2013 (6) TMI 446 - AT - Service Tax

Commercial training or coaching service - ICFAI - vocational training - 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. - Explanation added by the Finance Act 2010 to Section 65(105)(zzc) of the Finance Act 1994 with retrospective effect from 01/07/2003. Held that - the assessees were providing to their students training or coaching for a consideration and would ipso facto fall within the ambit of commercial training or coaching centre envisaged in the explanation to Section 65(105)(zzc) of the Finance Act 1994. As this explanation has retrospective effect from 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 authorities concerned. Regarding extended period of limitation - Held that - Therefore we hold that the proviso to Section 73(1) of the Finance Act 1994 was rightly invoked in these cases. In any case a major part of the demand on ISB is within the normal period and in the case of other assessees also a considerable part of the demand is within the normal period.

Issues Involved:
1. Liability to pay service tax under Section 65(105)(zzc) of the Finance Act, 1994.
2. Invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994.
3. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
4. Eligibility for exemption under Notification No.9/2003-ST dated 20/06/2003.

Detailed Analysis:

1. Liability to Pay Service Tax:
The primary issue was whether the assessees were liable to pay service tax under Section 65(105)(zzc) of the Finance Act, 1994, which pertains to "commercial training or coaching service." The Tribunal examined the nature of the activities conducted by the assessees, which included various educational courses and training programs. The Tribunal noted that the Finance Act, 2010, added an explanation to Section 65(105)(zzc) with retrospective effect from 01/07/2003, clarifying that the term "commercial training or coaching centre" includes any centre or institute imparting training or coaching for consideration, regardless of profit motive or registration status. The Tribunal concluded that the assessees' activities fell within this definition, as they were imparting training or coaching for consideration and were not issuing certificates, diplomas, or degrees recognized by law. Thus, the assessees were liable to pay service tax on the fees collected from students.

2. Invocation of the Extended Period of Limitation:
The Tribunal upheld the invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994. It was found that the assessees had not disclosed relevant facts to the department, had not obtained registration, filed returns, or paid service tax, and had only disclosed information under compulsion during investigations. The Tribunal cited the Supreme Court's decision in CCE, Visakhapatnam vs. Mehta & Co., which held that the extended period could be reckoned from the date of acquisition of knowledge by the department. Therefore, the demands were not time-barred.

3. Imposition of Penalties:
The Tribunal affirmed the imposition of penalties under Section 78 of the Finance Act, 1994, which pertains to suppression of facts with intent to evade payment of service tax. However, it set aside the penalties imposed under Sections 76 and 77, considering the facts and circumstances of the cases. The Tribunal noted that the assessees' actions indicated an intent to evade tax, justifying the penalty under Section 78.

4. Eligibility for Exemption under Notification No.9/2003-ST:
The assessees ISB, BIFT, and IIRM raised an alternative plea for exemption under Notification No.9/2003-ST, which was not raised in earlier proceedings. The Tribunal allowed this plea to be considered by the adjudicating authorities on merits. The Tribunal ordered that each assessee should be given a reasonable opportunity to present their case regarding this exemption. If the exemption claim is denied, the assessees would be liable to pay the service tax, interest, and penalties under Section 78, but not under Sections 76 and 77.

Conclusion:
The Tribunal disposed of the appeals by affirming the liability to pay service tax, upholding the invocation of the extended period of limitation, sustaining the penalties under Section 78, and setting aside the penalties under Sections 76 and 77. The alternative claim for exemption under Notification No.9/2003-ST was remanded to the adjudicating authorities for consideration on merits.

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