.
(Pronounced on 12.10.2023) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) G.Y.