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Sri Chaitanya Educational Committee (SCEC) Versus Commissioner of Customs, Central Excise And Service Tax, Guntur, Commissioner of Customs, Central Excise And Service Tax, Guntur Versus Sri Chaitanya Educational Committee (SCEC)

2015 (6) TMI 627 - CESTAT BANGALORE (LB)

Demand of service tax - 'Commercial training or coaching' services - Invocation of extended period of limitation - whether the Service Tax is leviable in respect of the coaching provided by the Appellant through their junior colleges under its management or under the management of others - Difference of opinion - Majority order - Held that:- Students appear for the intermediate examinations under the hall ticket issued by the respective colleges and the students after passing examination, are aw .....

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ng of JE-IIT, 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

Appellants were aware of their tax liability as they have registered in Kota, Rajasthan and paid Service Tax. There is no logic or rational on diffe .....

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nion on the leviability of Service Tax in the present case would also support the bonafide belief of the Appellant of the leviability of tax. - demand of tax is barred by limitation. - However, penalty u/s 77 is upheld - Decided partly in favour of assessee. - ST/ Misc./200/2010, ST/ Misc./439/2010, ST/ , Misc./440/2010, ST/Early Hearing/25488/2013, ST/785/2009-DB & ST/MISC./201/2010 in ST/745/2009-DB - Final Order Nos. 21239 and 21240/2015 - Dated:- 1-6-2015 - B S V Murthy, Member (T) , MR. Ani .....

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consequently claiming Income tax exemptions as a charitable institution. 2. The appellants are imparting education through 3 types of institutions as follows: • Junior Colleges - These colleges are wholly established by the appellants themselves. • Junior Colleges (associated with the Appellants Society) - These colleges are established by various other societies. The appellants society is associated with these societies/colleges and is actively managing the (colleges operating under t .....

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utside the State of Andhra Pradesh Therefore, education is being provided by the appellants society through two types institutions, viz.: (i) Junior Colleges and (ii) Coaching Centers. 3. The appellant's society, through their own junior colleges and the junior colleges of other societies under its management imparts education to the students for Intermediate (11 th and 12 th Standard). In order to impart education for their students, like any other schools providing education for 11 th and .....

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ate. The said optional courses are offered so as to enable the students to appear and score high in various entrance exams such as IIT-JEE, Engineering and Medical Common Entrance Test (EAMCET) etc. The appellant's society follows the guidelines for the syllabus prescribed by the A.P. Intermediate Board, conducts regular internal assessments, follows a standard admission procedure and imparts education in various subjects under the Intermediate Board. Copies of Prospectus/ Academic organizer .....

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Intermediate+ CA/ICWA Foundation 6. For the purpose of providing the said integrated courses along with the Second year of intermediate studies of the students, the appellant's society has established integrated programs which aim at enabling students to be prepared for specific entrance exams even while completing the Second year of Intermediate education. The said programs evolved by the appellant's society as provided for in the prospectus are as follows: • IIT-JEE Concept Orien .....

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These activities being in the nature of 'Commercial training or coaching' services have been held by the respondent, to be covered under Section 65(26) of the Finance Act, 1994 read with Sections 65(27) and 65(105)(zzc) of the Act ibid and hence, exigible to service tax. The captioned appeals relate to a demand for the period from 1.7.2003 to 31.3.2007. 8. After investigations against the society which were conducted since the year 2003 the department issued a show-cause notice dated 8.9 .....

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ed to demand interest under Section 75 of the Act and impose penalties under 76, 77 and 78 of the Act. 9. The gist of the Order-in-Original is as under: • Amount of service tax confirmed: ₹ 85,38,34,876/-; • Penalty of ₹ 200 per day or 2% of the tax, whichever is higher u/s 76; • Penalty of ₹ 150 crores u/s 78 plus penalty of ₹ 1000 u/s 77. While appellant has appealed against the entire Order, the department has appealed against the reduction of the servic .....

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entre" 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. • Sectio .....

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ted 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; This Explanation was inserted in the Finance Act, 2010 and made effective from 1/7/2003, i.e. the date from which the levy of service tax was imposed on "commercial tra .....

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dments on 1.5.2011. The issue involved in this case relates to the period from July 2003 to March 2007 and therefore except for the explanation inserted in 2010 and given retrospective effect from 2003, other amendments would not be of much relevance to the issue before us even though these amendments were also used by the appellant's counsel for arguing their case and the same will be dealt at the appropriate place. Before going into the question as to whether the retrospective amendment an .....

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s in view of the submission made by the learned Special Consultant that commercial and training center is a coined expression and the meaning always mean the same and had the same meaning which was made clear by introduction of explanation. 12. The appellant had interpreted the definition in their letter dated 26.8.2003 written to the Superintendent of Central Excise, Service Tax Range, Vijayawada. According to them, "Service tax has not defined the word commercial hence the meaning of the .....

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ri.-Chennai). It was the submission of the Special Consultant that even before the amendment was made the expression commercial training or coaching was in the nature of coined expression giving a specific meaning to the said expression. Any institute or establish engaged in imparting skill or knowledge or lessons on any subject of field other than sports, was covered by the definition and definition included coaching of tutorial classes. 13. According to Section 65 (26) "commercial trainin .....

