2018 (11) TMI 495 - AT - Service Tax

Levy of service tax - Income from insurance Co. for rendering CTCS to their agents - Commercial Training and Coaching Center Service or not? - Held that - It is an admitted fact that to become the insurance agent it is mandatory in law for him to undergo a training program and thereafter to clear an exam conducted by Insurance Regulatory and Development Authority (IRDA) - for while providing training to insurance agents the appellants are not providing the service of Commercial Training and Coaching Center Service. The income derived from such service is therefore not taxable - demand not sustainable. Commercial Training or Coaching Services or not - Demand on income from Indira Gandhi National Open University (IGNOU) and from Punjab Technical University (PTU) - demand has been confirmed for want of evidence establishing that the income for the impugned period was received for and on behalf of IGNOU and PTU - Held that - Due accreditation of appellants from both these universities is very much on record. There is no dispute that IGNOU and PTU both are constituted under law - since IGNOU and PTU are constituted in exercise of the legislative power the accreditation by them in favour of the appellant is very much covered under the terms recognized by law - demand set aside. Demand on hiring charges recovered from IGNOU - scope of SCN - Held that - The demand for the charges received as hiring of computer stationery etc. charges under commercial tanning and coaching service is not sustainable. Such kind service may be classified as supply of tangible goods. But the impugned Show Cause Notice has not proposed the demand under the head of supply of tangible goods - The law is settled that the adjudicating authorities are not allowed to go beyond the scope of show cause notice - demand set aside. Demand on Income from IIHT - Held that - From the clause of the agreement between appellant and IIHT and in view of the admitted fact that the appellant is the service tax provider whereas IIHT is the recipient thereof Section 68 of the Finance Act 1944 acquires relevance according to which the liability to pay service tax in such manner and within such period as may be prescribed rests upon such person who is providing taxable services to any other person. Thus the statue itself prohibits any agreement of services provider and service recipient to agree for the liability to be discharged by the services recipient unless and until it is so provided by any other provision of law - demand upheld. Demand on Bitcom Tuition fees - Held that - As per notification no.24/2004 vocational training institute means a Commercial Training or Coaching Centre which provides vocational training or coaching that impart skill to enable the trainee to seek employment or undertakes an employment directly after such training or coaching. Since the nature of training in the present case is about latest information technology programs such as networking cloud computing net java etc. the training is a job specific talent devolvement - the appellant is opined to be a vocational training institute entitled for the exemption of above notification dated 10.09.2004 - demand set aside. Demand as raised for miscellaneous income - Held that - There is no evidence on record to this effect the original adjudicating authority has clearly recorded that despite a ledger account was asked from the appellant they have failed to provide same. In absence thereof the miscellaneous income is held to have been received in relation to providing the services of commercial training and coaching. In the absence of evidence to prove the assertion of the appellant we find no infirmity in the order under challenge same is hereby upheld Time limitation - period of demand herein is April 2004 to September 2009 and Show Cause Notice is dated 22.04.2010 - Penalty - Held that - The appellants are providing coaching and training at mega level even for the institutes of repute any ignorance to the legal provisions about applicable taxability cannot be presumed on their part. Otherwise also ignorance of law is no excuse - When any service provider fails to comply with the provisions of the Finance Act which make him liable to pay the service tax the only conclusion drawn is that the same act is with an intent to evade duty - the Department was entitled to invoke the proviso of Section 73 of the Act - penalty also upheld. Appeal allowed in part.

Summary

Issues Involved:
1. Demand on income from insurance companies.
2. Demand on income from Indira Gandhi National Open University (IGNOU) and Punjab Technical University (PTU).
3. Demand on hiring charges recovered from IGNOU.
4. Demand on income from Indian Institute of Hardware Technology (IIHT).
5. Demand on Bitcom Tuition fees.
6. Demand on miscellaneous income.
7. Demand on income not forming part of the profit & loss account.
8. Plea of limitation.

Issue-wise Detailed Analysis:

1. Demand on Income from Insurance Companies:
The appellants argued that income from insurance companies for providing CTCS to their agents is not taxable, citing several decisions including *The Bombay Flying Club* and *Academy of Maritime Education And Training Trust*. The department conceded that the issue was settled. The Tribunal held that training imparted to insurance agents, which is mandatory by law and recognized by IRDA, does not fall under the ambit of Section 65 (27) of the Finance Act, 1994. Consequently, the demand of Rs. 17,43,604/- was set aside.

2. Demand on Income from IGNOU and PTU:
The appellants claimed that they provided training essential for obtaining degrees and certificates from IGNOU and PTU, which are recognized by law, thus falling under the exclusion clause of CTCS. The Tribunal observed that accreditation from these universities is on record and both are constituted under law. The definition of CTCS exempts institutes issuing educational qualifications recognized by law. The demand confirmed by the authorities below was set aside.

3. Demand on Hiring Charges Recovered from IGNOU:
The appellant contended that the amount received was a reimbursement for expenses related to computer maintenance and stationery, thus exempted. The Tribunal noted that hiring charges cannot be considered as charges for imparting commercial training or coaching services and should be classified as supply of tangible goods. Since the Show Cause Notice did not propose the demand under this head, the demand was not sustainable and was set aside.

4. Demand on Income from IIHT:
The appellants argued that they provided training on behalf of IIHT, and the fees collected were remitted to IIHT, which had already discharged the service tax liability. The Tribunal, however, held that the appellant, being the service provider, was liable to pay the service tax and that any payment made by IIHT was not valid. The plea of double taxation was dismissed, and the demand of Rs. 10,51,472/- was upheld.

5. Demand on Bitcom Tuition Fees:
The appellants claimed that the income was from short-term vocational courses, exempted under notification no. 9/2003. The Tribunal observed that the training provided was vocational, enabling employment, thus exempted under notification no. 24/2004. The demand of Rs. 63,786/- was set aside.

6. Demand on Miscellaneous Income:
The Tribunal noted the absence of evidence to support the appellant's claim that the miscellaneous income was from the sale of scrap and library charges. The demand of Rs. 6,542/- was upheld.

7. Demand on Income Not Forming Part of the Profit & Loss Account:
The Tribunal found no evidence to support the appellant's claim of a calculation mistake. The demand of Rs. 28,748/- was upheld.

8. Plea of Limitation:
The Tribunal held that the appellant's failure to cooperate and provide requisite documents indicated an intent to evade duty. The Show Cause Notice was not barred by time, and the penalty imposed was justified for the confirmed demands.

Conclusion:
The appeal was partly allowed. The demands related to income from insurance companies, IGNOU, PTU, and tuition fees for short-term vocational courses were dropped. However, the demands related to hiring charges from IGNOU, income from IIHT, miscellaneous income, and income not forming part of the P&L account were confirmed.