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TMI Blog2019 (11) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the Appellant, was repelled by a learned Member (Technical) . The appeals may now be listed before the Regular Bench. - SERVICE TAX APPEAL No. 1884 OF 2012 WITH SERVICE TAX APPEAL No. 2799 OF 2012 AND SERVICE TAX APPEAL No. 2896 OF 2012 - MISC. ORDER NO. 30344/2019 - Dated:- 23-7-2019 - JUSTICE DILIP GUPTA, PRESIDENT, MS. SULEKHABEEVI C.S., MEMBER (JUDICIAL) AND MR. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) For The Respondent : Sh. G. Shivadas, Sr. Advocate and Ms. Sudeshna Benerjee, Advocate, for the Appellant in Service Tax Appeal No. 1884 of 2012 with Service Tax Appeal No. 2896 of 2012 and in Service Tax Appeal No. 2799 of 2012 For The Appellant : Sh. MVS Prasad, Special Counsel for the Respondent in Service Tax Appeal No. 1884 of 2012 with Service Tax Appeal No. 2896 of 2012 ORDER JUSTICE DILIP GUPTA : This Larger Bench has been constituted to resolve the divergent views taken by two Benches of the Tribunal in Sri Chaitanya Educational Committee vs Commissioner of Customs, Central Excise Service Tax, Guntur 2016 (41) STR 241 (Tri. Bang.), and ITM International Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ediate examination in accordance with the regulations, but not to the degree examinations of a University. The Appellant through its own Junior Colleges and the Junior Colleges of other societies under its management, imparts education to students of Intermediate i.e Class 11 and Class 12. It is recognized under the provisions of the Intermediate Education Act. It is, therefore, necessary for the Appellant to follow the guidelines prescribed by the Intermediate Education Act and the Regulations framed thereunder. 5. However, in the year 1991 the Appellant introduced an optional scheme or courses for students undergoing intermediate courses in Junior Colleges. According to the Appellant, these courses are integrated in the syllabus of Class 11 and Class 12 and these optional courses are offered to students to enable them to obtain high scores in various entrance examinations for medical and engineering courses. The various courses offered by the Appellant to the students of the junior colleges are as follows : ( i) Maths/Physics/Chemistry (Regular Intermediate) ( ii) Intermediate + IITJEE (along with AIEEE and BITSAT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court which is said to be pending. The Department also filed an Appeal before the Supreme Court on the aspect of extended period of limitation which was decided against the Department. 8. In ITM International Private Limited, again two contrary opinions were expressed by the Members constituting the Bench, but this time, the third Member took a view that Service Tax was not leviable. 9. For the subsequent period 200710, the Department also issued three show cause notices dated 24 October, 2008, 07 October, 2009 and 30 September, 2010 to the Appellant demanding Service Tax under the heading commercial training or coaching . The demands were confirmed by order dated 30 March, 2012 passed by the Adjudicating Authority to the extent of ₹ 63,06,14,433/with penalty and interest. This order has been assailed by the Appellant in Service Tax Appeal No. 1884 of 2012. For the period 201011, another show cause notice dated 18 October, 2011 was issued and the demand to the extent of ₹ 13,04,69,118/was confirmed by the Adjudicating Authority by order dated 13 July, 2012 with interest and penalty. This order has been assailed by the Appellant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospective effect from 01 July, 2003. It is reproduced below : 65(105)(zzc) 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 subclause 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 organisation under any law for the time being in force and carrying on its activity with or without profit motive and the expression commercial training or coaching shall be construed accordingly. 14. It is, therefore, clear from the aforesaid definitions that commercial training or coaching means any training or coaching provided by a commercial training or coaching centre. A commercial training or coaching centre has been defined to mean, any institute or establishment providing commercial training or coaching for imparting skill or k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmediate Board as well as the Principal of the respective colleges. The transfer certificates are issued by the Junior Colleges; and ( iv) The value of taxable service arrived at is erroneous and no interest is chargeable nor penalty is imposable. 17. Shri MVS Prashad, learned Counsel appearing for the Department, has, however, supported the impugned order. 18. It is not in dispute that the Appellant is imparting education through numerous Junior Colleges for students of intermediate course i.e. Class 11 and Class 12. It is also not in dispute that the Appellant also offers optional scheme of courses for students undergoing the intermediate course. These optional courses are offered to enable students to score higher marks in the national entrance examination for seeking admission to medical and/or engineering colleges. It is also not in dispute that the fee structure for the various programmes offered by the Appellant is different for each programme and in any case is much higher than the fee structure for the students undergoing the regular intermediate course prescribed by the Intermediate Education Board. It may be that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax. In the case of National Institute of Bank Management (NIBM), the same issue was examined by the Ministry. The Ministry vide letter F.No. 354/91/2005TRU dated 22.08.2005 has clarified that taxable service provided by any person for a consideration on commercial basis are liable for Service Tax. Service Tax is a consumption based levy and the incidence of Service Tax is borne by the consumer of service. The nature of the tax being indirect, the fact that any person is providing taxable service on nonprofit basis, is not relevant to determine the levy of Service Tax. 22. It will also be useful to reproduce to the Board Circular dated 28 January, 2009 on the same issue. The Board clarified as under : The first issue arises from the very name i.e. commercial training or coaching center . Many service providers argue that the word commercial appearing in the aforementioned phrase, suggests that to fall under this definition, the establishment or the institute must be commercial (i.e. having profit