ST - Programmes designed and conducted for participants to gain ‘freedom’ & to achieve ‘peace of mind and power within’ - Taxable under category of ‘Commercial Training or Coaching Centre' : CESTAT
By TIOL News Service
MUMBAI, APR 17, 2014: THE appellant is registered u/s 25 of the Companies Act and is engaged in imparting education by conducting courses for personality development and orientation programme. The programmes conducted are towards enhancement of personal skills of the participants inspiring them to be more effective, aesthetic values and practical at the same time in all realms of life.
One of the courses conducted which is called “The Landmark Forum” takes place over three consecutive days and an evening session. The participants in such forums are from college going students to senior citizens. The programme is conducted in a group study with the instructors who are skilled, perspective, effective and well trained. The programme also helps in enhancement of skill of the participants in respect of performance and effectiveness, to which they conduct, the growth of their personal productivity.
Nonetheless, for these courses the participants are required to pay fees.
The jurisdictional authorities were of the view that the appellants were engaged in providing ‘commercial training and coaching services' which have been brought under the net of Service Tax w.e.f. 1.7.2003.
So, demand notices seeking recovery of Service Tax were issued to the appellant for the period 1.1.2006 to 31.12.2006 [Rs.1,04,83,664/-]and for the period 1.1.2008 to 31.3.2008 [Rs.21,41,124/-].
The adjudicating authority oriented his energies towards confirmation of the demands and imposing penalties and interest.
And so the appellant is before the CESTAT and inter alia submits -
+ The programmes conducted are designed for participants to gain “freedom”, to achieve “peace of mind and power within”. On the other hand, commercial training or coaching centre trains students to achieve scores or marks that are relative and the performance of the students can be measured and compared.
+ That the appellant does not prepare students or participants for the particular exam and the activity of the appellant being in the nature of discourse and orientation programme for improvement of personality and is somewhat similar to the discourse orientation by the Yoga or Spiritual teachers.
+ Benefit of cum-tax for calculation of the tax levied should have been extended.
+ Presuming that the liability of the appellant has arisen due to amendment in the Finance Act, 1994 vide Finance Bill, 2010 with retrospective effect the penal liability is required to be set aside.
+ that the issue involved in the appellant's case is purely a question of interpretation of law and during the period of dispute, there are several decisions of the Tribunal holding that non-commercial institutes like the appellant providing training or coaching were not taxable. Great Lakes Institute of Management Vs. Commissioner of Service Tax - 2008-TIOL-134-CESTAT-MAD, ICFAI Vs. Commissioner of Central Excise - 2009-TIOL-32-CESTAT-DEL .
The Revenue representative derived support from the decision in Ajai Kumar Agnihotri Vs. Commissioner of Central Excise, Kanpur (Tri-Del) 2013-TIOL-1049-CESTAT-DEL wherein it is held that where the ruling in support of the appellants in identical facts were pronounced after the end of the period in dispute, it cannot be said that the appellant had a bona fide belief in view of the ruling pronounced subsequently. Referring to the LB decision in Great Lakes Institute Management Ltd. & Others 2013-TIOL-1480-CESTAT-DEL-LB, it was submitted that activities of imparting skills, knowledge, lessons on any subject or field or when provided by any entity, institution or establishment which is excluded by a specific and legislated exclusionary clause would alone be outside the fold of the taxable activity.
The Bench in a terse sentence concluded - “…that the activity of the appellant is liable to tax under the provisions of the Finance Act, 1994 as section 65 (27) of the Act provides imparting of coaching or training in any skill or knowledge or lessons on any subject or field other than sports. Thus, the activity of the appellant is squarely covered under the category of ‘commercial coaching or training' and liable to Service Tax .”
The Benefit of cum-tax calculation was also allowed.
In the matter of penalties, the Bench observed -
“…, we find that the issue involved interpretation of statute and the levy was newly imposed. Secondly the appellant is not engaged in providing commercial coaching as ordinarily understood i.e. coaching for particular exams or training in the subject like Engineering or Management etc. Further, the appellant being a non-profit organization established under Section 25 of the Companies Act, had reasonable belief that they are not a commercial institute or training centre, which issue was clarified by the Finance Act, 2010 by insertion of explanation with retrospective effect. It is also relevant that several decisions were rendered in favour of the assessees under similar facts and circumstances of being non-profit or charitable in nature. Such cases were challenged before the Apex Court. The Apex Court, during the pendency of the appeals in view of the amendment by the Finance Act, 2010 remanded the appeals for fresh adjudication in view of the amendment. Thus, it is found that there is no contumacious conduct or active disregard of the provisions of law in complying with the provisions of the Act or Rules. Thus, penalties imposed under Sections 76, 77 and 78 are set aside, there being reasoned cause for non-compliance and non-payment of tax as provided under Section 80 of the Act.”
The appeals were partly allowed.
(See 2014-TIOL-581-CESTAT-MUM)
