9911796707
TMI Blog2012 (7) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... s detailed below demanding service tax. S.No. SCN date Amount of service tax involved (in Rs.) Period of demand Classification of service 1 20-4-2009 1,05,73,964/- October,03 to September,08 Commercial Coaching or Training Services and Management, maintenance and repair services 2 22-4-10 33,88,916/- October,08 to March,09 -do- 3 5-10-2010 58,80,527/- 2009-10 -do- 4 3-10-2011 57,62,275/- 2010-11 -do- The case was adjudicated vide the impugned order and the entire service tax demand amounting to Rs.2,56,05,682/- was confirmed under section 73 of the Finance Act,1944 along with interest under section 75 ibid. A penalty of Rs.5000/- was imposed under section 77 for non-registration and non-filing of returns and a penalty equal to service tax was imposed under section 78 of the said Finance Act. Hence the appellants are before us. 3. The ld. Counsel for the appellant makes the following submissions:- 3.1 The appellant is a company registered under the Companies Act,1956 with the objective of promoting the art and science of flying, without any profit motive. The appellant is also registered as a Charitable Institution under the Income Tax Act, 1961. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licences. 3.5 The appellant also undertakes overhauling of the aircrafts belonging to its members. This activity is also carried out by the appellant as it is an approved organization under rule 133B of the Aircraft Rules. 3.6 The appellant was under the bona fide belief that the activities undertaken by the appellant are statutory functions. Since the appellant was a charitable organizations, there is no commercial aspect to its activities and consequently, the appellant never charged any service tax on any of its activities. 3.7 The activities undertaken by the appellant with respect to the training in AME and Flying are exempt from the levy of service tax under notification Nos.9/2003-ST dated 20/6/2003 and 24/2004-ST dated 10/9/2004 up to 26 th February, 2010 as the appellant is a vocations training institute as defined in the said notifications as the training given by the appellant is part of the license issuing process of the DGCA and this training enables the person to seek employment directly after such training. Training provided by the appellant in respect of flying activity amounts to training for the purposes of 'recreation' and therefore, the said activity is not l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogrammes. The said circular should be given due weightage while deciding the matter. 4.2 The Advance Ruling Authority (AAR) in the case of CAE Flight Training (India) Ltd. reported in 2010 (18) STR 785 (AAR), in identical circumstances, had held that the activity undertaken is leviable to service tax under "commercial training or coaching" and benefit of notification No.24/2004-ST is not available. This decision given by the AAR, though not binding on the Tribunal, has a great persuasive value while deciding the matter. 4.3 The Tribunal while deciding the case in respect of Gujarat Flying Club had not considered the matter in the light of the Board's clarification and the AAR decision and it was only a prima facie view taken by the Tribunal. Such interim orders has no binding precedence. 4.4 He further relies on the judgment of the hon'ble apex court in the case of P.C.Paulose vs. CCE & C [2011 (21) STR 353 (SC)] wherein the services provided to Airport Authority of India in collection of entry fee to the airport by a private person was held liable to service tax. Merely because a service has been rendered to a statutory authority, it can not be said that the activity performed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGCA. Since the appellant is a charitable institution, can they be considered as a commercial training or coaching centre? Here again the answer is negative. So long as the appellant imparts training or skill in any subject or field other than sports for a consideration, the said activity would come under the purview of "commercial training or coaching". It is on record that the appellant is collecting substantial amount of fees from the students for imparting training. Merely because the appellant is registered as a Charitable Institution under the Income Tax Act, 1961, that does not entitle the appellant to claim exclusion from the ambit of service tax. Thus it is obvious that the appellant does not come under the exclusion clause of the definition of "commercial training or coaching centre". 5.3 The next issue for consideration is whether the appellant is eligible for duty exemption under notification No.24/2004-ST dated 10-9-2004 during the impugned period. The said notification reads as follows:- "...................the Central Government...................................... hereby exempts the taxable services provided in relation to commercial training or coaching, by,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torate General of Employment and Training, Govt. of India under the Apprentice Act, 1961. Therefore, prima facie we are of the view that the appellant is not eligible for the benefit under the aforesaid exemption. 