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is to say that taxable service is any service provided by the defined person. Example: stock broker, advertisement agency, consulting engineer, custom house agent, C & F Agent, air travel agent, etc. in addition there were also examples where the definition uses the work commercial concern. For example, in respect of convention service, online information and database retrieval service, business auxiliary service, the expression commercial concern was used. There were three categories where .....

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concern and nobody else, in the definition itself such a word was used. Therefore when the intention was not to collect the tax from concerns who did not have a profit motive, the words commercial concern has been used. When the word commercial concerns have been used to define taxable service, obviously the demand cannot be made from an organization which is a charitable trust and does not have any profit motive. Therefore if we accept the view canvassed by the appellant's before the origi .....

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mmercial training or coaching centre" means any institute or establishment providing commercial training or coaching. Such commercial training or coaching has to be for imparting skill or knowledge or lessons on any subject or field other than sports. The definition makes it clear that whether a certificate has been issued or not is not relevant for this purpose. Further, it also specifically provides that coaching or tutorial classes are included thereby explaining the scope of definition. .....

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coaching and training centre which would again show that while legislating the definition; it was felt that if pre-school coaching and training is not specifically excluded, it would get covered. Pre-school coaching and training imparts skill or knowledge or lesson on any subject and sports also happens to be part of it even though they may not be in the exact sense we think of sports. Therefore the word commercial used before training or coaching cannot be made applicable to the person who is p .....

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ing or coaching center which conforms an essential part of a course or a curriculum of any other institute or establishment leading to a degree or education qualification recognized by law for the time being in force to any person. It also specifies that such an exemption is available only when the individual who receives such training or coaching pays for it. When we read the definition and the exemption Notification together, what emerges is that schools and colleges which provide training or .....

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without consideration does not attract any service tax liability since the rate of service tax is on the amount received as consideration for provision of service. Commercial training or coaching does not refer or cannot be said to be relating to the training or coaching provided only by a commercial concern in view of the above observations. 16. This was made clear by the Government in the Circular issued explaining the changes brought about in relation to service tax in the budget of 2010-11 .....

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nized 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', &# .....

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taxable service is being suitable amended, through insertion of an Explanation, to clarify that the word 'commercial' means any training or coaching that is provided for a consideration irrespective of the presence or absence any profit motive. This amendment is being carried out retrospectively (from July 2003) so as resolve the disputes pending at different levels of the dispute settlement system." Explaining the purpose of insertion of Explanation, etc., became necessary because .....

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uffix commercial used for training or coaching center cannot be attributed to the person providing the training or coaching but to the nature of training or coaching. 17. In fact, in olden days when there were large numbers of typewriting institutes even in small villages, many of the institutes call themselves as institute of commerce. The meaning understood by the students was that the institute taught typewriting and shorthand which are basically used for commercial purposes as well as commun .....

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ng charitable trust and organizations without profit motive so long as such training or coaching was covered by the definition. Therefore, we agree with the submission made by the special consultant that the legislative intent and the view taken all along by the department have been validated by the insertion of the explanation. 19. Now we proceed to consider the first ground of appeal by the appellant. It is the submission of the appellant that appellants are institute/establishment providing e .....

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on any subject or field; • Such training or coaching may be with or without issuance of a certificate; • It includes coaching or tutorial classes. 21. It was also submitted with which we agree that the training or coaching in the field of sports, pre-school coaching and training center and institute or establishment which issues any certificate or diploma or degree or any education qualification recognized by law are excluded. 22. In this case neither SCEC nor the colleges / establish .....

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ediate Education, AP and not by SCEC. The kind of certificates/degree/diploma that we are taking about in the definition is the ones which are issued by the recognized/deemed universities and secondary education Boards and autonomous colleges whose certificate has been recognized by law. Therefore, 23. The next submission of the appellant is that the Board itself had clarified that service tax is not leviable on institutes providing commercial coaching in addition to recognized degree courses. I .....

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gnized degree courses; some institutes like colleges, apart from imparting education for obtaining recognized degrees/diploma/certificates, also impart training for competitive examination various entrance tests, etc. It is clarified that by definition such institutes are outside the purview of commercial training or coaching centres." It is quite clear that this clarification is explaining the definition itself which we have already examined and we have come to the conclusion that it canno .....

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in their 10 th and first year intermediate. These optional courses enable the students to appear in various entrance examinations such as IIT-JEE, EAMCET, etc. The colleges only follow a different method of imparting the Intermediate education to the students and no separate training was provided to the students for preparations for the entrance exams. According to the learned counsel only w.e.f. 1.5.2011 training/coaching in other courses provided by institutes/establishments providing recogniz .....

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ges and therefore they were not liable to service tax. Even though it was not specifically mentioned, the claim is that the appellant could claim exemption under Notification No.10/2003- S.T. dated 1.7.2003 which provide for exemption to 'commercial training or coaching' which forms an essential part of course or curriculum of any other institute or establishments leading to an educational qualification recognized by law. The appellant's submissions in this regard are as under: &bull .....

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nducted by the Board get mark lists/mark sheets from the Board and the conduct and transfer certificates from the colleges administered by the appellants. • The exclusion part indicates a situation where the institute conducts an academic course and issues certificate by itself and another situation where the institute conducts an academic course which is recognized by law. For instance, the law degrees conferred by the different law colleges are recognized by the Bar Council of India and c .....