motive) in nature. It is argued that institutes which are run by charitable trusts or on noprofit basis would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aminations. What is, however, sought to be contended by the Appellant is that the activity of preparing these students for appearing at the entrance examinations is not a separate activity but is integrally connected with the intermediate education rendered by the Appellant. It is stated that the syllabus is designed in such a way that it prepares the students to effectively get through the entrance examinations meant for admission to professional courses, such as, engineering and medicine. It is also stated that there is no separate curriculum or teaching faculty nor separate classes are held. It is submitted that from the definitions of commercial training or coaching or commercial training or coaching centre and from the taxable service in relation to commercial training or coaching that Service Tax is sought to be levied on the activity of commercial training or coaching provided by a commercial training or coaching centre and not on educational activities even if commercial training or coaching is also undertaken. It has also been submitted that all institutes, whether they issue the certificates or not, are exempted from the definition of commercial training or coachin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board setting forth the year of the examination, the subjects in which he/she was examined and the division in which he/she was placed. 28. It is, therefore, more than apparent that it is the Board that awards certificates to the candidates who have undergone the prescribed course and have appeared at the intermediate examination conducted by the Board and that the certificate is awarded by the Secretary of the Board of Intermediate Examination. A candidate is given a certificate after he has been declared successful in the examination. The certificate sets forth the year of the examination, the subject in which he was examined and the division he was placed. A copy of the certificate has also been filed by the Appellant. It clearly shows that it has been issued by the Board of Intermediate Examination, Andhra Pradesh, and it contains the Serial Number, Emblem of the Board and the details of the student with marks. It is signed by the Controller of Examination of the Board. Merely because the Principal of the Junior College has also signed the certificate with the stamp of the Junior College would not mean that the certificate has been issued by the Junior Colleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime being in force and, therefore, will fall in the exemption clause of the definition. The Appellant will, therefore, fall in the category of a commercial training or coaching centre . 32. The contention of the learned Counsel for the Appellant, however, is that since Service Tax is levied on the activity of commercial training or coaching provided by a commercial training or coaching centre , it cannot be levied on educational activities even if they include commercial training or coaching. According to the learned Counsel, there can be no distinction between an institute imparting commercial training or coaching even if it is not issuing any certificate because such an interpretation would be preposterous and would render the exclusion clause redundant. 33. It is not possible to accept this contention of the learned Counsel for the Appellant. The Appellant is providing commercial training or coaching . It is a commercial training or coaching centre because a commercial training or coaching centre has been defined to be an institute providing commercial training or coaching for imparting skill or knowledge or lessons and includes coachin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned Counsel for the Appellant. The relevant portion of the Circular is reproduced below : 2.2.1 Commercial coaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams like entrance examinations for Indian Institute of TechnologyJoint Entrance Examinations/Pre Medical Tests, Civil Services exams etc. are chargeable to service tax.......... xxxxxxxx xxxxxxxx xxxxxxx 2.2.3 Certain doubts have been raised in case of commercial coaching and training. In this regard, the following is clarified,xxxxxxxx Xxxxxxxx xxxxxxx xxxxxxx * Whether service tax is leviable on institutes providing commercial coaching in addition to recognized degree courses: Some institutes like colleges, apart from imparting education for obtaining recognized degrees/diploma/certificates, also impart training for competitive examinations, various entrance tests etc. It is clarified that by definition, such institutes or estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng classes for examinations or unrecognized courses in various areas such as, management, marketing, engineering etc. The schools, institutes, colleges and universities providing courses that lead to award of recognized diplomas/degrees and sports education were kept out of tax net. These include universities created under a Central or State Act, institutes recognized by UGC as universities or deemed universities, institutes granted recognition professional councils like AICTE, Medical Council of India, Bar Council of India etc. To distinguish the former types of institutes/centres from the latter, the word 16 commercial was used in the definitions of Commercial training and coaching , Commercial training and coaching centres and taxable service . 6.2 The use of the word commercial in these definitions has led to certain unintended consequences. A view has been taken that the term commercial appearing in various definitions implies that the institute must be run with a profit motive to fall under the taxable service. A number of taxpayers resisted paying tax on this ground. In order to clarify the legislative intent, the definition of the taxable servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions discussed above are contrary to some of the facts that are emerging from the records of the case and the submissions. The appellants themselves in the synopsis in para 6 as already been reproduced earlier have stated that appellantsociety has established separate integrated programmes which aim at enabling students to prepare for specific entrance exam called ICON, NEON, LEO. It has been stated that the fee structure for the above stream would be different. It also emerged during the hearing that 94% of the students (on an average) who also opt for special courses provided by the SCEC are the students who also study in the colleges of SCEC/managed by SCEC. The fact remains that there are 6% of the students who do not undergo intermediate course or who do not study in the colleges of SCEC or colleges managed by SCEC but take up optional courses for appearing in competitive exams. If the claim made above was correct, no student who was not studying in the colleges of/managed by SCEC could have taken up the special courses offered by SCEC for entrance exams. This directly shows that the submissions in this regard are not based on facts but have been made to avail the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r all the colleges and no separate fee is charged for such classes even though such classes are also made to help the students to appear for competitive exams. It is not the submission of the learned counsel or the appellant that the courses conducted by the appellant are limited to that period which is earmarked for that purpose for the AP Intermediate Board. 