2008 (10) TMI 59 - AT - Service Tax

Appellant, ICFAI contend that they are awarding Degrees/Diplomas recognized by law for educational purposes without any profit motive, so they are not rendering any service under the category of Commercial Coaching and Training assessee is registered under Societies Registration Act, and degrees conferred by them have recognition of Bar Council of India, Universities and various government bodies therefore, assessee is excluded from purview of Commercial training/coaching centre

Issues Involved:
1. Leviability of service tax on the services rendered by the appellants under the category of "Commercial Training and Coaching".
2. Recognition of degrees/diplomas awarded by the appellants.
3. Profit motive and non-profit status of the appellants.
4. Applicability of extended period of limitation for the demand of service tax.

Detailed Analysis:

1. Leviability of Service Tax on "Commercial Training and Coaching":
The revenue argued that the appellants were liable for service tax under the category of "Commercial Training and Coaching". The Commissioner held that the appellants were indeed rendering "Commercial training or coaching" and thus were liable for service tax. He rejected the appellants' contention that they were universities conferring degrees recognized by law and not commercial entities. The Commissioner emphasized that the profit motive was immaterial for the imposition of service tax.

2. Recognition of Degrees/Diplomas:
The appellants contended that they were awarding degrees/diplomas recognized by law, which should exclude them from the definition of "Commercial Training or Coaching Centre" under Section 65(26) and Section 65(27) of the Finance Act, 1994. They cited various recognitions from the University Grants Commission (UGC) and state governments. The Tribunal found that the appellants were indeed conferring degrees recognized by law, supported by UGC notifications and state government recognitions. Therefore, they were excluded from the purview of "Commercial Training or Coaching Centre".

3. Profit Motive and Non-Profit Status:
The appellants argued that they were non-profit organizations established solely for educational purposes and thus should not be considered commercial entities. They highlighted their registration under the Societies Registration Act, which is meant for non-commercial purposes. The Tribunal agreed, noting that the appellants' surplus funds were reinvested in the institution and not distributed as profits. The Tribunal referenced the Chennai Tribunal's decision in the case of Great Lakes Institute of Management Ltd., which held that non-profit educational institutions are not "commercial concerns" and thus not liable for service tax under "Commercial Training or Coaching".

4. Applicability of Extended Period of Limitation:
The Commissioner invoked the extended period of limitation, alleging suppression of facts by the appellants. The Tribunal found that the appellants had made full disclosures in their prospectuses and on their website, which were publicly available. Therefore, the Tribunal concluded that there was no suppression of facts with the intention to evade service tax, rendering the invocation of the extended period of limitation unjustified.

Conclusion:
The Tribunal concluded that:
1. The appellants were institutions imparting higher education and not "Commercial Training or Coaching Centres".
2. The degrees conferred by the appellants were recognized by law, excluding them from the service tax purview.
3. The appellants were non-profit organizations, and their activities did not constitute commercial training or coaching.
4. The extended period of limitation was not applicable due to the lack of suppression of facts.

The appeals were allowed with consequential relief, and the impugned order was set aside.

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