2008 (8) TMI 194 - AT - Service Tax

Appellant providing post-experience management education - Since research activities of appellant are related to social science, they can be called as a science or technology institution therefore would not come in the ambit of Scientific or Technical Consultancy - As long as the institution is registered under the Societies Act and also exempted from income-tax, it cannot be considered as a commercial centre - service tax not leviable under the category of Commercial Coaching or Training

Issues Involved
1. Liability of the appellant to pay service tax under 'Commercial Training or Coaching Service.'
2. Liability of the appellant to pay service tax under 'Scientific or Technical Consultancy' service.
3. Applicability of the longer period for the demand of service tax.
4. Relevance of the appellant's status as a non-profit organization and exemption from income tax.

Detailed Analysis

1. Liability under 'Commercial Training or Coaching Service'
The Revenue contended that the appellant, Administrative Staff College of India (ASCI), did not pay service tax on services rendered under 'Commercial Training or Coaching Service.' The Adjudicating Authority confirmed the demand of Rs. 1,59,86,170 along with interest and penalties under sections 75, 76, and 78 of the Finance Act. The Authority argued that the services provided by ASCI amounted to 'Commercial Training or Coaching,' and the institution did not fall under the specific exclusion in the definition of 'Commercial Coaching or Training Centre.'

The appellant argued that they are a non-profit organization registered under the Societies Registration Act and exempt from income tax, thus not liable for service tax. However, the Commissioner rejected this argument, stating that the exemption from income tax does not affect their liability to service tax. The Commissioner emphasized that the term 'commercial' in 'Commercial Training or Coaching Centre' qualifies the center and not the activity itself.

Upon review, the Tribunal found that ASCI conducts various professional programs for individuals already in service, which cannot be equated with commercial coaching centers like tutorial colleges. The Tribunal held that the significance of the word 'commercial' indicates that the institution, being a non-profit entity registered under the Societies Registration Act and exempt from income tax, cannot be considered a commercial center. Therefore, no service tax is leviable under 'Commercial Coaching or Training.'

2. Liability under 'Scientific or Technical Consultancy'
The Revenue also argued that ASCI provided services under 'Scientific or Technical Consultancy,' thus liable for service tax under this category. The definition under section 65(92) of the Finance Act includes any advice, consultancy, or scientific or technical assistance rendered by a scientist, technocrat, or science or technology institution.

The Tribunal examined the nature of ASCI's research activities, which are broadly in social sciences, such as Health Policy Research, Change Management, and Energy Management. The Tribunal concluded that these activities fall under 'Research in Social Sciences' and do not meet the criteria of 'Scientific or Technical Consultancy' as defined in the Act. Therefore, ASCI is not liable for service tax under this category.

3. Applicability of the Longer Period for Demand
The Revenue invoked the longer period for the demand, alleging suppression of facts with intent to evade service tax. The Tribunal noted that ASCI is a well-known institution that had already registered for service tax under 'Management Consultancy' and regularly filed returns. The Tribunal accepted the appellant's argument that they were under a bona fide belief that their activities were not liable for service tax. Consequently, the Tribunal found no justification for invoking the longer period.

4. Relevance of Non-Profit Status and Income Tax Exemption
The Tribunal considered the appellant's status as a non-profit organization and their exemption from income tax as relevant factors. The Tribunal disagreed with the Revenue's argument that these factors are irrelevant for service tax liability. The Tribunal emphasized that the legislative use of the word 'commercial' implies that non-profit organizations registered under the Societies Registration Act and exempt from income tax should not be considered commercial centers for the purpose of service tax.

Conclusion
The Tribunal set aside the impugned order, concluding that:
- ASCI is not liable for service tax under 'Commercial Training or Coaching Service' due to its non-profit status and exemption from income tax.
- ASCI's activities do not fall under 'Scientific or Technical Consultancy' as defined in the Act.
- There is no justification for invoking the longer period for demand.
The appeal was allowed with consequential relief.

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