45. Learned Member (Technical) also rejected the contention of the Appellant that the Junior College itself was issuing the certificate and the relevant paragraph is reproduced below : 22. In this case neither SCEC nor the colleges/establishments managed by them issued any certificate. Some of the sample certificates were produced by the appellants and on going through the same, we find that the same has been issued by Board of Intermediate Education, AP and Controller of Examination has signed and the Principal of the concerned college has also signed. No one can say or claim or this is a certificate issued by the college or SCEC. Anyone who sees the certificates would always recognize it as a certificate issued by Board of Intermediate Education, AP and not by SCEC. The kind of ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding Budget Circular No. D.O.F. No. 334/1/2010TRU, dated 2622010, which reads as under :- 6.1 Commercial training and coaching service was introduced in Budget 2003 with a view to tax the mushrooming coaching institutes and training centres which either provide coaching classes for examinations or unrecognized courses in various areas such as, management, marketing, engineering, etc. The schools, institutes, colleges and universities providing courses that lead to award of recognized diplomas/degrees and sports education were kept out of tax net. These include universities created under a Central or State Act, institutes recognized by UGC as universities or deemed universities, institutes granted recognition professional councils like AICTE, Medical Council of India, Bar Council of India, etc. To distinguish the former types of institutes/centres from the latter, the word commercial was used in the definitions of Commercial training and coaching , Commercial training and coaching centres and taxable service . ( c) It is not important, who issues the certificate, whether issued by educational institution or by the Board (se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful completion of the intermediate examination by the students enrolled in the junior colleges, in addition to the marks sheet issued by the Board under signature of the Controller of Examination, the college provides transfer certificate and conduct certificate to the students to facilitate their further education, and/or employment. ( j) The adverse inference drawn by the learned Commissioner for the reasons that the assessee has collected monetary consideration in excess of the amount/fee fixed by the Board of Intermediate Education is of no relevance under the provisions of the Finance Act, 1994. The Finance Act, 1994 does not lay down any monetary limits in case of coaching provided by schools/colleges in addition to the prescribed curriculum/syllabus. It has been further clarified by the appellant that the fees collected from the students, besides tuition fee also includes game fee, laboratory fee, examination charges, hostel fee, etc. 47. As there was a difference of opinion between the two Members constituting the Bench, the matter was referred to a third Member. The learned third Member agreed with the views of the learned Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing of JEIIT, EAMCET, etc., in different branches of the Appellant Society situated in Andhra Pradesh and other places of India. It is clearly evident from the facts of the case that the coaching classes were conducted in different campuses, separate fees and totally independent and had no nexus with the intermediate courses of the colleges. So, I agree with the finding of the learned Member (Technical) that Service Tax is leviable on the Appellant Society on such coaching classes. 48. The majority decision that was rendered in the Appeal on the matter being placed before the Division Bench is as follows: MAJORITY DECISION 89. [Order per : B.S.V. Murthy, Member (T)] In view of the conclusion of the majority of Members, the following order is passed : ( a) Service tax is leviable in respect of coaching provided by the appellant through junior colleges under its management or under the management of others also; ( b) Extended period of limitation is not invocable and the demand is limited to the normal period of limitation; and ( c) Only penalty under Section 77 of the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the degree and diploma certificates issued by foreign universities were institutes recognized by AIU and, thereafter, the certificate has to be treated as a certificate recognized by law. There is no discussion in the order as to whether certificate should be issued by an institute. The matter was referred to a third Member, who opined as follows: 23. On the first issue, regarding courses offered by the appellant resulting in the degrees/diplomas awarded by University of London, I find that these degrees/diplomas are to be considered as recognized by the law for the time being in force. It is noted that inference that degree or diploma or any educational qualification should be issued by commercial trainee or coaching Centre itself, is too literal interpretation of the statute. It is a well known fact that the colleges in India provide courses resulting in degrees or diplomas but the said degrees and diplomas are issued by the University or the main Institute to which these colleges are affiliated. If it is to be held that as the degree is not issued by the college which is providing course, the college should be considered as a commercial trainee or coac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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