By TIOL News Service

NEW DELHI, MAR 21, 2018: THIS is a Revenue appeal against the order dated 24.01.2012 passed by the Commissioner of Service Tax, Delhi dropping most of the Service Tax demand raised on the respondent and confirming a tax amount of Rs. 8,08,000/- along with interest and penalty.

Intelligence was received by DGCEI that the respondent was not paying Service Tax on the fees collected for the various academic courses like MBA, BBA, FIIPM, AFIIPM and also various training courses being organized by them.

The academic courses conducted by the respondent were not approved by All India Council of Technical Education (AICTE) which is under Ministry of Human Resources Development. The Institute is also not affiliated to any University or recognized by UGC or any State or Central Act and they were not following any of the regulations of AICTE, UGC etc. These facts have been declared by respondent in their prospectus as well as advertisements routinely released in newspaper.

As the respondent was not registered centrally under the provisions of FA, 1994,SCNs demanding Service Tax were made answerable to various Jurisdictional Service Tax Authorities and later a common adjudicating authority was appointed who passed the impugned order.

The findings of the Adjudicating Authority are summarized below -

i. The Adjudicating Authority referred to the legal provisions i.e. Section 65 (105) (zzc) of the Act and found that some of the courses conducted by the IIPM in the form of purely training programs intended for providing skill or knowledge in the respective fields are covered within the above statutory definitions and are liable to payment of Service Tax. Accordingly, he has confirmed the demand of Service Tax to the extent of Rs. 8,08,000/-.

ii. He has considered the training programs leading to the award of Certificate such as AFIIPM, FIIPM of IIPM as well as MBA and BBA degrees of IMI, Europe as academic programs. After referring to definitions of the Commercial Training or Coaching under Section 65 (26) of the Act, he has concluded that such programs are by way of academic education and are distinct from the ambit of Commercial Training or Coaching. Accordingly, he has dropped the demand of Service Tax on the fees collected by IIPM towards such courses.

After considering the elaborate submissions made by both sides, the Bench noted that the issues pertaining to interpretation of 'Commercial training or Coaching', were examined by the Larger Bench in the case of Great Lakes Institute of Management Ltd.   -   2013-TIOL-1480-CESTAT-DEL-LB [Order dated 20.09.2013] and the reference was answered thus –

"(i) The taxable service of "commercial training or coaching" occurs when any institute or establishment is engaged in the activity of imparting skill, knowledge or lessons on any subject or field (excluding sports), irrespective of whether such imparting of skill, knowledge or lessons is in respect of particular discipline or a broad spectrum of disciplines/academic areas; irrespective of the nomenclature or description of the institute or establishment, as a coaching or training centre or an educational institution; regardless of whether an institute or establishment is incorporated by or registered under any law; and irrespective of distinctions on the basis of curriculum, course content, teaching methodology, course duration or otherwise. 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."

Applying the ratio laid down to the facts of the present case, the Bench concluded that there was no scope to exclude "Academic Courses", conducted by respondent (IIPM) from the purview of Service tax levy.

Nonetheless, the Bench, in the matter of limitation observed –

“15. It is on record that IIPM neither took registration nor registered themselves with Department up to 22/07/2005. On the said day the registration was taken only at Bangalore even though IIPM has Institutes in many other places. They also did not pay any Service Tax or file ST-3 Returns even though the tax on Commercial Training or Coaching Centre was levied w.e.f. 01/07/2003. Since they have failed to obtain registration or file returns or even intimate the Department of the activities undertaken, the Department is fully justified in issuing show cause notice to demand of Service Tax along with interest by invoking the extended period of time."

Concluding that the Adjudicating Authority had erred in dropping the demand of the Service Tax, the impugned order, to the extent of dropping of Service Tax demand was set aside and the entire demand of Service Tax raised in the show cause notice dated 10/02/2006 was upheld. Penalties were also held payable u/s 77 and 78 of the FA, 1994 along with interest u/s 75 of the FA, 1994.

The Revenue appeal was allowed as above.

(See 2018-TIOL-900-CESTAT-DEL)