2023 (11) TMI 895 - AT - Service Tax

Seeking clarity regarding the payment of service tax - APTS had neither taken registration nor paid services tax on amounts received for providing various taxable services - Mandap Keeper Services - Manpower supply services - Commercial Coaching - Business Auxiliary services - suppression of facts or not - invocation of extended period of limitation. Mandap Keeper Service - HELD THAT - At the outset to qualify under Mandap Keeper services there must be a service of letting out any immovable property including furniture fixtures light fittings etc. and which are let out for consideration for organising any official social or business functions. From perusal of the records it is seen that APTS is only providing computer labs to National Institute of Information Technology and other organisations such as APTEC who impart training to personnel of the Government and its organisations in computer awareness it would be highly incorrect to hold that they are providing Mandap Keeper Services - According to common parlance and dictionaries a function involves a ceremony or a social gathering . The activity of temporary letting out of computer lab for the purposes of training programme is a business activity and not a business function . Hence the activity of letting out the computer lab cannot be held to be a Mandap Keeper Services . Therefore the demand under mandap keeper cannot sustain. Commercial Coaching or Training - HELD THAT - For the periodical appeals the demand for commercial coaching was confirmed by the impugned order for the period 10.09.2004 to 31.03.2007. As can be seen from the records the coaching services are provided by NIIT and APTEC. APTS had no role in providing the coaching services except letting out or providing their computer lab for conducting training or coaching by other external organisations. Hence the demand of Rs. 55, 745/- for the period 10.09.2004 to 31.05.2006 and Rs. 1, 711/- for the period 2007-08 under Commercial Training or Coaching Services is not sustainable in law. Business Auxiliary Services - HELD THAT - The Adjudicating Authority categorises the activities carried out by the appellant on which the Service tax was demanded under BAS. As can be seen from such categorisation all the activities are related IT Services only. It can be seen from the definition of Business Auxiliary Service information technology services is specifically excluded during the entire period of demand in the instant case. Thus the entire demand of Service tax confirmed under BAS is liable to be dropped on this count as well - It is further seen that the activities of the Appellant appeared as commission agent to classify them under Business Auxiliary Service - A perusal of the said categorisation of services would clearly reveal that the Appellant would only assist the Government Departments/Organisation for availing/procuring various IT related hardware/services and for such assistance they collect certain administrative charges. Therefore the services of the Appellant do not satisfy the definition of commission agent so as to bring them under the category of Business Auxiliary Services . Further with respect to exemption claim rejected on income such as sale of tender forms xeroxing and printing and digital software and certificates which are not covered under business auxiliary services. This claim was not allowed on the ground that the appellant had not produced any evidence in support of the claim. However as can be seen they are identified clearly in the Show Cause Notice itself therefore the denial of exemption is incorrect. Manpower Supply Service - HELD THAT - The issue is no longer res-integra as the Hon ble Supreme Court have settled the issue of re-imbursement to rest - the view is further strengthened by the decision of MALABAR MANAGEMENT SERVICES PVT. LTD. VERSUS COMMR. OF ST 2007 (10) TMI 135 - CESTAT CHENNAI which was affirmed by the Hon ble Supreme Court COMMISSIONER OF SERVICE TAX CHENNAI TAMIL NADU VERSUS M/S MALABAR MANAGEMENT SERVICES PVT. LTD. 2019 (7) TMI 1161 - SC ORDER and VIDARBHA IRON STEEL CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE NAGPUR 2015 (8) TMI 593 - CESTAT MUMBAI . This view was also followed by the Principle Bench in the case of M/S RAJCOMP INFO SERVICE LIMITED VERSUS THE COMMISSIONER OFFICE OF THE COMMISSIONER CGST AND CENTRAL EXCISE COMMISSIONERATE (VICE-VERSA) 2022 (2) TMI 955 - CESTAT NEW DELHI . Extended period of limitation - HELD THAT - It is settled law that when all the relevant facts are in the knowledge of the department there cannot be a case for the Department alleging wilful misstatement for invoking extended period of limitation. Further it is clearly evident from the responses given by the Appellant to the communications received from the Department that the Appellant have entertained a bona fide belief that their activities were either exempted or not liable for Service tax. Both the SCN and impugned order failed to demonstrate that the Appellant acted either deceitfully or fraudulently to evade taxes. The Appellant being a Government Company cannot be alleged to have entertained any intention to evade payment of Service tax. The issues are purely of interpretation and from 2004 onwards the department is aware of the activities of the appellant - thus on grounds of limitation also the impugned orders need to be set aside. The impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Mandap Keeper Service
2. Commercial Coaching or Training
3. Business Auxiliary Services
4. Manpower Supply
5. Extended Period of Limitation
6. Penalty under Section 78

Summary:

Mandap Keeper Service:
The Tribunal examined whether the appellant's provision of computer labs to NIIT and APTEC for training government employees constitutes "Mandap Keeper Services." It concluded that such activities do not qualify as "Mandap Keeper Services" because they involve business activities rather than organizing official, social, or business functions. Therefore, the demand under Mandap Keeper Services cannot be sustained.

Commercial Coaching or Training:
The Tribunal addressed the demand for commercial coaching or training services. It found that the appellant only provided computer labs, while the actual coaching was done by external organizations like NIIT and APTEC. Since the appellant did not provide coaching services, the demand under this category is not sustainable. Additionally, confirming the demand for periods not covered in the Show Cause Notice was deemed beyond its scope.

Business Auxiliary Services:
The Tribunal analyzed whether the appellant's activities fall under Business Auxiliary Services (BAS). It noted that the appellant acted as a technical consultant and nodal agency for government departments, assisting in procurement and implementation of IT services. The Tribunal found that these activities are related to IT services, which are specifically excluded from BAS. Therefore, the demand under BAS is not sustainable. The Tribunal also rejected the denial of exemption claims for activities like sale of tender forms and xeroxing, as these were clearly identified in the Show Cause Notice.

Manpower Supply:
The Tribunal examined the demand under Manpower Supply Services. It found that the appellant deputed employees to government departments and claimed reimbursement of their salaries plus an administrative cost. The Tribunal held that the reimbursement of salaries should not be included in the taxable value, relying on the Supreme Court's decision in UOI Vs Intercontinental Consultants and Technocrats India Pvt. Ltd. Therefore, the demand under Manpower Supply Services is not sustainable.

Extended Period of Limitation:
The Tribunal found that the Department was aware of the appellant's activities since 2004 and had communicated with the appellant regarding the nature of their services. Therefore, invoking the extended period of limitation was incorrect. The Tribunal held that the appellant had a bona fide belief that their activities were exempt or not liable for service tax, and there was no evidence of deceit or fraud.

Penalty under Section 78:
The Tribunal dismissed the Department's appeal for non-imposition of equal penalty under Section 78, as the demands of service tax were not sustainable on merits and limitation. It held that the question of penalty does not arise.

Conclusion:
The Tribunal allowed the appeals, set aside the impugned orders, and granted consequential benefits to the appellant. The Departmental Appeal No. ST/472/2008 was dismissed.