2014 (8) TMI 99 - HC - Service Tax

Validity of order passed after considerable delay - principle of natural justice - Commercial Training or Coaching service - petitioner was issued with a show cause notice on 01.10.2012, a personal hearing was given to the petitioner on 26.02.2013, on which date, the petitioner submitted his written submissions putting forward his objections for levying service tax. - impugned order came to be passed after 11 months from the date of personal hearing given to the petitioner - petitoiner also relied on the Circular dated 05.08.2003 issued by the Central Board of Excise & Customs, New Delhi wherein directions have been given to the effect that in cases where personal hearing have been concluded, the copy of the order has to be communicated within 5 days or within 15 days or at most one month from the date of conclusion of personal hearing. Held that - This argument of the learned counsel for the petitioner cannot be accepted. As per the decision of the Honourable Supreme Court Telestar Travels Pvt Ltd., vs. Special Director of Enforcement 2013 (2) TMI 396 - SUPREME COURT the delay by itself will not be a ground for setting aside an order, which may otherwise be legally valid and justifiable, however, such order only requires a closer and careful scrutiny by the Court. In such event, the petitioner has to prove that the delay by itself has caused prejudice to him. - Decided against the assessee. Decision of tribunal - retrospective or prospective - Held that - It is relevant to refer to the decision of the Honourable Supreme Court in the case of Assistant Commissioner, Income Tax, Rajkot vs. Saurashtra Kutch Stock Exchange Ltd., 2008 (9) TMI 11 - SUPREME COURT wherein the Honourable Supreme Court held that if a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. Therefore in the light of the above decision of the Honourable Supreme Court, the reliance placed by the learned counsel for the petitioner on the order passed by the CESTAT cannot be of any use to the case of the petitioner. Even on merits, it has to be noted that the petitioner is an institution which is imparting training to the students in various activities. Admittedly, the petitioner institution is collecting fee from the students for imparting such training - Demand of service tax confirmed - Decided against the assessee.

Summary

Issues:
1. Classification of activities of the petitioner as Commercial Training or Coaching service for service tax assessment.
2. Delay in passing the impugned order and its impact on the validity of the order.
3. Applicability of previous legal judgments to the case.

Issue 1: Classification of Activities for Service Tax Assessment
The petitioner institution challenged the respondent's order classifying their activities as Commercial Training or Coaching service, leading to a demand for service tax and a penalty. The petitioner argued that their courses, including Higher National Diploma courses and various short-term courses, should be exempt from service tax. The respondent relied on previous decisions and concluded that the petitioner's activities fell within the purview of service tax. The court upheld the respondent's classification based on the nature of training provided and the collection of fees from students.

Issue 2: Delay in Passing the Impugned Order
The petitioner contended that the delay of 11 months in passing the order after the personal hearing rendered the order invalid. Citing a circular directing timely communication of decisions, the petitioner argued that the delay vitiated the order. However, the court held that delay alone cannot invalidate a legally justifiable order. The petitioner failed to demonstrate how the delay prejudiced them, as required by legal precedent.

Issue 3: Applicability of Previous Legal Judgments
The petitioner relied on the decision of the CESTAT and the Delhi High Court to support their claim for exemption from service tax. However, the court noted that subsequent legal developments, including a Supreme Court decision, altered the applicability of these judgments. The court emphasized that a later decision clarifying legal principles must be applied retrospectively, thus diminishing the relevance of the petitioner's cited judgments.

In conclusion, the court dismissed the writ petition, upholding the respondent's classification of the petitioner's activities for service tax assessment. The court emphasized the legality of the order despite the delay and the evolving legal landscape affecting the applicability of previous judgments.