2014 (3) TMI 697 - AT - Service Tax

Waiver of pre-deposit - Commercial coaching and training service - taxability of grant received from government for various programmes like PMRY, EAC, EDP, RDSY, MDS/DOP etc. - taxability of data digitization charges - assessee claims that they undertakes various training programmes under the welfare scheme of the Central Government and State Government - Held that - Since the appellant institute provides courses which result in the award of diplomas or degrees, as mentioned above, which are recognized under the law, the appellant institute would not be covered by the definition of commercial training or coaching centre and, therefore, we are of the prima facie view that any training programmes conducted or organized by the appellant would not attract service tax under Section 65 (105) (zzc) readwith Section 65 (27) ibid. Therefore, the service tax demand in respect of the appellant s alleged activities as commercial coaching or training centres is not sustainable. - Decided in favor of assessee. As regards business support service - data digitization charges - Held that - the activity of data digitization for various Government department would not be covered by the definition of support services of business or commerce as the data digitization service for various Government departments cannot be treated as the service in relation to business or commerce. Extended period of limitation - Held that - it would be absurd to allege that an institution run by the State Government and which is associated in implementation of various welfare schemes of the centre and State Government like Prime Minister Rozgar Youjana (PMRY), Prime Minister Employment Generation Programme (PMEGP), Mass Employment Generation through Science & Technology (MEGSET), Swayam Siddha project for upliftment and development of women in the rural areas, Rani Durgawati Swarozgar Yojana (RDSY), CM Gharelu Kamkaji Mahila Yojana (CMGKMY) etc. by organizing various training programmes to improve the skills of poorer sections of the society, of having evaded service tax by taking recourse to fraud, wilful misstatement, suppression of facts etc. On this point, the approach of the department is absurd and, therefore, neither longer limitation period would be invokable not penalty under Section 78 would be attracted. Therefore, in any case, bulk of the service tax demand would be time barred. - Stay granted.

Summary

Issues Involved:
1. Classification of training programs as "commercial coaching and training" service.
2. Taxability of grants received from the government.
3. Provision of business support services through data digitization.
4. Renting of immovable property service.
5. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
6. Invocation of extended period for demand due to alleged fraud, willful misstatement, and suppression of facts.

Detailed Analysis:

1. Classification of Training Programs as "Commercial Coaching and Training" Service:
The primary issue revolves around whether the appellant's training programs fall under the category of "commercial coaching and training" service as defined under Section 65(105)(zzc) read with Section 65(27) of the Finance Act, 1994. The appellant argued that their institution conducts courses in collaboration with Bhoj University, resulting in the award of degrees and diplomas recognized by law, such as Diploma in Computer Application (DCA), Bachelor of Computer Application (BCA), and Post Graduate Diploma in Computer Application (PGDCA). Since these courses lead to recognized qualifications, the institution should not be classified as a "commercial coaching or training centre." The Tribunal agreed with this view, citing that institutions issuing recognized certificates, diplomas, or degrees fall outside the purview of "commercial coaching or training centre" as per the Board's Circular No. 59/8/03 dated 20th June, 2003.

2. Taxability of Grants Received from the Government:
The department contended that the grants received by the appellant for various government welfare schemes should be treated as the gross amount charged for providing commercial coaching and training services, thereby attracting service tax. The appellant countered this by referencing the Tribunal's decision in Apitco Ltd. vs. CST, Hyderabad, which held that no taxable services are rendered by implementing government schemes using grants-in-aid received from the government. The Tribunal found merit in this argument, indicating that the appellant's activities under government schemes do not constitute taxable services.

3. Provision of Business Support Services through Data Digitization:
The department alleged that the appellant provided business support services through data digitization for various government departments. However, the Tribunal noted that the impugned order did not adequately explain how data digitization services fit within the definition of "support service to business or commerce" under Section 65(104C). The Tribunal's prima facie view was that data digitization for government departments does not qualify as a service related to business or commerce.

4. Renting of Immovable Property Service:
The appellant admitted to providing renting of immovable property services and paying the applicable service tax on these services. Therefore, this issue was not contested.

5. Imposition of Penalties under Sections 76, 77, and 78 of the Finance Act, 1994:
The Commissioner imposed penalties under Sections 76, 77, and 78, citing evasion of service tax through fraud, willful misstatement, and suppression of facts. The appellant argued against this, stating that being a state government-run institution involved in welfare schemes, there was no intent to evade taxes. The Tribunal found the department's approach to be absurd and concluded that the imposition of penalties and the invocation of the extended limitation period were not justified.

6. Invocation of Extended Period for Demand:
The department invoked the extended period for demand based on allegations of fraud, willful misstatement, and suppression of facts. The Tribunal disagreed, stating that the appellant's activities as a state government-run institution implementing welfare schemes did not support such allegations. Consequently, the bulk of the service tax demand was considered time-barred.

Conclusion:
The Tribunal concluded that the appellant's activities did not fall under the taxable category of "commercial coaching and training" service, and the grants received for government schemes were not taxable. The data digitization services for government departments were also not considered as business support services. The penalties and the invocation of the extended period for demand were deemed unjustified. The amount of Rs. 34,05,492/- already paid by the appellant was deemed sufficient for hearing the appeal, and the requirement for pre-deposit of the balance amount was waived. The stay application was disposed of accordingly.