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on are same for all the intermediate students all over the state of Andhra Pradesh irrespective of the institution from which they appear for the exam. The answer papers are evaluated by the teachers specifically deputed by the State Examination Board. At the successful completion of the examination the student is given a marks card by the appellants and the same will be in accordance with the T-rolls maintained by the State Board of Education common to all the institutions. The marks sheet is s .....

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alification for higher studies or for seeking employment. Hence the whole activity of the appellants is in accordance with a system which is recognized by law and controlled and supervised by the State. Specimen copies of the T-rolls, Conduct certificate and transfer certificate are enclosed. However, it can be seen that these submissions and the submissions discussed above are contrary to some of the facts that are emerging from the records of the case and the submissions. The appellants themse .....

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s 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 ba .....

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campuses of SCEC. In fact in the statements, the Vice Principal also stated that students are allocated to different campuses/campus based on their performance in the regular intermediate course first/second year. We find that the submission made by the special consultant, the students of the colleges set up by SCEC and other likeminded societies were actually coached by SCEC in the campus set up by them. While it has been admitted that in places like Vijayawada and Hyderabad, there were separa .....

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he fee structure for intermediate course is decided by the state government. Therefore the management cannot charge higher fee. This is in another reason why the coaching given for entrance examination for which the fee varies from ₹ 8, 000/- to ₹ 75, 000/- per year cannot be integral part of curriculum or coaching as a part of regular college course; The moment it becomes the part of regular course, the fee charged cannot be more than prescribed by the state government and definitel .....

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re 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. 28. Another important aspect that has to be taken note of and which emerges from the records is the fact that schools recognized by AP Intermediate Board are recognized in their independent capacity. No doubt the Board recognized .....

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eservation for SC, ST and BC and other specified categories while making admissions. The principal will be held personally responsible for violation of rules of admission and management shall not interfere in this regard. The certificate also prescribes certain other conditions. The permission is granted to SCEC to start a profit college and the name of the college is specifically indicated in the certificate itself. The fact that the principal of the college signs the certificate, the stamp of .....

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ting the coaching provided for competitive examinations as an integral part of Intermediate course and if the fees happen to be more than the prescribed amount by the Board, it becomes income of the government. Therefore the claim that special coaching/optional coaching provided is an integral part of the regular curriculum of junior colleges is not based on facts. If 94% of the Intermediate students studying in the campuses and undergoing the training/coaching for competitive exams and are payi .....

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fact of their studying in college run by SCEC or managed by SCEC are called students of SCEC institutions. The policies relating to admissions, transfer of students and staff from one campus to another, management plan and delivery schedule were decided by various Committees of SCEC and implemented by the campus in-charge of SCEC and not by the individual colleges who had no say. 31. Even in the rejoinder submitted by the appellants to the submissions made by the special consultant, it has been .....

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ltant that the students in all individual campuses were allotted to the campus based on performance/subject group was contradicted by the learned counsel for the appellants in the rejoinder but no basis for this conclusion has been given by the appellants whereas the special consultant had relied upon the statement of Mr. Ravi Kumar which has not been contradicted by anyone till date. Since the colleges are required to be run according to academic plan prescribed by the Board and each college is .....

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or competitive exam has to be necessarily optional since admittedly the appellants allocate students to different campuses based on their academic abilities and the fee also is higher and separate for providing such coaching. It cannot be of regular college in view of the restriction on fee to be charged and also the government policy to be followed as regards admission. All students who got admission and especially those who get admission on the basis of reservation as per the policy of governm .....

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ext issue is whether the extended period could have been invoked for demanding service tax in this case. It was vehemently urged on behalf of the appellants by the learned counsel that appellants had fully cooperated with the department and provided the information whenever called for. The first ground taken for the purpose of taking a view that extended period could not have been invoked is that the appellant entertained a bona fide belief that the education imparted by them was not leviable to .....

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n Finance Act, 2010 wherein the law underwent a change, there cannot be any suppression of fact on the part of the appellant. In the rejoinder, the learned special consultant submitted that the decision in the case of NIBM cannot be applied to the present case. He submitted that, in that case after observing that the facts were similar to the issues involved in I.C. Financial Analysts of India (ICFAI): 2013 (30) S.T.R. 273, Tribunal held that on merits NIBM was liable to pay service tax. However .....

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rrect and therefore the decision in the case of NIBM cannot be applied to the facts of this case. In this case, in July 2003 itself as soon as the service was introduced in the statute books, the appellants were informed that they were liable to pay and they were asked to register themselves and start paying service tax. This was followed by correspondence with the appellants and further searches of their premises, investigations, recording the statements of various persons in the management whi .....

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nts are running certain centers where exclusive training is provided for entrance examinations only. As regards coaching centres run in Kota, it was submitted that the appellants had mistakenly taken service tax registration. It was submitted that there also summons were issued and premises of the appellant was searched on 8.12.2005 and on 15.12.2005 and letter was issued demanding appellants to pay service tax for the year 2005-06. There also on 26.12.2005, the appellant took the stand that app .....

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y also paid some service tax which was found to be much less than what was actually due according to the Revenue and hence the proceedings were initiated for demanding differential service tax for the period from 1.7.2003 to 5.10.2005. After 5.10.2005, Kota Centre was closed. It is surprising that in Kota, the ground that appellant was not a commercial venture but a charitable trust was taken only as late as 26.12.2005 in reply to a letter dated 15.12.2005. In fact it is their claim that they ha .....

