2019 (1) TMI 569 - HC - Service Tax

Commercial concern or not - demand of service tax - extended period of limitation - Held that - No Substantial Question of Law arises for consideration in the instant case - The reliance placed on the larger Bench decision of the CESTAT in the case of Great Lakes Institute of Management Ltd. V. Commissioner of S.T., Chennai 2013 (10) TMI 433 - CESTAT NEW DELHI - LB is wholly inapplicable to the facts and circumstances of this case. Invocation of proviso to Section 73(1) of Finance Act - Held that - Sub-section (1) of Section 73 states that where any service tax has not been levied or paid or has been shortlevied or short-paid or erroneously refunded, the Central Excise Officer within one year from the relevant date, serve notice on the person chargeable with service tax. The period stipulated under Section 73(1) viz., one year was substituted by eighteen months by Finance Act, 2012 dated 28.05.2012. The period in dispute in the instant case falls prior to the amendment. Therefore, if the Department was of the view that service tax has not been levied or paid by the respondent, they could have invoked Section 73(1) within one year from the relevant date - Admittedly, this was not done and the Department seeks to invoke proviso to Section 73(1) of the Act. The proviso provides for an extended period, whereby, the word one year in Section 73(1) was substituted by the word five years . The proviso will come into play only if the service tax has not been paid by the respondent by reason of fraud; or collusion; or willful mis-statement; or suppression of facts; or contravention of any of the provisions of Chapter 5 of the Finance Act or of the Rules made thereunder with intent to evade payment of service tax. Admittedly, there is no such allegation of fraud or collusion etc., which is not the only requirement, but there should be intention to evade payment of tax. Thus, mere non-payment will not be a ground to invoke proviso to Section 73(1) of the Act. That apart, the assessee had an explanation that they had produced Government records, approval from AICTE, Project Director of the Canada-India Institutional Cooperation Project, who had also given a statement clearly stating that they are Government aided Institution and Government directed such courses to be conducted - proviso to Section 73(1) of the Finance Act could not have been invoked, as there was no material against the respondent for invoking the extended period. The Substantial Questions of Law are answered against the Revenue - appeal dismissed.

Summary

Issues:
1. Interpretation of Section 65(105)(zzc) in relation to commercial concern.
2. Consideration of the judgment in the case of Great Lakes Institute of Management Ltd.
3. Recognition of courses conducted by the respondent institution under the Canada-India Institutional Cooperation Project.
4. Invocation of extended period under Section 73(1) of the Finance Act, 1994.

Analysis:
1. The appeal by the Revenue challenged the Final Order passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai Bench, raising substantial questions of law. The Department issued show cause notices proposing service tax demand, interest, and penalty for specific periods. The respondent institution, a Government Aided Polytechnic College, filed replies, and the matter was adjudicated upon. The first appeal before the Commissioner of Customs and Central Excise (Appeals) favored the respondent, leading to the Revenue's appeal before the Tribunal, which was dismissed, prompting the current appeal.

2. The High Court noted that no Substantial Question of Law arose for consideration in the case. It was emphasized that the respondent institution's courses were part of an initiative under the Canada-India Institutional Cooperation Project aimed at upliftment and livelihood provision for the underprivileged. The Commissioner's decision, considering various circulars, precedents, and approvals, was upheld. The services rendered were deemed beneficial for students' employment prospects, leading to the Tribunal's dismissal of the Revenue's appeal.

3. The Court examined the invocation of the extended period under Section 73(1) of the Finance Act, 1994. The show cause notice alleged non-payment of service tax within the stipulated period. However, the Department sought to invoke the proviso to Section 73(1) for an extended period of five years, which required proof of fraud, collusion, willful misstatement, or intent to evade tax. As no such allegations were substantiated against the respondent, and with evidence of Government approvals and directions, the Court concluded that the proviso could not be invoked, thereby upholding the Tribunal's decision.

4. Ultimately, the High Court dismissed the appeal, answering the Substantial Questions of Law against the Revenue. The judgment highlighted the importance of factual considerations, government approvals, and the absence of grounds for invoking the extended period under the Finance Act. The decision reaffirmed the Tribunal's ruling in favor of the respondent institution, emphasizing the lawful conduct of courses under the Canada-India Institutional Cooperation Project for societal benefit.