2010 (8) TMI 275 - AT - Service Tax

Commercial training or coaching service Stay order Assessee was a society registered under Societies Registration Act, 1860 and was also registered under Bombay Public Trust Act, 1962 which runs numerous educational institutes Demand of service tax on fees collected by assessee under category of Commercial training or coaching service - appellant not made out a case on merits against the demand of service tax - no plea of financial hardships - even in the absence of plea of financial hardships, pre-deposit partly waived

Issues Involved:
1. Waiver of pre-deposit and stay of recovery of service tax, interest, and penalty.
2. Classification of educational institutions as "commercial training or coaching centres".
3. Applicability of service tax on fees collected by educational institutions.
4. Invocation of the extended period of limitation for service tax demand.
5. Interpretation of relevant case law and statutory provisions.

Detailed Analysis:

1. Waiver of Pre-deposit and Stay of Recovery:
The appellant sought a waiver of pre-deposit and stay of recovery concerning service tax, interest, and penalty. The Tribunal noted that the appellant did not present a case of financial hardship, which is typically required to justify such waivers. Despite this, the Tribunal displayed leniency by not demanding full pre-deposit and instead directed the appellant to pre-deposit Rs. 2 crores within four weeks.

2. Classification of Educational Institutions as "Commercial Training or Coaching Centres":
The appellant, a registered society running multiple educational institutions, contested the classification of some of its institutions as "commercial training or coaching centres" under section 65(27) of the Finance Act, 1994. The Tribunal highlighted that the definition, as clarified by the Explanation to section 65(105)(zzc), includes any institution providing training or coaching for consideration, regardless of its registration status or profit motive. Consequently, the Tribunal found that the eight institutes in question fell within this definition and were liable for service tax.

3. Applicability of Service Tax on Fees Collected:
The appellant argued that the institutions issued recognized certificates/degrees and were educational institutions exempt from service tax. However, the Tribunal emphasized that the nature of the certificates or degrees and the educational status of the institutions did not exempt them from service tax if they provided training or coaching for consideration. The Tribunal relied on the Explanation to section 65(105)(zzc) and previous judicial interpretations to conclude that the activities of the institutions were taxable.

4. Invocation of the Extended Period of Limitation:
The department invoked the extended period of limitation under section 73(1)(a) of the Act, alleging that the appellant had suppressed material facts with the intent to evade tax. The Tribunal supported this invocation, noting the appellant's reluctance to provide necessary information despite repeated requests and the eventual disclosure of relevant details only in response to the show-cause notice. The Tribunal found that the appellant's conduct justified the extended period of limitation.

5. Interpretation of Relevant Case Law and Statutory Provisions:
The appellant cited various case laws, including the Tribunal's decision in Great Lakes Institute of Management v. CST, which was not followed by the Commissioner due to an ongoing appeal. The Tribunal acknowledged the Supreme Court's order in CST v. Great Lakes Institute of Management Ltd., which remanded the case for reconsideration in light of the statutory Explanation. The Tribunal also referenced the Kerala High Court's judgment in Malapuram District Parallel College Association v. Union of India, which supported a broad interpretation of "commercial training or coaching centre". The Tribunal concluded that the appellant's institutions were indeed covered by the statutory definitions and liable for service tax.

Conclusion:
The Tribunal directed the appellant to pre-deposit Rs. 2 crores and report compliance, rejecting the plea for a complete waiver. The Tribunal upheld the classification of the appellant's institutions as "commercial training or coaching centres" and confirmed their liability for service tax. The extended period of limitation was deemed applicable due to the appellant's suppression of material facts. The Tribunal's decision was grounded in statutory provisions and judicial precedents, emphasizing the broad scope of taxable services under the Finance Act, 1994.

← Previous Next →