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Pradesh have not been explained anywhere. Even if we assume that in Kota appellant was running an exclusive coaching centre and therefore probably misunderstood about their liability also cannot be correct in view of the fact that even in Andhra Pradesh appellants have centres where exclusive coaching for competitive examinations is conducted. There is no logic or rationale behind the different stands taken by the appellants in Kota and Andhra Pradesh. This is definitely one aspect which goes ag .....

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le to pay service tax on 13.7.2003 and therefore it is appellant's submission that department was in the knowledge of their activity. Hence they are not liable to pay service tax. 38. The question of knowledge and the consequences of knowledge and its impact on limitation was considered by the Hon'ble High Court of Gujarat in the case of Neminath Fabrics Pvt.Ltd.:2010 (256) E.L.T. 369 (Guj.). The learned special consultant relied upon this decision to counter the claim made by the appell .....

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) of Section 11A of the Act or the proviso thereunder it would tantamount to rewriting the statutory provision and no canon of interpretation permits such an exercise by any Court. If it is not open to the superior court to either add or substitute words in a statute such right cannot be available to a statutory Tribunal. 17. The proviso cannot be read to mean that because there is knowledge the suppression which stands established disappears. Similarly the concept of reasonable period of limita .....

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ud, etc. are merely alleged and are disputed by an assessee. Hence, by no stretch of imagination the concept of knowledge can be read into the provisions because that would tantamount to rendering the defined term "relevant date" nugatory and such an interpretation is not permissible. 19. The language employed in the proviso to sub-section (1) of Section 11A, is, clear and unambiguous and makes it abundantly clear that moment there is non-levy or short levy etc. of central excise duty .....

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ibed under the statute is that upon the reasons stipulated under the proviso being satisfied, the period of limitation for service of show cause notice under sub-section (1) of Section 11A, stands extended to five years from the relevant date. The period cannot by reason of any decision of a Court or even by subordinate legislation be either curtailed or enhanced. In the present case as well as in the decisions on which reliance has been placed by the learned advocate for the respondent, the Tri .....

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se the department acquires knowledge of the irregularities the suppression would not be obliterated." 39. Further, the learned special consultant also relied upon the decision of the Hon'ble Supreme Court in the case of M/s. Mehta and Co: 2011 (264) E.L.T. 481 (S.C.). In that case, the apex court held that provisions of Section 11A (1) [ pari materia with Section 73(1)] would be attracted once there is an intention to evade excise duty and contravention of the provisions of the Act. The .....

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arned counsel for the appellants with the submission that the details as regards the service charges collected and service tax payable were never called for from them till search operations were conducted and it was only in 2006-07, according to the learned counsel, the information was called for. He submitted that as soon as the information was called for they had submitted the details. He submitted that there was lot of correspondence with the department but in none of the letters, specific in .....

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he reply given by the appellants on 31.7.2003 was only available. However, while submitting the rejoinder on this submission, the learned special consultant submitted copies of correspondence once again. In the letter dated 13.7.2003, appellant was informed that 'commercial training or coaching centre' became liable to service tax w.e.f. 1.7.2003 and therefore the appellant was required to obtain registration as per the provisions of Section 69 of Finance Act, 1994. It was also mentioned .....

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wherein the definition of 'commercial training and coaching centre' was explained and appellant was informed in clear terms that they were required to take registration. Reminders were sent and on 23.2.2004 also appellant was informed that they had not come forward to take registration. Only after this, the search operations were conducted and subsequently on 10.5.2005, the appellants were asked to give specific information regarding fees collected by them and several other records. 42. .....

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and force the department to undertake coercive measures would be better off than a law abiding citizen who likes to pursue the matter in a legal and proper manner. Question arises then what would be legal and proper procedure for doing this. If a law abiding citizen would have taken the registration and filed the returns with the relevant information showing the service tax payable but would not have paid the same if he really felt he would not be liable to pay. This is the proper legal course t .....

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ce within the normal period and i.e. the time when the bona fide belief would come into play since the appellant has complied with the legal requirements. This was the proper procedure which was to be followed by the assessee, if they were intending to claim that no extended period was invokable. On the contrary, departmental officers also could have entertained a belief that in any case they have 5 years' time for issuing the show-cause notice since the appellant has defied the law and was .....

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er person who simply takes a stand and goes on putting hurdles and goes on corresponding without proceeding to undertake actions in accordance with law which is required of him. In our opinion, the claim of the appellant that extended period is not invokable because the information was not called for and therefore they had not violated any provisions is not at all acceptable especially in view of the decision of the Hon'ble Supreme Court and Hon'ble High Court of Gujarat. While making th .....

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the claim of the learned consultant that the appellants could not have entertained a bona fide belief because the same appellant followed the right procedure in Kota where they took registration and started paying tax. The fact that there also show-cause notice was issued, offence case was registered, because of dispute between the appellant and the department regarding quantum of service tax payable is another factor that may not be relevant but what is relevant is same person took the registra .....

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nce amount according to the appellant could have been intimated and incorporated in the returns by the assessee by taking a registration in which case extended period could not have been invoked. Under these circumstances, we hold that extended period has been correctly invoked in this case. 43. At this stage it is also to be taken note of that service tax is an indirect tax and all that the appellants had to do was to charge service tax to the students and pay it to the government. Unlike sever .....

