2012 (7) TMI 49 - AT - Service Tax

Waiver of pre-deposit - Consulting Engineers Service Held that - No question of levy of service tax from the appellant under the head Consulting Engineer s Service in respect of the activities like SET, LET, KGTE and CAB. Regarding demand of service tax under the head Commercial Training or Coaching Service - appellate Society has been working in the educational field under Governmental patronage - all the expenses, whether in the conduct of courses/training programs or in the award of diplomas/certificates, were met by the appellant out of the fees collected by them from the students/trainees. Entire cost of the courses was met out of the fees collected from students/trainees on a Commercial basis. Demand of service tax under the head Commercial Training or Coaching Service is sustainable on merits. - pre deposit ordered.

Issues:
1. Waiver of pre-deposit and stay of recovery of service tax demanded.
2. Applicability of service tax on activities conducted by a society registered under a specific Act.
3. Distinction between 'Consulting Engineer's Service' and 'Commercial Training or Coaching Service'.
4. Justification for levy of service tax on fees charged from students by the society.
5. Interpretation of Constitutional and statutory provisions in relation to educational activities.
6. Consideration of Board's Circular on 'Commercial Training or Coaching Centre'.
7. Time bar defense against a part of the service tax demand.
8. Public interest consideration in directing pre-deposit by the appellant.

Analysis:

1. The appellant sought waiver of pre-deposit and stay of recovery of service tax amounting to over Rs.1.89 crores along with penalties. A significant portion of the demand fell under 'Consulting Engineers' Service' and 'Commercial Training or Coaching Service', with a portion within the normal limitation period and the rest under the extended period.

2. The appellant, a society registered under a specific Act, contended that as an entity discharging governmental functions, they were not liable to pay service tax under the Finance Act, 1994. The activities conducted by the appellant were highlighted as educational in nature, approved and recognized by the Government of Kerala, with fees charged from students not falling under 'Consulting Engineer's Service'.

3. The distinction between 'Consulting Engineer's Service' and 'Commercial Training or Coaching Service' was crucial. The appellant argued that being in the educational sector, service tax was not applicable on activities recognized and funded by the Government, emphasizing the non-commercial nature of their operations.

4. The justification for levying service tax on fees charged from students was debated, with the appellant emphasizing the educational and non-profit motive behind their activities, supported by various Government Orders and Constitutional provisions recognizing their educational courses.

5. The interpretation of Constitutional and statutory provisions, including Article 13 and Article 162, was pivotal in determining the legality of the service tax demand on the educational activities conducted by the appellant and the certificates issued by them.

6. Reference was made to Board's Circular on 'Commercial Training or Coaching Centre' to argue against the levy of service tax on fees collected from students, presenting a case for exemption based on the nature of the appellant's activities.

7. The appellant raised a time bar defense against a part of the service tax demand, emphasizing the limitations on the period for raising such demands and seeking relief on that basis.

8. Considering the public interest aspect and the appellant's role in the priority sector of education under governmental patronage, the Tribunal directed a pre-deposit of Rs.15 lakhs, taking into account the estimated amount and the appellant's operational context in the educational field.

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