2023 (12) TMI 481 - AT - Service Tax

Non-payment of service tax - service tax registration not obtained - Commercial Training and Coaching Services - institute is acting as a learning centre for Punjab Technical University and as a result of the same a degree or a diploma is awarded to the students for participating in the offered programs - HELD THAT - It is evident that the Institute who fall under this category should be imparting skill, knowledge or lessons or any subject other than sports, with or without issuance of certificate and includes coaching or tutorial classes. In the present case, the institute is acting as a learning centre for Punjab Technical University and as a result of the same a degree or a diploma is awarded to the students for participating in the offered programs. Once that being by the definition as is exists during the relevant period, they are out of this definition as the definition clearly stated that it was with the purpose of issuance of occasional commercial teachings not a degree or a diploma granted by the university. After 01.07.2012 the definition of service was amended and concept of negative list is brought. It is undisputed that Punjab Technical University has been constituted by the Act of State Legislature. The degree is conferred by the said university on the students who undergo the courses offered by the said university either by attending the residential programs or attending the courses through distance Education Program. The clarification or circular issued by the UGC do not bar the conferment of the degree by Punjab Technical University to the students who undertake the degree programmes offered by the university through distance education programme - Once the degree has been conferred by the university duly constituted under a State Act or a Central Act, the institute offering such programmes will, go out of the ambit of the Commercial Coaching and Training Services. Delhi bench has in case of Punjab Technical University 2016 (1) TMI 162 - CESTAT NEW DELHI after examining the Memorandum of Understanding etc has held that such centres are franchisee of the PTU and has held that service tax will be leviable under the category of Franchisee Services. From the above decision it is evident that the transactions between the appellant have been held to be taxable under the category of Franchisee Services. If the service tax is now levied under the category of Commercial Coaching and Training Centre Service again the same will amount to double taxation under two different categories. Thus the decision holding that the services provided by the appellant are classifiable under the category of Commercial Coaching and Training Center Services is contrary to the above decision of Delhi Bench. It is already held that the degree provided by the Punjab Technical University is recognized by the law and hence the deletion of the said phrase will not have any impact on findings recorded by us to the effect that the prior to introduction of Negative List, the services provided by the appellant are not covered by the definition of Commercial Training or Coaching Services. There are no merits in the impugned order and the same is set aside - appeal allowed.

Summary

Issues Involved:
1. Whether the appellant was liable to pay service tax for providing Commercial Training and Coaching Centre Services.
2. Whether penalties under Sections 77(1), 77(2), and 78 of the Finance Act, 1994 were imposable.
3. Whether the services provided by the appellant were classifiable under Franchise Services or Commercial Coaching and Training Centre Services.
4. Whether the extended period of limitation was invocable.
5. Whether the degree awarded by Punjab Technical University (PTU) was recognized outside the state of Punjab.

Summary:

1. Liability to Pay Service Tax:
The appellant provided Commercial Training and Coaching Centre Services without paying service tax and without obtaining service tax registration from 01.10.2011 to 31.03.2015. The Assistant Commissioner confirmed the demand of Rs. 67,448/- along with interest under Section 75 of the Finance Act, 1994.

2. Imposition of Penalties:
Penalties were imposed under Sections 77(1) and 77(2) for failure to obtain service tax registration and file statutory returns, and under Section 78 for willful suppression of facts with intent to evade payment of service tax. The appellant had already paid the confirmed demand of service tax along with interest and a reduced penalty (25% of Rs. 67,448/-).

3. Classification of Services:
The Tribunal noted that the appellant acted as a learning center for PTU, which awarded degrees and diplomas to students. The Tribunal held that such services do not fall under the definition of Commercial Training and Coaching Centre Services as they were for the issuance of recognized degrees or diplomas. The Tribunal referenced a Delhi bench decision which classified similar services under Franchise Services, not Commercial Coaching and Training Centre Services.

4. Extended Period of Limitation:
The Tribunal found that the invocation of the extended period was not justified as there was no evidence of willful misstatement or suppression of facts by the appellant. The appellant's activities were advertised and displayed on its website, and there was no conscious withholding of information.

5. Recognition of PTU Degrees:
The Tribunal held that the degree awarded by PTU, constituted under a State Act, is recognized by law. The Tribunal rejected the argument that the degree was only recognized within Punjab, noting that the UGC circular did not bar the conferment of degrees by PTU to students outside Punjab.

Conclusion:
The Tribunal set aside the impugned order, holding that the services provided by the appellant were not taxable under Commercial Coaching and Training Centre Services. The appeal was allowed with consequential relief to the appellant.