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x according his assessment of the liability and pays to the government. When in our own analysis, there was no scope for interpretation that appellant was not liable to pay tax right from the beginning and explanation therefore was clarificatory in nature, the fact that appellant refused to collect the service tax from students and pay to the government goes against them. 44. The learned counsel also relied upon some decisions to submit that in view of these decisions a view was taken that ' .....

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s, even if the amendment made is considered as effective from the earlier date, yet extended period cannot be invoked in such a situation since this would show that the appellants could have entertained a bona fide belief. 45. Before we proceed to consider the decisions, it would be appropriate to discuss as to why a simplistic approach to take a view that because the subsequent decisions of judicial fora took a view in favour of the appellant, appellant could have entertained a bona fide belief .....

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ts are liable to pay service tax. We have also taken into account that the appellants themselves took registration and paid service tax in Kota. Therefore unless the very same facts are considered by a superior judicial forum or at least under the similar circumstances, a decision in favourable to the appellant has been taken, it would not be appropriate to simply follow the precedent decisions and apply the same to a case where the facts are totally dissimilar. 46. Another important aspect that .....

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Can we say that based on the decision of the Tribunal a layman could have entertained a bona fide belief after considering the statute and the decisions that penalty is not mandatory. • There were several decisions taking a view that excise duty is a duty on manufacture and therefore post-manufacturing expenses cannot be included for the purpose of levy of duty which was ultimately negatived by the Hon'ble Supreme Court in the case of Bombay Tyre International Ltd. • Another examp .....

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not have the knowledge and therefore period of one year has to be counted from the date of investigation for issue of show-cause notice and if show-cause notice is not issued within one year from the commencement of investigation or completion of investigation, the same would be time-barred. This was again overruled by the Hon'ble High Court of Gujarat in the case of Neminath Fabrics Pvt. Ltd. (supra). 47. Therefore, if an assessee has to plead a bona fide belief, such a bona fide belief has .....

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the legislative intent came into the picture only in 2010. Unless the doubts are raised either by the department or by the assessees and the matter reaches the Board, the legislative intent and clarifications are not issued. In this case, as can be seen in Rajasthan as well as in Andhra Pradesh, departmental officers had interpreted that the definition in a manner that it covered all organizations who provided such training or coaching. Department also entertained a view that schools, colleges/ .....

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d by law" is a very wide one. The learned counsel relied upon paragraph 14, 21-23 and 25 to support his submissions that the issue of certificates by the intermediate colleges run by the appellant which were signed by the Controller of Exams and the Principal would be covered by the decision of the Hon'ble High Court of Delhi. The relevant paragraphs cited by the learned counsel are reproduced below: "14. We have wondered, what could be the reason for exempting from payment of Serv .....

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ch training or coaching centres. 15. to 20………….. 21. Nonetheless, the law dealing with the subject of aircrafts has not left the institutes imparting such courses/training and which course completion/training makes the successful candidates eligible to one year exemption, unregulated. It is not as if anyone can start, offering such course and imparting training. The Act, Rules and CAR provide for approval of institutes such as the petitioner's. DGCA regulates the .....

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ed are wide enough to also issue a direction with respect to the fee etc. to be charged by such institute. 22. The question which falls for consideration is whether the aforesaid would amount to 'recognition by law' of the Course Completion Certificate and On Job Training Certificate given by such institute. 23. The expression 'recognized by law' is a very wide one. The legislature has not used the expression "conferred by law" or "conferred by statute". Thus .....

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CA examination, have recognized the Course Completion Certificate and the qualification offered by such Institutes. The certificate/training/qualification offered by Institutes which are without approval of DGCA would not confer the benefit of such relaxation. Thus, the certificate/training/qualification offered by approved Institutes, has by the Act, Rules and the CAR been conferred some value in the eyes of law, even if it be only for the purpose of eligibility for obtaining ultimate licence/a .....

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this case the Hon'ble High Court has examined the issue as the course conducted by the institute for obtaining basic aircraft maintenance engineering licence would be covered by the term "recognized by law". After considering the provisions of DGCA Act, the nature of control exercised by DGCA over such institutions, the Court concluded that they were regulated by law. It was also held that the expression "recognized by law" is of wider import. Therefore it was held that .....

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the college and charged for separately and was given separately and not to all the students of the college who got admission in the normal course. Therefore the ratio of the decision of the Hon'ble High Court of Delhi cannot be applied to the facts of this case. 51. The learned counsel cited the decision in the case of ICFAI rendered by the Tribunal and reported in 2013 (30) S.T.R. 273 (Tri.-Bang.). He relied upon the observations made by the Tribunal in para 14: "It is pertinent to no .....

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. Once again it has to be noted that the educational qualification which a student acquires is not recognized by anybody or any ordinary prudent person as the one issued by the college run by SCEC or issued by SCEC. Anyone who sees the certificate and who considers that the student has completed intermediate course would only recognize it as a qualification given by the Board and not by the college or the appellant. The definition excludes only those institutions who themselves issue or certify .....

