2017 (3) TMI 249 - AT - Service Tax

Demand of tax - extended period of limitation - commercial coaching or training service - Held that - Appellant is a public body that is without profit motive. The intent to evade tax is not apparent; nor is there any evaluated finding to that effect in the orders of the original and first appellate authority - there was no reason for appellant to entertain the notion that they were liable to treated as a commercial coaching or training centre considering the nature of their activities. That an Explanation had to be inserted in 2010 in the charging provision of section 65 (105) makes it apparent that confusion about the scope of this tax existed in the minds of not just institutions but also tax officers. The assessing officer is directed to ascertain the claim of the appellant that the data submitted constitutes the sum total of receipts from beneficiaries of training programmes and restrict the levy to such collections within the normal period of limitation u/s 73 of FA, 1994 from the date of issue of SCN - appeal allowed by way of remand.

Summary

Issues: Challenge to modified tax demand under Finance Act, 1994 for commercial coaching or training service; Dispute on levy based on non-profit status, limitation period, and computation of taxable service.

Analysis:

The case involves a challenge by The Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA), Pune against a modified tax demand of &8377; 24,12,484/- under the Finance Act, 1994 for providing 'commercial coaching or training service' from April 2005 to March 2010. The appellant disputes the levy on the grounds of being a non-profit organization, absence of intent to evade tax, and errors in the computation of taxable service.

The Tribunal notes that the appellant indeed conducts training programs falling under the taxable activity defined in the Finance Act, 1994. Despite the appellant being a non-profit entity, the specific exclusions mentioned in the Act make the training programs liable to tax.

Regarding the limitation period, the Tribunal finds that there was no apparent intent to evade tax, as supported by the absence of any evaluated finding to that effect in the orders of the authorities. The confusion surrounding the tax scope, as evidenced by the insertion of an Explanation in 2010, indicates that the extended period of limitation cannot be invoked, restricting the demand to the normal period.

On the computation of taxable value, the Tribunal acknowledges that the assessable value was derived from financial statements. However, it emphasizes that tax on services is limited to consideration received from beneficiaries. The assessing officer is directed to verify the accuracy of the appellant's submissions regarding the receipts from beneficiaries and restrict the levy to such collections within the normal limitation period.

Ultimately, the appeal is disposed of based on the above considerations, with the judgment pronounced on 16/01/2017.