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TMI Blog2013 (6) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/07/2003, the activities undertaken by all the assessees during the periods of dispute would get covered within the meaning of the phrase training or coaching imparted for consideration occurring in the text of the explanation. In other words, the explanation to Section 65(105)(zzc) of the Act has very wide scope to encompass the activities of the assessees and render them exigible to service tax under Section 65(105)(zzc) of the Act. In the result, the assessees have no case on merits. Regarding vocational training - benefit of Notification No.9/2003-ST dt. 20/06/2003 - held that:- This plea was, admittedly, not raised at any stage before, even though the case of the assessees travelled upto the apex court. It is interesting to note that the learned counsel who sought to narrow down the scope of the apex court’s remand orders, nevertheless, wanted us to consider the above plea also. The dichotomy of arguments notwithstanding, we are of the view that the alternative plea can be considered in these proceedings in terms of the remand orders. As it is a virgin plea which has got to be substantiated by the parties concerned, the same will have to be examined by the adjudicating a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven below: Appeal No. Appellant Respondent Period Service tax + education cess Penalties ST/365/2007 CST, Hyderabad-II Badruka Institute of Foreign Trade, Hyderabad 7/2003 to 9/2005 Rs.22,77,288/- Rs.22,77,288/- u/s 78 Rs.150 per day u/s 76 Rs.1000/- u/s 77 ST/392/2007 CST, Hyderabad-II Institute of Insurance Risk Management, Hyderabad 3/2003 to 3/2006 Rs.4,76,013/- Rs.4,76,013/- u/s 78 Rs.100 per day u/s 76 Rs.1000/- u/s 77 The remaining appeal of another assesse is against an order of the Commissioner demanding service tax under the same head, imposing penalties etc. as shown below:- Appeal No. Appellant Period Service tax + education cess demanded Penalties ST/194/2008 Indian School of Business, Hyderabad 7/2003 to 3/2007 Rs.21.82 cr. Rs.12.25 cr. u/s 78 Rs.1.05 cr. u/s 76 2. The earlier Final Orders passed by this Bench in all thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 as also to decide afresh on all other issues. Accordingly we have examined the records of all the cases. 3. The Institute of Chartered Financial Analysts of India (ICFAI, for short), Hyderabad, is a society registered under the Andhra Pradesh (Telengana Area) Public Societies Registration Act, 1350 Fasli as per the Registration Certificate No.1602/1984 issued by the Registrar of Societies, Hyderabad. The ICFAIAN Foundation is also a society registered under the same Act as per the Registration Certificate No.1800/1998 issued by the Registrar of Societies, Hyderabad. The ICFAI University, Dehradun was established in 2003 under the ICFAI University Act, 2003 of the State of Uttaranchal and the same was sponsored by the ICFAI Society, Hyderabad. The ICFAI University, Tripura was established in 2004 under the ICFAI University Tripura Act of the State of Tripura and the same was also sponsored by the ICFAI Society, Hyderabad. M/s. Badruka Institute of Foreign Trade(BIFT, for short), Hyderabad is an institution belonging to the Seth Ghasiram Gopikishen Badruka Educational Society registered under the aforesaid Public Societies Registration Act of 1350 Fasli as per the Registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur but the other 4 ICFAI entities are in appeal before us. In this context, it may also be mentioned that the ICFAI University, Raipur ceased to exist with the judgment of the Hon ble Supreme Court, dt. 11/02/2005, in the case of Prof. Yashpal and another vs. State of Chhattisgarh and others wherein Section 5 (which empowered the State government to incorporate and establish, by Notification in the Gazette, self-financed private universities for higher education) and Section 6 (which permitted such universities to affiliate colleges or other institutions or to set up more campuses than one with prior approval of the State government) of the Chattisgarh Niji Kshetra Viswavidyalaya (Sthapana aur Vinyaman) Adhiniyam, 2002 were struck down as unconstitutional and all Notifications issued by the State government in the Gazette in the purported exercise of power under Section 5 ibid notifying private universities including the ICFAI University, Raipur were also quashed. 4.2. A show-cause notice dt. 19/01/2006 was issued to BIFT demanding service tax with education cess on the gross amount of Rs.2,70,08,524/- collected by them as tuition fees from students for allegedly imparting trai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or coaching centre means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force. Section 65(105)(zzc) taxable service means any service provided or to be provided, to any person, by a commercial training or coaching centre in relation to commercial training or coaching; Explanation.For the removal of doubts, it is hereby declared that the expression commercial training or coaching centre occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force and carrying on its activity with or without profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. As per the directives of the Hon ble Supreme Court, we have to decide afresh on all the issues on merits. The substantive issue has to be decided by taking into account the aforesaid explanation to Section 65(105)(zzc) of the Finance Act, 1994. 