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14 of their decision are very relevant in this context. The relevant paragraphs in Larger Bench decision of the Tribunal in the case of Great Lakes Institute of Management Ltd. & Ors.:- 2013 (32) S.T.R. 305 (Tri. - LB) are reproduced below: "10. The order dated 16.4.2013 has referred, the limited issue whether "Commercial coaching or Training" as defined in Sections 65(26), 65(27) and 65(105)(zzc) of the Act accommodates a distinction between imparting of a specific skill by .....

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ral contentions urged, on aspects which are outside the scope of the reference to this Bench. 11. Though we have averted to precedents cited at the Bar, explaining the scope of the expression "educational institution" and whether "education" is a charitable purpose under the provisions of the Income Tax Act, 1961, neither the precedents nor the relevant provisions of the 1961 Act, offer substantial assistance in interpreting the scope of the expression "commercial traini .....

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searching for explication of meaning of expressions used in the Act, by recourse to definitions or meaning of similar or analogous expressions in other legislation, is inappropriate. The various pedagogic, lexicographic or textual authorities cited at the Bar to explain the distinction between the concepts of "education", "training" or "coaching" also do not offer appropriate or coherent guidance to aid comprehension of the scope of the relevant expressions defined .....

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nd objectives of the activity pursued by a commercial training or coaching centre. In this definitional regime, training or coaching for imparting skill, knowledge or lessons on any subject or field constitutes commercial training or coaching. Though complexly drafted, this part of the definition seeks to define the contours of 'training or coaching' in the very provision and an identical expression employed in Section 65(27) as well. From the legislated definition, training or coaching .....

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ed and therefore a counter - majoritarian device, of restrictive interpretation. Where a legislatively mandated definition is available, it is impermissible to look to extra - textual guidance." 53. We find the relevance on these observations of the Larger Bench by the learned special consultant are appropriate and therefore the decision of the Tribunal in the case of ICFAI institutes is of no help to the appellants. 54. Further, the decision of the Larger Bench also cannot be relied upon s .....

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ants were covered by the definition and were liable to service tax in respect of the services rendered by them. This means that the explanation is clarificatory. Similar view was taken by the Tribunal in the case of ICFAI institutions also while upholding invocation of extended period. The three decisions which was cited by the learned counsel are as under: • J. K. Spinning and Weaving Mills Ltd. and Another vs. UOI & Ors.: 1987 (32) E. L. T. 234 (S. C.); • J.K. Cotton SPG&WVG .....

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period, the Tribunal in a catena of decisions in the context of commercial training or coaching centre service had held that service tax is not leviable if the centre is charitable in nature. The following decisions were relied upon. • ICFAI vs. CC & CE: [2008] 17 STT 5019 (Bang.-CESTAT) • Administrative Staff College of India vs. CC & CE: [2009] 18 STT 89 (Bang.- CESTAT) • CDAC vs. CC & CE (Appeals-II): [2009] 18 STT 361 (Bang.-CESTAT) • Magnus Society vs. CC &a .....

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raining provide separately for college students as an optional course and being charged extra fee. The appellants themselves took the registration in Kota where they were running exclusive coaching centres and even then the appellants did not choose to take registration even in respect of exclusive coaching centers run by them in Vijayawada and Hyderabad. In none of the decisions the support of which have been claimed, it can be said that the facts under consideration were similar to the ones be .....

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cal events, results of investigation conducted by the Revenue and the process of conducting coaching by the appellants. Therefore, these decisions are also not relevant. 58. The next issue is the quantum of demand to be confirmed. It was submitted during the course of hearing that in subsequent proceedings the Commissioner himself has reduced the demand and has allowed certain deductions. According to the learned counsel, the Commissioner in his order-in-original No.27/2012 dated 30.3.2012 allow .....

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ive submission. 59. Another request made was that the amount collected by the appellants should be treated as cum-tax. We agree with the submission that the entire amount received from the students cannot be taken as the value of taxable service and it has to be treated as cum-tax service. Therefore the tax liability is required to be requantified. 60. It was submitted that interest is not payable on the ground that the service tax itself is not payable. Since we have taken the view that service .....

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vice'. Therefore, no penalty is imposable. However, in view of the fact that we have already upheld suppression of facts and invocation of extended period, the penalty under Section 78 of the Finance Act would be mandatory. 62. The appellants also submitted that even if it is held that extended period is invocable, provisions of Section 80 of Finance Act, 1994 would be applicable in the present case. Section 80 of the Finance Act provides that no penalty shall be imposed on the assessee if t .....

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liability under 'commercial training or coaching service' is the case of ICFAI (supra). In that case penalty under Section 78 was upheld but penalties under Section 76 and 77 were set aside. The case of ICFAI can be and has to be distinguished since in that case it was the case of the Revenue that the ICFAI had misrepresented facts by submitting that "ICFAI University was conducting various courses while it was not an entity established under, or recognized by law". At least i .....

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e coaching centres was suppressed or was not disclosed when enquired into. During investigations also no fudging of records or manipulation of records or misrepresentation has been found before the authorities. In fact, in respect of certain aspects of the case, Revenue has relied upon the statements of employees of the appellant which also shows that they were interacting with them to give out the correct facts. There is no finding that the records as emerging out of data recovered from compute .....

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f stay, the matter travelled right up to Supreme Court. In view of the fact the Tribunal in 2008, after hearing both the sides and considering the issue came to the conclusion that charitable trusts need not have to pay service tax, the appellants have a case under Section 80 of Finance Act, 1994. It can be argued that having confirmed the extended period for demand, penalty which is mandatory also should be confirmed. If a rigid view is taken, the purpose of Section 80 and its existence in the .....

