ST - Commercial Training & Coaching Services - Even after demand was confirmed and issue no longer remained res integra appellant did not remit tax demand which clearly shows that failure to remit ST was not because of any reasonable cause - s.80 benefit not available: CESTAT
By TIOL News Service
NEW DELHI, SEPT 28, 2015: SERVICE Tax demands of Rs.33,38,829/- and Rs.71,50,372/- were confirmed by the CST, Delhi in June 2008 along with interest and penalties on the ground that the appellant had not paid the service tax under "Commercial Training or Coaching Services" during the period 10.09.2004 to 09.03.2005.
Before the CESTAT, the appellant contended that the issue of liability to tax under "Commercial Training or Coaching Service" on the service rendered by a computer institute is no longer res integra and decided against the appellant by the Supreme Court in the case of Sunwin Technosolution P. Ltd. - 2010-TIOL-108-SC-ST.
The appellant also mentioned that it was only after addition of the following proviso - "Provided that nothing contained in this notification shall apply to the taxable services provided in relation to commercial training or coaching by a computer training institute" by amending notification 19/2005-ST w.e.f 16.06.2005 that they started paying service tax and prior to that date they were under the bona fide belief that the training being provided by them fell within the scope of vocational training and, therefore, was covered within the scope of vocational training institute and so they did not pay any service tax.
Adverting to the Uttarakhand High Court decision in Doon Institute of Information Tech P Ltd. - 2014-TIOL-429-HC-UKHAND-ST it is submitted that the judgement showed that there was a genuine ambiguity and confusion and, therefore, the extended period of limitation is not invokable making the demand of Rs.71,50,372/- totally time-barred. Furthermore, they are eligible for the benefit of Section 80 of the Finance Act, 1994.
The AR strenuously argued that there was suppression of facts and the appellant did not mention the value of the exempted service and exemption Notification in the ST-3 returns. It also did not provide the information timely, when asked, inspite of protracted correspondence and in respect of demand of Rs.71,50,372/- it provided the information after more than two years from the date it was sought.
The Bench observed that the issue is no longer res integra having been decided by the Supreme Court in the case of CCE Vs. Sunwin Technosolution P. Ltd. (supra) and as conceded the appellant has no case on merit.
The Tribunal further added -
Limitation
Demand of Rs.71,50,372/-
+ The fact that even CESTAT held the same view and the same view was held by Uttarakhand High Court in the case of Doon Institute of Information Technology (supra) shows that the view held by the appellant was not unreasonable or hallucinatory. In these circumstances, the contention of the appellant that it was actually under a bona fide belief that the impugned service tax was exempted during the period prior to the insertion of the proviso in Notification No.24/2004-ST vide Notification No.19/2005-ST, with effect from 16.06.2005 cannot be discarded as baseless or untenable.
+ Although there was delay on the part of the appellant in providing information which may have led to delay in issuance of Show Cause Notice, the appellant has claimed the delay was caused as data from large number of centres had to be compiled. There is nothing to even suggest that the appellant was deliberately causing delay to take advantage of time-bar. The fact that Delhi data was supplied without delay further supports the view that delay in providing information about outside-Delhi centres was not intentional to evade service tax. However, for invoking the extended period what is required to be established is that there was wilful mis-statement/suppression of facts. So, one has to distinguish between wilful non-supply of information and mere delay in furnishing the information. It has been repeatedly held by the judicial pronouncements that mere not telling is not tantamounting to suppression. As stated earlier, the appellant had good ground to have a reasonable belief that it was not liable to service tax prior to 16.06.2005. Thus, having regard to the overall circumstances, we are of the view that the allegation of wilful suppression of facts is not sustainable. Similar view was also been held by CESTAT in the case of Gargi Consultants Pvt. Ltd. Vs. Commissioner - 2013-TIOL-940-CESTAT-DEL.
+ As a consequence, the demand of Rs.71,50,372/- is hit by time bar and hence the same is not sustainable. Therefore, penalty related to the above demand is also not sustainable.
Demand of Rs.33,38,829/-
+ Entire demand pertains to the normal period of one year and hence is sustainable. Regarding the contention that the appellant deserves the benefit of Section 80 ibid, we find that Section 76 ibid does not require wilful mis-statement or suppression of facts on the part of the appellant. Section 80 ibid can be invoked only when there is reasonable cause for failure to remit service tax. We find that even after the demand was confirmed and the issue no longer remained res integra, the appellant did not remit the said demand. It clearly shows that failure to remit of service tax was not because of any reasonable cause because had it been so, the appellant would have remitted the service tax after the issue was settled in favour of Revenue by Supreme Court. Therefore, the appellant is not eligible or qualified for the benefit of Section 80 ibid.
Conclusion:
(i) The demand [Rs.71,50,372/-], interest and penalties relating to Show Cause Notice dated 24.08.2007 are set aside and;
(ii) The demand [Rs.33,38,829/-], interest and penalty (except penalty under Section 78 ibid) relating to Show Cause Notice dated 25.04.2006 are upheld.
The appeal was disposed of in above terms.
(See 2015-TIOL-2061-CESTAT-DEL)
