2024 (7) TMI 687 - AT - Service Tax

Liability of service tax on trainings imparted by the appellant under the head Commercial training or Coaching service - Eligibility of composition scheme under Works Contract Service - Service Tax on Mandap Keeper services - Liability of service tax under Reverse Charge Mechanism on foreign remittances - Liability of service tax on Scientific Technical Consultancy received by the appellant - Liability of service tax on Grants-in-aid - Extended period of limitation. Liability of service tax on trainings imparted by the appellant under the head Commercial training or Coaching service - HELD THAT - There is no dispute that the appellant provided training to farmers, students, teachers in the field of horticulture. Such training would enable the trainee to upskill themselves and carry forward the objective of the institute, viz., promotion of agricultural entrepreneurship. There is no dispute that such trainings did enable the trainees to seek employment in the field of their choice, or to improve the yield of the farmers by sharing and training them to the latest technological and other advancements in their field. Therefore, as long as there is the ability to seek employment or self-employment in terms of the explanation of the notification, the benefit of exemption cannot be denied, as has been held by this Tribunal in the case of M/s Frankfinn Aviation Services Pvt Ltd., vs Commissioner of Service Tax, New Delhi 2017 (3) TMI 1027 - CESTAT NEW DELHI . Consequently, the appellant is entitled to the exemption for the period prior to the amendment dated 27.02.2010 - As regards the demand for the subsequent period, the same would be taxable. However, the demand would be restricted to the normal period only. Eligibility of composition scheme under Works Contract Service - HELD THAT - The dispute pertains limitedly in respect of the extension of benefit of the composition scheme without prior intimation to the Department. It has been submitted that the computation of demand is incorrect. It was also contended that the service tax in respect of works contract services has already been paid by the appellant by availing the composition scheme. It is observed that the impugned order has denied such benefit on the ground that neither the actual value of goods was provided by the Appellant nor an advance intimation about opting for the composition scheme - the appellant is eligible to avail the benefit of the Composition scheme, and it is noted that the appellant had already paid the Service Tax on the same. Therefore, the said demand is also not sustainable. Service Tax on Mandap Keeper services - HELD THAT - It is clear that for any service to be taxable under mandap keeper service , the immovable property has to be let out for organizing any official, social or business function. In the present case, it has been submitted that the property was let out by the Appellant for conducting the seminars on horticulture only which is for the educational/academic purpose and would thus, fall outside the purview of mandap keeper service and hence, demand confirmed is not sustainable - the appellant s activity of renting out the property for holding of seminars by their clients is squarely covered by mandap keeper service. Hence, the demand is upheld for the normal period. Liability of service tax under Reverse Charge Mechanism on foreign remittances - HELD THAT - The training services have been provided by M/s Stitching PTC Netherlands to trainers/managers in Netherlands, i.e. a place outside India. Thus, since the place of performance of such service is outside India, the same is not taxable. Liability of service tax on Scientific Technical Consultancy received by the appellant - HELD THAT - In the instant case, what has been received is design of business and master plan, which as per the above decision cannot be classified as Scientific or Technical consultancy. Consequently, the demand under this head does not stand. Liability of service tax on Grants-in-aid - HELD THAT - This issue stands decided by the Supreme Court in the case of Commissioner vs Apitco Ltd 2011 (5) TMI 1086 - SC ORDER , wherein it upheld the Tribunal s order that grant-in-aid received from the Government for implementation of schemes were fully utilised for the said activity and no consideration was received for any service to the government, was not taxable - in the instant case, the grant-in-aid had been received from the government for the scheme and is therefore squarely covered by the aforesaid decision. Extended period of limitation - HELD THAT - It is observed that no cogent evidence has been adduced for invocation of the extended period, or establish suppression of facts with an intent to evade tax. Therefore, the demand for extended period, and the penalties are set aside. However, the liability to interest will be recalculated as per the demand to be recalculated by the adjudicating authority. The impugned order is upheld to the extent indicated above by way of remand, and the appeal is allowed partially.