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4. As regards the penalty under Section 76, there are decisions of various High Courts taking a view that penalty under Section 76 and 78 are mutually exclusive and therefore if penalty under Section 78 is imposed, penalty under 76 need not be imposed. In any case, the very same ground which in our opinion shall be the reasonable cause for non-payment of tax during the period would be applicable for penalty under 78 also. Therefore penalty under Section 76 is also waived by invoking the provisio .....

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under various heads, it may not be easily possible for the adjudicating authority to do the quantification without delay. In any case, the relevant details are required to be furnished by the appellants only to facilitate this. Therefore instead of remanding the matter for quantification, we direct the appellants to submit detailed worksheet year-wise to the Commissioner within two months from the date of receipt of this order quantifying the amount payable by them in terms of the decision taken .....

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s are advised not to delay the process. 66. At this stage, we have to take note of the fact that there is an appeal filed by the Revenue also. Appeal has been filed by the Revenue since the department is aggrieved by the fact that service tax demand was reduced from ₹ 87,49,20,368/- to ₹ 85,38,34,876/-. The grievance has arisen because the Commissioner accepted the figures furnished by SCEC at the time of adjudication without proper verification. In view of the direction given by us .....

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s have become infructuous and accordingly, they are rejected as infructuous. (Order pronounced in open court on ………………….. ) Per: Anil Choudhary: 68. I had the advantage of going through the order recorded by, learned brother Shri B.S.V. Murthy, Member (Technical), but I am unable to agree with the same and hence, I record my separate order. 69. As regards the coaching provided in addition to normal curriculum by the appellant in the junior college .....

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peared in the examination "conducted by the Board and the certificate or degree is awarded by the Board. The students on successful completion of the intermediate course and on the basis of the certificate/marks sheet awarded by the Board, enables the students to seek further higher education like graduation or for admission to professional courses like, Engineering, Medical, etc. • Formal education provided by school and college is not the subject matter of taxation under the Service .....

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g 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 .....

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rtificate, whether issued by educational institution or by the Board (set up by the Government). What is important is the qualification and/or the certificate of merit or the degree should be recognized by the law. In the facts of the case, the certificate is awarded by the Govt. of Andhra Pradesh through the Education Board set up by it. Such certificate/marks sheets are countersigned by the Principal of the Junior College. • All essential features of formal education are present like, pre .....

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forementioned exclusion clause, it is not material who issues the certificate or degree, but what is important is whether such certificate or degree or marks sheet is recognized by law. Similar view was taken by Delhi High Court in Indian Institute of Aircraft Engg. Vs. UOI - 2013 (30) STR 689. • In the facts of the case, the certificate/marks sheets are issued by the Board and countersigned by the Principal/Head of the Junior College, is recognized by law. • As per the clarification g .....

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rification by the Board dated 20.6.2003. Even the activity of providing coaching in other junior colleges, set up by different bodies, by the appellant by way of collaboration or such other arrangement will also be exempted under the exclusion clause of Section 65(27) read with clarification of the CBE&C dated 20.6.2003. • After the successful completion of the intermediate examination by the students enrolled in the junior colleges, in addition to the marks sheet issued by the Board un .....

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994 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. 70. As regards the activity of the appellant of providing coaching through its coaching centre, the said activity will be taxable under the provisions of the Finance Ac .....

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State of Andhra Pradesh, in addition to the coaching activity, the appellants are also providing 'formal education' of the intermediate course through the junior colleges. The formal education provided through junior colleges along with coaching in such colleges is exempted activity, as clarified vide Board's clarification dated 20.6.2003. 71.1 As regards the stand taken by the appellant with respect to the activity in its coaching centre being not taxable, they being charitable inst .....

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h retrospective effect under Section 65(105)(zzc) of the Finance Act, 2010. Thus, it has been appreciated by the legislature also that the situation of confusion existed among the tax payers and also with the Court/Tribunal as regards liability of tax on the charitable organization(s) providing commercial coaching or training. 71.3 That delay in furnishing information sought for by Revenue from the appellant, cannot be a ground for invocation of extended period. All the powers of a Court with re .....

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ation of law was involved. 71.5 Thus, in my considered view in the facts and circumstances, extended period of limitation is not attracted in the appellant's case and the appellant will be liable to tax only for the normal period from the date of show-cause notice in respect of the activity of commercial coaching from its coaching centre. 72. As regards penalty, under the aforementioned facts and circumstances, there is reasonable cause for non-payment of Service Tax, non-filing of returns, .....

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s under its management or under the management of others. • Extended period of limitation is not invokable. • Penalty under Section 77 is set aside. I hold and agree with learned brother Member (Technical) on the following points: - • Service Tax is leviable on the activity of coaching at the Coaching Centres of the appellant. • Penalty imposed under Sections 76 and 78 of the Finance Act, 1994 are set aside. • Benefit of cum-tax calculation will be available. • Othe .....

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aching provided by the appellant through junior colleges under its management or under the management of others also as held by Member (Technical) or no tax would be leviable in such cases as held by learned Member (Judicial). • Whether extended period of limitation is invocable as held by Member (Technical) or is not invocable as held by learned Member (Judicial). • Whether penalty under Section 77 is to be set aside as held by learned Member (Judicial) or has to be imposed as held by .....