5.5 The Central Board of Excise & Customs had examined issues relating to the service under consideration on several occasions in the past and issued clarifications. Vide circular No. 107/1/2009-ST dated 28-1-2009, the Board had clarified as follows:- "2. Commercial Nature of Institute The first issue arises from the very name, i.e., "commercial training or coaching centre". Many service providers argue that the word commercial appearing in the aforementioned phrase suggests that to fall under this definition, the establishment or institute must be commercial (i.e. having profit motive) in nature. It is argued that institutes which are run by charitable trusts or on no-profit basis would not fall within the phrase 'commercial training or coaching centre' and none of their activities would fall under the taxable service. This argument is clearly erroneous. As the phrase 'commercial training or coaching centre' has been defined in the statute, there is no scope to add o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity (AAR in short) had occasion to give ruling on a similar matter in the case of CAE Flight Training (India) Pvt. Ltd. CFTI in short) [2010 (18) STR 785(AAR)]. In that case, CFTI was imparting aircraft-specific training called "type rating training" to commercial pilot licence holders which was in intensive course of a minimum 37 days wherein the trainees are imparted specified skills and knowledge about specific aircraft. AAR framed two questions of law for ruling namely- "1. Whether CFTI can be considered as an institute imparting training which is specifically excluded from the definition of 'commercial coaching and training centre' as defined under section 65(27) of the Finance Act, as an establishment which issued a certificate recognized by law for the time being in force? 2. Whether CFTI can be considered as a 'vocational training institute' so as to be exempted from tax under the category of 'commercial training and coaching service' as provided under notification No.24/2004 dated 10-9-2004, in the light of the fact that it provides aircraft specific training to CPL holders so as to enable them to qualify for flying specified aircrafts and to subsequently enable them t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as a "vocational training institute" for the purposes of exemption from service tax under the category of "commercial training and coaching service" in terms of notification No. 24/2004-ST dated 10-9-2004. 5.9 The above ruling of the AAR has direct implication for the case before us. It is true that the decision of the AAR is binding only to the parties involved in that ruling. But when the facts involved are similar and the question for decision is identical, due to consideration needs to be given to the said ruling especially considering the fact the AAR is presided by a Retired Judge of the hon'ble apex court and the other members of the authority are erstwhile members of the Central Board of Excise & Customs and Central Board of Direct Taxes. Thus the status of AAR is higher than that of this Tribunal and therefore, this Tribunal cannot ignore the ruling by the AAR in a case where the facts are similar/identical and the questions of law are identical. 5.10 The ld. Counsel for the appellant has made a submission that another co-ordinate bench of this Tribunal has granted stay in the case of The Gujarat Flying Club. We have carefully examined the said decision of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to reach an understanding. Whether that understanding is reached by individual contracts/agreements or by a general one as provided for in the memorandum and articles of association, the purpose is the same. Therefore, prima facie, the activity of overhauling for a consideration comes under the purview of "management, maintenance or repair service" and is liable to service tax. 5.13 The last issue for consideration is whether there has been any suppression of fact on the part of the appellant so as to invoke the extended period of time for the demand of service tax. The appellant claims the benefit of "bonafide" belief. It is seen that three show cause notices involving a revenue of Rs. 1,50,31,718/- have been issued in time. Only in the case of show cause notice dated 20-4-09 demanding service amounting to Rs.1,05,73,964/- for the period from October, 03 to September, 08 the extended period has to be invoked. Even in this case, the demand is within time for the period from October, 07 to September, 08. Though period wise details are not available, the demand within the normal period will be about 21 lakhs on a proportionate basis. In other words, the demand of service tax for R ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