Summary

Issues Involved:
1. Liability of service tax on trainings imparted by the appellant under the head Commercial Training or Coaching Service.
2. Eligibility of composition scheme under Works Contract Service.
3. Service Tax on Mandap Keeper Services.
4. Liability of service tax under Reverse Charge Mechanism on foreign remittances.
5. Liability of service tax on Scientific & Technical Consultancy received by the appellant.
6. Liability of service tax on Grants-in-aid.

Detailed Analysis:

1. Commercial Training or Coaching Services:
The appellant challenged the demand of service tax on the total receipts of Rs. 4,02,05,286/-, arguing that only Rs. 3,67,81,896/- was towards actual training. The remaining amount related to study materials, reimbursements, and grants-in-aid, which should not be taxable. The tribunal found that the receipts for study materials (Rs. 12,68,940/-) and reimbursements (Rs. 21,54,450/-) were exempt under Notification No. 12/2003-ST and the Supreme Court ruling in Intercontinental Consultants and Technocrats Pvt Ltd. The grant-in-aid (Rs. 20,00,000/-) was also exempt as per the Supreme Court decision in Commissioner vs Apitco Ltd. The tribunal held that training services provided by a vocational training institute were exempt until 26.2.2010, and the amendment by Notification No. 3/2010-ST was prospective. Therefore, the appellant was entitled to exemption for the period before 27.2.2010, and the demand for the subsequent period was taxable but limited to the normal period.

2. Eligibility of Composition Scheme under Works Contract Service:
The tribunal noted that the appellant had paid service tax under the composition scheme for works contract services but had not provided the actual value of goods or given advance intimation to the Department. The tribunal held that Rule 3(3) of the Composition Scheme Rules did not require written intimation and that non-intimation was a procedural irregularity. The tribunal relied on the decision in M/s J.R. Construction vs Commissioner, Jaipur-1, and held that the appellant was eligible for the composition scheme, and the demand was not sustainable.

3. Service Tax on Mandap Keeper Services:
The tribunal confirmed the demand of Rs. 93,361/- for leasing out space for educational seminars under the category of Mandap Keeper Services. The tribunal noted that the property was let out for conducting seminars, which fell under the definition of mandap keeper services. However, the demand was restricted to the normal period only.

4. Liability of Service Tax under Reverse Charge Mechanism on Foreign Remittances:
The tribunal addressed the demand of Rs. 21,73,714/- under reverse charge mechanism for foreign remittances made to M/s. Stitching PTC Netherlands for training services. The tribunal found that training services provided in the Netherlands were not taxable as per Rule 3 of the Import of Service Rules and the Bombay High Court decision in Commissioner of Central Excise and Service Tax vs Maersk India Pvt Ltd. However, the tribunal remanded the matter to the adjudicating authority to verify the place of performance for two other training activities.

5. Liability of Service Tax on Scientific & Technical Consultancy Received by the Appellant:
The tribunal set aside the demand of Rs. 5,38,952/- for design of business and master plan services received from M/s. Stitching PTC Netherlands. The tribunal held that the services did not fall under the definition of Scientific or Technical Consultancy, as they were not provided by a scientist, technocrat, or science/technology institution. The tribunal relied on the decision in Administrative Staff College of India vs Commissioner, C.Ex, Hyderabad.

6. Liability of Service Tax on Grants-in-aid:
The tribunal set aside the demand for service tax on grants-in-aid, holding that such grants were not taxable as per the Supreme Court decision in Commissioner vs Apitco Ltd.

Conclusion:
(i) The demand for service tax on trainings under Commercial Training or Coaching Service is upheld for the period after 27.2.2010, limited to the normal period.
(ii) The appellant is eligible for the composition scheme under Works Contract Service, and the demand is set aside.
(iii) The demand for Mandap Keeper Services is confirmed but restricted to the normal period.
(iv) The demand under reverse charge mechanism for training held in the Netherlands is set aside, and the matter is remanded to verify the place of performance for other trainings.
(v) The demand for Scientific & Technical Consultancy is set aside.
(vi) The demand for service tax on grants-in-aid is set aside.

The appeal is partially allowed, and the impugned order is upheld to the extent indicated by way of remand.