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rovided by the Appellant through their junior colleges under its management or under the management of others, as held by the learned Member (Technical), or no tax would be leviable in such cases as held by learned Member (Judicial). 78. The main contention of the learned Advocate for the Appellants is that the Appellant Society through their own junior colleges and the junior colleges of other societies, under its management, imparts education to the students for intermediate 11 th and 12 th St .....

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Centre" in 2003, for students undergoing intermediate courses in their colleges. These optional courses are offered to students securing high percentage of marks in intermediate examination and to enable the students to appear and score high marks in various entrance examinations such as IIT, JEE, Engineering and Medical Common Entrance Test (EAMCET) etc. The contention of the learned Advocate is that as per the Section 65(27), an institute or establishment, which provides training or coach .....

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e certificates issue by BIE (Board of Intermediate Education), Government of Andhra Pradesh and duly signed and endorsed by the Principal of the respective college, are recognized by law. So, it is not covered under the definition. 79. For the purpose of proper appreciation of the case, the definition of "Commercial Training or Coaching Centre" under Section 65 (27) of Finance Act, 1994 is reproduced below:- "Commercial training or coaching centre" means any institute or esta .....

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ining or Coaching Centre" have both inclusive and exclusive part i.e. it may include certain things and exclude others. The word "any" e.g. institute or establishment providing Commercial Training or Coaching in the main part of the definition, is a word having very wide meaning. It is noted that the definition also categorically includes coaching or tutorial classes". The word "includes" in the definition makes it clear that the intention was to make it more extens .....

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e exclusion part must be strictly construed, what is being included in the definition cannot be excluded, unless it is specifically mentioned. In the present case, according to the Appellant, they were offering coaching classes to the students of intermediate standard of their colleges and other colleges for appearing joint entrance examination of IIT, JEE etc. In my considered view, when "coaching classes" have categorically included in the definition, then, it cannot be excluded by s .....

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entrance tests. Such institutes or establishments, which issue a certificate, diploma or degree recognized by law, are out side the purview of "Commercial Training or Coaching" institute. Thus, even if such institutes or establishment provides training for competitive examinations etc, such services rendered would be outside the scope of Service Tax. In my view, while deciding the words "any institute or establishment which issues certificate or diploma or degree or any education .....

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ges. The contention of the learned Advocate that the certificate issued by Andhra Pradesh Board is endorsed by the Principal of the college, which would cover the exclusion part of the definition. In this context, it is required to examine the facts of the case as to whether the coaching classes offered by the Appellant Society are integrally connected with the intermediate courses. 82. The learned Member (Technical) in his order had elaborately discussed the facts and held that the courses have .....

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Sasi Kumar, Campus Incharge of Sri Chaitanya EAMCET Coaching Centre, Sri Vyshnavi Bhavan, Gurunanaknagar Colony, had stated that "intensive coaching for EAMCET would be given in their premises; that the duration of the coaching is 8 to 10 months, that depending on the performance of the students, fees from ₹ 20,000/- to 50,000/- would be collected from each student; that the collection of fees and the details would be done at the Central Office and that in this premises, Attendance Re .....

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mi and himself would look after the general administration; that some students were day students and some stay as boarders; that the courses offered were Bi.P.C., M.P.C., M.E.C. both English and Telugu media; that the boarding facilities were only for M.P.C. and Bi.P.C. and Boarding facilities were given both for intermediate and coaching students of competitive examinations; that for the students who score more than 90% in 10 th class, there was no fees at all, while some concession would be gi .....

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a Educational Committee to the students on the basis of merit but not on the basis of economic conditions of the students." 83. The students appear for the intermediate examinations under the hall ticket issued by the respective colleges and the students after passing examination, are awarded a certificate which issued by intermediate board education duly endorsing stamp of respective college. However, the students of said colleges underwent coaching in different campus of the Appellant on .....

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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. 84. The next issue is whether the extended period of limitation is invokable as held by learned Member (Technical) or not invokable as held by learned Member (Judicial). Learned Member (Technical) observed that the Appella .....

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ve noticed that the Appellant was running independent coaching classes in Kota Rajasthan, while, in Andhra Pradesh, the Appellant were running the colleges of intermediate courses and also offering the coaching classes. So, there is a change of circumstances in Andhra Pradesh. It is seen that "Commercial Coaching & Training Class" in the Service Tax net was introduced in 2003 and the Appellant disputed the levy of Service Tax in Andhra Pradesh from 31.07.2003. After detailed corres .....

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xplanation under Section 65(105)(zzc) of Act, with retrospective amendment by Finance Act, 2010 that the expression "Commercial Training or Coaching Centre" shall include a Trust or a Society with or without profit motive. So, the finding of the Adjudicating Authority that the Appellant tried to mislead the department by stating that their committee is non-commercial nature with an intention to evade payment of tax, cannot be accepted. It cannot be said that there was a suppression of .....

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licated issue of legal interpretation and cannot be held to be a settled law. The fact that there is difference of opinion between the two Members of the original Bench, itself establishes the fact that the legal issue is complex issue requiring legal expertise to settle the same. In such a scenario, if an assessee entertained a bona fide belief that inasmuch as the service is not being received by him, and he is not required to pay any tax, he cannot be blamed for the same. Further the fact tha .....

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