ST - Coaching - in view of fact that appellant is set up by Govt and had belief that no tax is payable on basis of Tribunal decisions prior to retro amendment, same would prima facie establish that demand is time barred: HC
By TIOL News Service
MUMBAI, FEB 12, 2014: A total Service Tax demand of Rs. 5,34,65,199/- along with interest and penalty was confirmed by the CCE, Pune-III against the Insurance Academy on the ground that they were providing 'Commercial Training or Coaching' service. The demand also includes a few lakhs of ST demanded under the head BAS.
While seeking a Stay, the applicant submitted before the CESTAT that they had started MBA Course in 2003 with the approval from AICTE vide letter dt. 11.5.2004; the approval was renewed on year to year basis and hence the demand is not sustainable. It is further submitted that in view of the decision of Supreme Court in the case of Association of Management of Private Colleges Vs. All India Council for Technical Education & Others dt. 25.4.2013, to start management courses, approval from the AICTE is not required and, therefore,the demand on the ground that the conditions imposed by the All India Council for Technical Education to start courses are not fulfilled cannot survive. Further more, prior to insertion of Explanation to Section 65(105)(zzc) by the Finance Act 2010, which is effective from 1.7.2003, there are decisions by the Tribunal where it has been held that charitable institution are not liable for service tax. That the applicant is a charitable institution without any profit motive and, therefore, they were under the bonafide belief that applicant is not liable to service tax and so demand beyond the normal period is not sustainable.
The Bench while ordering a pre-deposit [ 2014-TIOL-32-CESTAT-MUM ] of 50% of the adjudged ST dues inter alia observed -
+ The applicant had not affiliated to any university till today. The courses are not recognized by any university or by the UGC. Therefore the activity undertaken by applicant comes under the scope of commercial training and coaching service.
+ Disclosure that the programme is affiliated and recognized by University of Pune is clearly suppression of facts. The fact on record by way of three letters written by the applicant to the Revenue whereby it has been disclosed that course is recognized by Pune University is clear suppression.
+ In respect of the demand on renting of immovable property the law has been amended with retrospective effect.
Not happy with this order of pre-deposit, the appellant filed an appeal before the Bombay High Court and submitted that the demand is substantially time barred and that they are facing financial hardships. It is also submitted that the appellant is a society registered under the Societies Act, 1860 and also registered under the Bombay Public Trusts Act, 1950; that the appellant has been formed by Government of India, Life Insurance Corporation, General Insurance Corporation and its four subsidiaries; that the appellant's objective is of rendering education in the field of insurance without profit motive and the appellant is exempted from payment of Income Tax under the Income Tax Act, 1961 since the income generated by its activities is considered to be charitable in nature and, therefore, the appellant harbored a bona fide belief that being an institution for rendering charitable purposes, they would not be liable for the payment of service tax.
It is also submitted that in respect of the main part of the demand of Rs. 4.80 crores, prior to the amendment to the said Act, 1994 by the Finance Act, 2010, which was made retrospective w.e.f. 1 July 2003, there were various decisions of the Tribunal viz. Great Lakes Institution of Management Ltd. (2008-TIOL-134-CESTAT-MAD), Indian School of Business (2009-TIOL-1679-CESTAT-BANG) and Institute of Insurance and Risk Management (2009-TIOL-2563-CESTAT-BANG) holding that institutions like the appellant which were not run for profit are not liable to service tax under the head "Commercial Training or Coaching" and, therefore, the demand beyond the normal period is not sustainable. Attention was drawn to Tribunal's order in Mahindra Ugine Steel Co. Ltd. v/s. Commissioner of Central Excise reported in 2013 TIOL-557-CESTAT-MUM wherein it is been held that when there is a bona fide belief on the part of the assessee in not paying service tax due the decision of the Tribunal, extended period of limitation is not sustainable. The appellant also pointed out that their cash and bank balance as on 31 March 2013 is only Rs. 27.85 lakhs and, therefore, the order of pre-deposit of 50% of the confirmed duty amount which comes to Rs. 2,67,37,597/- is unreasonable and, therefore, complete waiver of duty, penalty and interest was warranted.
The High Court observed –
"10. … We are not inclined to express any view on the merits of the controversy between the parties. The merits of the controversy would be examined in detail at the final hearing of the appellant's appeal. However, keeping in view the fact that the Tribunal itself had in Great Lakes Institute (Supra), Indian School of Business (supra) and in other cases has taken a view for the period prior to amendment in 2010 that institutions such as the appellant are not liable to pay service tax in respect of Commercial Training or Coaching as also the opinion of a consultant, the appellant were justified in having a belief that no service tax is payable on the above service. Therefore, taking in view the fact that the appellant is set up by the Government of India and a genuine understanding/belief that no service tax is payable by them on the basis of the decisions rendered by the Tribunal prior to the retrospective amendment to Commercial Training or Coaching Services would prima facie establish that the demand is substantially time barred. In view of the above, we are of the view that interests of justice would be served if the amount of pre-deposit on Commercial Training or Coaching Service is reduced from 50% to 25%, but this reduction will apply in respect of service tax payable for commercial training or coaching quantified at Rs. 4,80,63,080/- for the period between October 2006 to March 2012. So far as the other services are concerned, no submissions were made by the appellant before us or even before the Tribunal for dispensing with pre-deposit of demand. Therefore, the appellant shall deposit the entire amount of Rs. 54.01 lakhs attributable to the other services."
While directing the appellant to deposit the amounts within eight weeks, the High Court also granted interim stay against coercive recovery of the balance amount till the disposal of the appeal by the Tribunal.
The appeal was disposed of.
In passing : To accuse others for one's own misfortunes is a sign of want of education. To accuse oneself shows that one's education has begun. To accuse neither oneself nor others shows that one's education is complete - Epictetus.
(See 2014-TIOL-185-HC-MUM-ST)
