2024 (7) TMI 1457 - AT - Service Tax

Denial of exemption under Section 66D of Finance Act, 1994 - providing long duration courses which are not approved by AICTE - Extended period of limitation - HELD THAT - It is observed that as per Section 65(105)(zzc) of the Finance Act only such institute rendering Commercial Coaching or Training Centre Services were liable to service tax which were imparting the services and collecting fees as a profit motive as it was clarified by the Department s Circular No. 86/4/2006 dated 01.11.2006. However, the Finance Act, 2011 has taken away the said exemption by incorporating clause 27 to Section 65 to cover all training centres giving training/coaching for a consideration irrespective of the profit motive of the centre were made liable to tax - there was a service tax liability upon the fee received for rendering education services w.e.f. 01.07.2003 itself, however, only till 01.07.2012 when came into existence the Finance Act, 2012. For the impugned period irrespective the tax liability was introduced retrospectively, the said liability remained exempted w.e.f. 01.07.2012, the situation stands corroborated for the year 2016. Resultantly, there are no basis for the confirmation of the impugned demand as already - the show cause notice has wrongly been issued and that the appellant has no tax liability. Invocation of extended period - HELD THAT - The suppression of facts is wrongly alleged against the appellants, the appellants are already held to have no tax liability towards fees collected by them for imparting PG courses. There remain no possibility of tax evasion that too malafide intent for the same. Accordingly, it is held that the extended period of limitation has wrongly been invoked by department while issuing the impugned both the show cause notices. The impugned order is set aside - appeal allowed.

Summary

Issues:
- Tax liability on long duration courses provided by the appellant
- Exemption under Section 66D of Finance Act, 1994
- Applicability of Circulars and Notifications
- Recognition by AICTE for tax liability determination
- Invocation of extended period for tax assessment

Analysis:
1. Tax Liability on Long Duration Courses:
The appellant provided various long duration courses, including post graduate courses, against recovery fees. The Department alleged that these activities fall under 'Commercial Training' or 'Coaching Centre Service' liable to tax. The appellant claimed exemption under Section 66D of Finance Act, 1994, stating that courses were exempted under clause (l) of Section 66D. The dispute centered on whether the courses were recognized by law and approved by AICTE.

2. Exemption under Section 66D:
The exemption under Section 66D of Finance Act, 1994, was crucial to determining the tax liability of the appellant. The Mega Exemption Notification 25/2012, entry at Sr. No. 9(b), exempted services provided by Indian Institute of Management. The retrospective nature of tax liability introduction and subsequent exemptions played a significant role in the judgment.

3. Applicability of Circulars and Notifications:
The appellant relied on Circulars and Notifications to support their claim for exemption. Circular No. 334/8/2016/TRU and Notification No. 9/2016 were cited to argue for exemption from service tax. The Tribunal analyzed these references to ascertain their relevance in determining the tax liability of the appellant.

4. Recognition by AICTE for Tax Liability Determination:
The issue of recognition by AICTE was pivotal in determining the tax liability of the appellant. The Department's contention was that the courses provided by the appellant were not recognized by AICTE, making them subject to service tax. The Tribunal examined the legal provisions and precedents to assess the impact of AICTE recognition on tax liability.

5. Invocation of Extended Period for Tax Assessment:
The Department invoked the extended period for tax assessment, alleging suppression of facts by the appellant. The Tribunal scrutinized the validity of this claim, considering previous judgments and legal principles related to the invocation of the extended period. The decision highlighted the necessity of willful suppression for invoking the extended period.

In conclusion, the Tribunal set aside the order under challenge, allowing both appeals. The judgment emphasized the importance of legal recognition, exemptions under relevant provisions, and the correct interpretation of Circulars and Notifications in determining the tax liability of the appellant. The analysis provided a detailed examination of each issue raised in the appeals, ensuring a comprehensive understanding of the legal reasoning behind the decision.