By TIOL News Service

MUMBAI, NOV 24, 2017: THE appellant NICMAR is engaged in promoting education, training, research, professionalism and skill formation at all levels of the construction and other allied industries; they conducted two year, one year full time post graduate courses at Pune, Goa and Hyderabad in fields such as Advance Construction Management, Project Engineering & Management, Real Estate & Urban Infrastructure Management, Infrastructure Finance, Development & Management, Quantity Surveying & Health Safety Environment & Management; that they also conducted two years post graduate, one year graduate and six months certificate programmes by way of distance education by correspondence; that apart from the above, NICMAR also conducted in service training programmes, either at NICMAR campus or on-site at the customer's site, which were of short duration and designed as per requirement of the customer.

They also carried out consultancy work which were more of research and problem based for various industries; that for conducting various programmes, NICMAR received consideration from students and issued them receipts; that they also provided hostel facility to the students along with mess facility which was optional for which separate receipts were prepared; that for in service programmes/research & consultancy NICMAR raised bills/invoices on the customers on which service tax amount was also charged from the customers; that after completion of the courses/programmes, NICMAR issued certificates duly signed by the Dean (Post Graduate Programme), Director General NICMAR & Chairman of the Board of Governors; that the income and expenditure account submitted by NICMAR for the period 2006-07 to 2010-11 and also on comparing with ST-3 returns of reconciliation, it was seen that NICMAR had short paid service tax on in service training programmes and research and consultancy activities; that further they had not paid service tax on income received on account of educational activities.

A SCN was issued and which culminated into an order confirming the tax demand with interest. However, the penalties were dropped by invoking Section 80 of the FA, 1994.

The second appellant M/s. MIT Institute of Design is imparting various graduate diploma and post graduate diploma courses in design management such as Graduate diploma in Interior Space & Equipment design, Graduate diploma in Animation Design, Post Graduate Diploma in Product Design etc. by charging fees for the courses from their students. It was found that M/s. MIT was neither registered with service tax department under the category of 'Commercial training or coaching service' nor had discharged the service tax liability in respect of taxable services provided by them during the period 01/04/2006 to 31/03/2011.

SCN was issued and the demand was confirmed with penalties and interest.

Both the appellants are before the CESTAT and made elaborate submissions with the support of case laws.

The AR made point-wise counter submissions and emphasized that the demands were sustainable along with penalties.

After considering the submissions made by both sides, the CESTAT reproduced the definition of 'Commercial Training or Coaching Centre' and observed that the issue involved is no longer res integra in view of the Larger Bench decision in the case of Great Lakes Institute of Management Ltd. - 2013-TIOL-1480-CESTAT-DEL-LB .

+ Inasmuch as except training or coaching falling in the exclusion category, all training or coaching falls under the definition of commercial training or coaching service, hence the same is taxable, the Bench held. The demands confirmed by the original authority were sustained.

Limitation:

+ The appellants have neither declared the receipt nor of consideration towards commercial training or coaching in their ST-3 Returns also not informed to the department otherwise. The appellant also did not make any effort to seek any clarification on such an important legal aspect. Therefore, there is a clear suppression of fact on the part of the appellant. The present case was detected only on the independent investigation carried out by the departmental officer.

+ After extracting the findings on "limitation" given by the adjudicating authority, the CESTAT concluded that the appellants had suppressed the fact as well as contravened the provisions with intent to evade payment of service tax and, therefore, the extended period was rightly invoked.

Natural Justice:

+ Nonetheless, in the matter of challenge made by the second appellant to the quantification of the demand and so also the admissibility of cum-tax price and CENVAT, which, the Bench opined, had not been considered by the adjudicating authority thus resulting in violation of the principles of natural justice, the matter was remanded to the Commissioner.

Penalties:

+ The penalties were also held to have been correctly imposed by the adjudicating authority, in the context of the second appellant, as the appellants had neither taken registration nor filed the ST-3 return.

Conclusion:

(i) Appeal of M/s. NICMAR is dismissed.

(ii) Appeal of M/s. MIT Institute of Design is disposed of by way of remand to the adjudicating authority for re-quantification of demand and corresponding penalties.

(See 2017-TIOL-4131-CESTAT-MUM)