7. Heard both sides. Though, in the appeals of the ICFAI institutions, the territorial jurisdiction of the respondent was challenged, this objection has not been pressed before us. It is not in dispute that all the fees were centrally collected in the name of ICFAI University and deposited in the accounts of ICFAI Society, Hyderabad or ICFAIAN Foundation, Hyderabad. In view of this method of centralized billing and collection of fees, adopted by the ICFAI institutions which were not registered for service tax purposes, we uphold the jurisdiction of the Commissioner of Central Excise, Hyderabad who passed the impugned order. This view is also supported by the Tribunals decision in the case of Nokia Pvt. Ltd. vs. Commissioner [2006(1) STR 233]. 8. Other submissions/arguments made by the learned counsel for the assessees are summarized below: (a) The ICFAI institutions, the ISB, the BIFT and the IIRM are all educational bod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... renting of immovable property) and clause 115 (definition of tour operator) of Section 65 of the Finance Act, 1994. These definitions, which contain references to educational body and commercial training or coaching centre, bring out a clear distinction between the two, indicating that the legislative intent is to treat an educational institution/body imparting skill or knowledge or lessons on any subject or field, differently from a commercial training or coaching centre. [Wharton s Law Lexicon, Oxford/Chambers Dictionaries etc. referred to for distinguishing between education and training.] The assessees being educational institutions are not liable to pay service tax under Section 65(105)(zzc). Educational bodies are exempt from the levy. (c) What is sought to be taxed under the above provision is only the act of coaching or training provided to the students for preparing them for entrance examinations. [Reliance placed on the Tribunal s decision in the case of Administrative Staff College of India vs. Commissioner [2009(14) STR 341 (Tri. Bang.] upheld by the Supreme Court in the case Commissioner vs. Administrative Staff College of India [2010(20) STR J117 (SC)]. Reliance als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts or contravened any provision of law with intent to evade payment of tax. Moreover, whenever the assessees were required to furnish any information to the department, they promptly did so. The above bona fide belief of the assessees was also strengthened by certain decisions rendered by this Tribunal in favour of similar institutions, for instance, Great Lakes Institute of Management Ltd. vs. CST, Chennai [2008(10) STR 202 (Tri. Chennai)]. The decisions rendered on the issue by the Tribunal prior to the insertion of the explanation ibid were in favour of the assessees. In these circumstances, the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 was not invocable in these cases. For the same reason, Section 78 of the Act was not to be invoked to impose penalties on the assessees. 9. The submissions/arguments made by the learned Special Consultant for the Revenue are summarized below: (a) The so-called ICFAI University, in the name of which fees were collected, courses conducted and certificates issued, was an informal consortium of the ICFAI Society, the ICFAIAN Foundation and the three ICFAI Universities, Raipur, Dehradun and Tripura. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcial training or coaching centre appearing in Section 65(26) and (27) and retrospectively explained in explanation to Section 65(105)(zzc). (b) The ISB was also working in the same manner and they are also covered by the definition of commercial training or coaching centre. The PG courses in management, the Executive Educational programmes and the short term courses conducted by ISB were nothing but courses that imparted skills, knowledge or lessons in the field of management and other specialized areas. Fees were collected from the students as consideration for these services. Therefore, these activities would also qualify to be commercial training or coaching service for the levy of service tax in terms of the explanation to Section 65(105)(zzc) ibid. That the diplomas or certificates issued by the ISB were accepted by institutions abroad does not alter ISB s tax liability. As the diplomas/certificates issued by the ISB were not recognized by law, this assessee cannot claim exclusion from Section 65(27) even as it stood prior to the addition of explanation to Section 65(105)(zzc). (c) The assessees cannot escape tax liability on the premise that they are educational institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial facts with intent to evade payment of service tax. The extended period of limitation was rightly invoked in the ICFAI cases inasmuch as they did not get registered, did not file ST-3 returns and did not pay service tax and suppressed/misrepresented material facts for evading this tax liability. (h) The ISB also behaved more or less in the same manner. A major part of the demand raised on them is within the normal period of limitation. The rest of the demand is also enforceable as the extended period of limitation has been rightly invoked on the basis of suppression of facts found against them. (i) In the case of CCE, Visakhapatnam vs. Mehta Co. [2011-TIOL-17-SC-CX], the Hon ble Supreme Court held that, where the assessee suppressed material facts with intent to evade payment of duty, the department was entitled to issue show-cause notice to them within five years from the date of acquisition of knowledge of such facts by the department. In terms of this ruling of the apex court, the show-cause notices issued in the ICFAI and ISB cases are not hit by limitation. In respect of the ISB, in any case, the demand for the period from 28/09/2005 to 31/03/2006 covered by the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have given careful consideration to the submissions. The substantive issue which has arisen before us in these de novo proceedings is whether the assessees can claim exemption from service tax liability under Section 65(105)(zzc) read with the definition of commercial training or coaching under Section 65(26) and the definition of commercial training or coaching centre under Section 65(27) of the Finance Act, 1994 (as this provision stood during the period of dispute) in respect of the fees/charges collected by them from the students who underwent various courses offered by the assessees during the period of dispute. 