2011 (3) TMI 410 - AT - Service Tax

Demand - The institute collects fees from the companies for participation and for recruitment of the candidates separately - Manpower Recruitment Agency - Board vide Circular No. 86/4/2006-ST dated 1.11.2006 has clarified that the institutes like IITs or IIMs were not liable to pay service tax for the period prior to 1.5.2006 - It is undisputed that the definition of manpower recruitment or supply agency prior to 1.5.2006, was indicating any commercial concern engaged in providing any service, directly or indirectly, in any manner for recruitment of supply of manpower, temporarily or otherwise, to a client - However with effect from 1.5.2006, the words commercial concern have been replaced by the words any person . This would indicate that the Government is of the view that prior to 1.5.2006, services rendered by the institutes which are not commercial concern would not fall under the service tax net - Appeal is disposed of

Summary

Issues:
1. Whether the activity of an educational institute facilitating campus recruitment programs falls under the category of "Manpower Recruitment Agency" for service tax purposes.
2. Whether the extended period of five years for demanding service tax is legally tenable.

Analysis:
1. The case involved a dispute regarding the service tax liability of an educational institute conducting Campus Recruitment Programmes. The Revenue contended that the institute's activity of facilitating recruitment for business organizations falls under the category of "Manpower Recruitment Agency." The Commissioner (Appeals) ruled in favor of the institute, stating that the institute, being primarily engaged in imparting education, does not qualify as a commercial concern for service tax purposes. The Commissioner also highlighted that the institute's registration under "Management Consultancy Service" does not necessitate registration under "Manpower Recruitment Agency." The Tribunal upheld the Commissioner's decision, emphasizing that prior to 1.5.2006, services provided by institutes not considered commercial concerns were not taxable under service tax laws. The Tribunal dismissed the Revenue's appeal, affirming the legality of the Commissioner's order.

2. The second issue revolved around the legality of invoking the extended period of five years for demanding service tax. The Revenue argued that the institute's failure to register, pay appropriate service tax, and file returns for the service provided constituted an evasion of service tax. The Revenue contended that the extended period for demanding service tax was justified under Section 73(1) of the Finance Act, 1994. However, the Tribunal disagreed with the Revenue's stance, stating that the institute's activities did not warrant the application of the extended period for demanding service tax. The Tribunal found that the institute's failure to register and pay service tax was not due to fraud or suppression of facts, thus rendering the demand for service tax for the extended period of five years untenable.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, ruling that the educational institute's facilitation of campus recruitment programs did not qualify as a "Manpower Recruitment Agency" for service tax purposes. Additionally, the Tribunal rejected the Revenue's argument for invoking the extended period for demanding service tax, finding that the institute's actions did not amount to evasion warranting such an extended period.