2017 (3) TMI 1367 - AT - Service Tax

Demand of tax under Commercial Training and Coaching services - extended period of limitation - Held that - the appellant is mainly running courses leading to awarding of degrees by University of London and Allahabad Agriculture Institute, and which are recognised by certain Universities in India as mentioned in the brochure of AIU. However, the appellant itself does not issue any kind of diploma or degree, which is recognised by law for the time being in force. In other words, the appellant is not covered in the exclusions mentioned in Section 65(27) of the Act. Extended period of limitation - Held that - the Department has not been able to produce any substantial evidence to indicate that there has been wilful suppression with intent to evade the service tax on the part of the appellant. Consequently, the liability of service tax against the appellant cannot be confirmed beyond the period of one year preceding the date of SCN. Appeal allowed by way of remand.

Issues Involved:
1. Liability of service tax under the category of "Commercial Training and Coaching" services.
2. Applicability of the extended period of limitation for service tax demand.
3. Recognition of degrees awarded by foreign universities and their equivalence to Indian degrees.
4. Applicability of service tax exemption for vocational training institutes.

Detailed Analysis:

1. Liability of Service Tax under "Commercial Training and Coaching" Services:
The appellants were charged with service tax under the "Commercial Training and Coaching" category as per Section 65(27) of the Finance Act, 1994. The definition includes any institute providing commercial training or coaching but excludes those issuing recognized educational qualifications. The appellants argued that their courses, leading to degrees from the University of London and Allahabad Agriculture Institute, should be excluded from this category. However, the adjudicating authority and Member (Technical) held that since the appellants themselves did not issue the recognized degrees, they did not qualify for the exclusion. The Member (Judicial) disagreed, emphasizing that the degrees awarded by these universities are recognized by law in India, thus qualifying for the exclusion.

2. Applicability of the Extended Period of Limitation:
The appellants contended that the extended period of limitation could not be invoked as there was no willful suppression of facts or intent to evade tax. They claimed a bona fide belief that their services were not taxable and had accounted for the income in their books. The adjudicating authority found no substantial evidence of willful suppression by the appellants. Consequently, the liability of service tax was limited to the period within one year preceding the date of the Show Cause Notice.

3. Recognition of Degrees Awarded by Foreign Universities:
The appellants argued that the degrees awarded by the University of London and Allahabad Agriculture Institute are recognized by Indian universities and the Association of Indian Universities (AIU). The Member (Judicial) supported this view, citing the Ministry of Human Resource Development's notification and various legal precedents. It was concluded that degrees recognized by AIU are considered recognized by law, thus falling within the exclusion clause of the definition of "Commercial Training or Coaching Centre."

4. Applicability of Service Tax Exemption for Vocational Training Institutes:
The appellants also provided Business English and Personality Development courses, claiming exemption as vocational training institutes. The Member (Judicial) referred to Board Circular No. 107/01/2009-ST and previous decisions, confirming that such courses, which enhance employment prospects, qualify for exemption. The Member (Technical) did not specifically address this issue, but the Member (Judicial)'s detailed analysis concluded that these courses should be exempt from service tax.

Separate Judgments:
- Member (Technical): Upheld the service tax demand within the limitation period, holding that the appellants did not issue recognized degrees themselves.
- Member (Judicial): Disagreed on the merits, holding that the degrees awarded by the affiliated universities are recognized by law, thus excluding the appellants from the definition of "Commercial Training or Coaching Centre." Also, the vocational training exemption applied to the Business English and Personality Development courses.

Third Member Decision:
The third member agreed with the Member (Judicial), concluding that the degrees awarded by the University of London and Allahabad Agriculture Institute are recognized by law, and the appellants' courses fall outside the scope of "Commercial Training or Coaching Centre." The Business English and Personality Development courses also qualify for exemption as vocational training.

Majority Order:
In view of the majority decision, the impugned order was set aside, and the appeal was allowed. The appellants were not liable for service tax under the "Commercial Training and Coaching" category, and the extended period of limitation was not applicable. The vocational training exemption was also upheld.

← Previous Next →