2015 (6) TMI 627 - AT - Service Tax

Demand of service tax - Commercial training or coaching services - Invocation of extended period of limitation - whether the Service Tax is leviable in respect of the coaching provided by the Appellant through their junior colleges under its management or under the management of others - Difference of opinion - Majority order - Held that - Students appear for the intermediate examinations under the hall ticket issued by the respective colleges and the students after passing examination, are awarded a certificate which issued by intermediate board education duly endorsing stamp of respective college. However, the students of said colleges underwent coaching in different campus of the Appellant on payment of fee ranging from ₹ 8,000.00 to ₹ 75,000.00 which was accepted by Shri K.V. Subba Rao, Accounts Manager of the Appellant in his statement dt.28.02.2006. He also confirmed that the amount was collected from the different students of different colleges who underwent coaching of JE-IIT, EAMCET, etc in different branches of the Appellant Society situated in Andhra Pradesh and other places of India. It is clearly evident from the facts of the case that the coaching classes were conducted in different campuses, separate fees and totally independent and had no nexus with the intermediate courses of the colleges Appellants were aware of their tax liability as they have registered in Kota, Rajasthan and paid Service Tax. There is no logic or rational on different stand taken by the Appellant in Kota and Andhra Pradesh. The Appellants are not entitled to a bonafide belief that they are not liable to pay Service Tax. - the finding of the Adjudicating Authority that the Appellant tried to mislead the department by stating that their committee is non-commercial nature with an intention to evade payment of tax, cannot be accepted. It cannot be said that there was a suppression of facts with intent to evade payment tax. In any event, the difference of opinion on the leviability of Service Tax in the present case would also support the bonafide belief of the Appellant of the leviability of tax. - demand of tax is barred by limitation. - However, penalty u/s 77 is upheld - Decided partly in favour of assessee.

Issues Involved:
1. Whether service tax is leviable on coaching provided by the appellant through junior colleges under its management or under the management of others.
2. Whether the extended period of limitation is invocable for demanding service tax.
3. Whether penalties under Sections 76, 77, and 78 of the Finance Act, 1994 are applicable.

Issue-wise Detailed Analysis:

1. Service Tax on Coaching Provided by Junior Colleges:
The appellants, a not-for-profit society, argued that their activities should not be taxable as they provide formal education recognized by the Andhra Pradesh Intermediate Board. They introduced optional courses integrated into the intermediate syllabus to prepare students for competitive exams. The respondent contended that these activities fall under "Commercial training or coaching" services as defined under Section 65(26) of the Finance Act, 1994.

The Tribunal examined the definition of "Commercial training or coaching centre" and concluded that the coaching provided by the appellant is not covered by the exclusion clause, as the coaching for competitive exams was optional, conducted separately, and charged extra fees. The Tribunal held that the coaching classes are distinct from the formal intermediate courses and thus are taxable.

2. Extended Period of Limitation:
The appellants claimed they had a bona fide belief that they were not liable to pay service tax and had cooperated with the department. They argued that the extended period of limitation should not be invoked. The Tribunal noted that the appellants were aware of their liability, as evidenced by their registration and payment of service tax in Kota, Rajasthan. The Tribunal found no justification for different stands taken in different states and concluded that the extended period of limitation is invocable due to suppression of facts with intent to evade tax.

3. Penalties under Sections 76, 77, and 78:
The Tribunal upheld the penalty under Section 77 for non-compliance with statutory provisions. However, it waived penalties under Sections 76 and 78, invoking Section 80 of the Finance Act, 1994, which provides for waiver of penalties if there is reasonable cause for failure to comply with the provisions. The Tribunal recognized the appellants' continuous opposition to the levy of service tax and the absence of evidence of deliberate defiance or misrepresentation.

Separate Judgments:
- One member dissented, arguing that the coaching provided by junior colleges should not be taxable as it is part of formal education recognized by law. They also contended that the extended period of limitation should not be invoked and penalties should be set aside.
- The third member agreed with the majority on the first and third issues but sided with the dissenting member on the second issue, concluding that the extended period of limitation is not invocable.

Final Decision:
- Service tax is leviable on coaching provided by the appellant through junior colleges.
- The extended period of limitation is not invocable, limiting the demand to the normal period.
- Only the penalty under Section 77 is upheld.

(Order pronounced in open court on 1.6.2015)

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