13. The above issue has got to be examined on the facts of these cases in the light of the explanation added by the Finance Act, 2010 to Section 65(105)(zzc) of the Finance Act, 1994 with retrospective effect from 01/07/2003. As per this explanation, the expression commercial training or coaching centre appearing in Section 65(26) and (27) of the Finance Act, 1994 shall include-- * any centre or institute, by whatever name called, where training or coaching is imparted for consideration, with or without profit motive,whether or not such centre or institute is reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned counsel has referred to WHARTON S LAW LEXICON. It cannot be disputed that the act of imparting skill or knowledge or lessons on any subject or field (other than sports) is the stated purpose of commercial training or coaching vide Section 65(27) of the Act. Both the law lexicons cited before us present various shades of meaning of education. According to one meaning appearing in MAJOR LAW LEXICON, education means the act or process of imparting or acquiring particular knowledge or skills and it is the result produced by instruction, training or study. (This meaning is seen culled out from Padmanav Dehury vs. State of Orissa [AIR 1999 Orissa 99].) WHARTON S LAW LEXICON quotes Swamy Vivekananda: The end of all education, all training, should be man-making. The end and aim of all training is to make the man grow. The training by which the current and expression of will are brought under control and become fruitful is called education. As rightly submitted by the learned Special Consultant, education can be seen as the result of study, instruction, training, coaching etc. and the websites of at least two ICFAI varsities have been shown to acknowledge this. Therefore a line ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gree recognized by law inasmuch as the so-called ICFAI UNIVERSITY has not been shown to be a legally constituted body authorized by law to issue the same. We have, thus, found great force in the submissions made by the learned Special Consultant. As regards other assessees, it has not been established that the degrees/certificates/diplomas issued by them to their students during the relevant period were recognized by law. Acceptance of any such degree/certificate/diploma by any varsity or other institution abroad cannot mean recognition thereof by Indian law. Thus a conspectus of facts presented to us would clearly disclose the real character of the assessees activity training or coaching for a consideration. 16. It was argued by he learned counsel that the ICFAI Universities, Dehradun and Tripura, were established under the respective State Acts and recognized by the UGC and should ipso facto be considered to be establishments authorized to issue certificates, degrees etc. Though it is true that these universities were, by UGC s notification, included in the list of private/self-financed universities under Section 2(f) of the UGC Act, there is no evidence of any of them having i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) raised an alternative plea by claiming the benefit of exemption under Notification No.9/2003-ST dt. 20/06/2003 which benefit is available to a vocational training institute as defined in the Notification. This plea was, admittedly, not raised at any stage before, even though the case of the assessees travelled upto the apex court. It is interesting to note that the learned counsel who sought to narrow down the scope of the apex court s remand orders, nevertheless, wanted us to consider the above plea also. The dichotomy of arguments notwithstanding, we are of the view that the alternative plea can be considered in these proceedings in terms of the remand orders. As it is a virgin plea which has got to be substantiated by the parties concerned, the same will have to be examined by the adjudicating authorities concerned. 20. We have also examined the plea of limitation raised by the assessees/appellants. These appellants had not disclosed the relevant facts and materials to the department during the periods of dispute. They had not taken steps to obtain registration with the department, nor to file ST-3 returns of the fees/charges collected from the students, nor to pay service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation was rightly invoked in these cases and, therefore, no part of the demand of service tax on any of the assessees can be held to be time-barred; (iii) Section 78 of the Finance Act, 1994 was rightly invoked in these cases, but the penalties imposed on the assessees under Sections 76 and 77 of the Act are liable to be set aside; (iv) The alternative claim of the ISB, the BIFT and the IIRM for exemption under Notification No.9/2003-ST dt.20/06/2003 is liable to be considered on merits by the adjudicating authorities concerned. Each of these assessees should be given a reasonable opportunity of being heard on this issue. Needless to say that, in the event of the issue being held against the assessees, they would be liable to pay the service tax(with education cess) as already quantified by the adjudicating authorities as also to pay interest thereon under Section 75 of the Act besides the penalties under Section 78 of the Act. No penalty shall be imposed on these assessees under Sections 76 and 77 of the Act. 23. In the result, it is ordered as follows:- (a) Appeals, ST/32, 39, 40 46/2007 are disposed of by sustaining the demand of service tax with education cess rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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