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2015 (9) TMI 425 - CESTAT AHMEDABAD

2015 (9) TMI 425 - CESTAT AHMEDABAD - 2015 (40) S.T.R. 1139 (Tri. - Ahmd.) - Vocational training Institute - Running of Commercial Coaching Classes for the students of Chartered Accountant examination and providing coaching for different Chartered Accountant courses - exemption Notification No. 24/2004-ST dated 10.09.2004 - Clubbing of income of other relatives to the taxable turnover of the assessee - appellant strongly relied upon the decision of the Tribunal in the case of Pasha Educational T .....

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tion notification as vocational training institute. - Decided against the assessee.

Clubbing of turnover - Held that:- There is no material available on record that the Central Excise Officers had made any inquiry of the property shown in the income tax returns and from the Income Tax Department in respect of such Income Tax returns. Hence, we are unable to accept the clubbing of the income of the other relatives of the appellant as fees on the basis of the Income Tax returns.

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three sources (a) Fees collected (as per computer print out Pages taken out at the time of search) (b) Fees collected (as per details provided by the appellant vide Annexure A , B and C (fees receipt ledger) letter dated 04.05.2012 and (c) Fees collected/ income (by clubbing the income shown in the income tax return of the 13 persons/firm). - The highest amount, among all these three sources in each year had taken on year-wise taxable value for determining demand of tax - service tax cannot be .....

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see. - Appeal No. ST/11520/2014 - ORDER No. A/11254 / 2015 - Dated:- 4-9-2015 - Mr. P.K. Das, Hon'ble Member (Judicial) And Mr. P.M. Saleem, Hon'ble Member (Technical), JJ. For the Appellant : Shri Hardik Modh, Advocate , Shri Purvin Shah, Chartered Accountant For the Respondent : Shri Alok Srivastava, Authorised Representative ORDER Per : Mr. P.K. Das; The relevant facts of the case, in brief, are that the appellant Shri Jay Ajit Charia, proprietor of M/s. The Institute of Professiona .....

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es of the appellant, on the basis of intelligence, that the appellant was engaged in running Commercial Coaching Classes for the students of Chartered Accountant examination and providing coaching for different Chartered Accountant courses like Common Proficiency Test (CPT), IPCC to the students appearing in Chartered Accountant examination and not paying service tax, even though his annual turnover is above the small service provider exemption limit. The Central Excise officers during search op .....

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ct, 1994 and also to appropriate an amount of ₹ 26,57,344/-, as paid by the appellant during investigation. The adjudicating authority confirmed the demand of service tax alongwith interest and imposed penalties under the category of Commercial Training or Coaching Services . The amount deposited during investigation was appropriated by the Adjudicating authority. 3. The learned Advocate on behalf of the appellant submits that the services rendered by them would cover within the scope of e .....

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use notice to their relatives and the demand of tax is liable to be set-aside on this ground alone. He relied upon several case laws on this issue. 3.1 He further submits that there is no basis on demand of tax in so far as the demand was quantified partly on the basis of the computer printout, ledger and partly by clubbing the incomes of relatives and the taxable value taken into consideration, which is highest of these documents in each year. It is clear that the demand is not based on a parti .....

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a bonafide belief that the appellant is entitled to benefit of exemption notification on Vocational Training Institute as per the decision of the Tribunal Pasha Educational Training Inst. (supra). So, the extended period of limitation can not be invoked. 3.3 Without prejudice, the learned Advocate submits that the appellant during investigation deposited tax alongwith interest of ₹ 26,57,344/-, before issue of show cause notice. Therefore, imposition of penalty under various provisions of .....

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esentative on behalf of the Revenue submits that it is evident from the records that the appellant was providing commercial coaching service to the students appearing in Chartered Accountant examination. The demand was raised on the basis of detailed investigation, including the income tax returns filed by the appellant s relatives. Several summons were issued, but none of the relatives appeared before the investigating officer and therefore, the income of the said relatives were clubbed with in .....

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e considered as conclusive piece of evidence. The adjudicating authority rightly clubbed the income of the appellant s relative with the appellant s income to determine taxable value and confirmed the demand of tax. It is submitted that the appellant is Chartered Accountant and knowingly and wilfully had not paid the tax and therefore, extended period of limitation would be invoked and imposition of various penalties are warranted. 5. After hearing both the sides and on perusal of the records, w .....

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t got amended the Registration Certificate and added the category of Commercial Training or Coaching Service in the registration certificate. The Learned Advocate submitted that the coaching was provided to the students for passing the examination conducted by Institute of Chartered Accountant of India and for seeking employment thereon. Learned Advocate submitted that such activities are exempted from payment of Service Tax in terms of Notification No. 24/2004-ST dated 10.09.2004. They are also .....

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or coaching. Thus, the vocational training institute would provide training or coaching to enable the trainee to seek employment or undertake self employment. The job of the vocational training institute is that after such training or coaching, the trainee would be able to get job or to undertake self-entrepreneurship. In the present case, the appellant had provided the coaching to the students to appear in the examination conducted by The Institute of Chartered Accountants of India. It can not .....

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nce examination for Engineering & Medical, UPSC, SSC etc. which can not be treated as vocational training institute. 6. The learned Advocate strongly relied upon the decision of the Tribunal in the case of Pasha Educational Training Inst. (supra). In that case, the appellants were providing training on various fields, such as, Insurance Agents for various Insurance Companies. The Tribunal observed that this definition should not be interpreted in a very narrow sense. After the comprehensive .....

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he facts of this case. So, the appellant is not eligible for the benefit of exemption notification as vocational training institute. 7. The next submission of the learned Advocate is that the demand of service tax was raised by clubbing the income of relatives of the appellant as fees of coaching classes. It is seen from the record that after a search of the appellant s premises, a Diary 1999 was recovered amongst others. In the said Diary, 13persons (including the appellant) names, Bank account .....

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/Profit and Loss Accounts/balance sheet for the financial year 2007-08 to 2010-11 of the family members and relatives, which are mentioned in the Diary, to the investigating officers. At the time of recording statement dated 25.5.2012, the appellant by his letter dated 25.5.2012, under which he prepared and produced Service Tax liability of ₹ 16,51,460.00 and interest of ₹ 2,99,017.00 for the period 2006-07 to 2009-10, by clubbing the income of the appellant, the appellant (HUF), Shr .....

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d Advocate, in respect of the clubbing of income of the appellant with the said two students. 8. The clubbing of income of the appellants with the income of the other relatives, as appeared in the seized Diary 1999 , the Adjudicating authority observed that on scrutiny of income tax return of relatives/ associates of the appellant submitted by the appellant, it is noticed that relatives and associates of the appellant have shown their income as fees like Tuition Income, CA Branch fees, Professio .....

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ome for the purpose of determining taxable value. It is also observed that the appellant and his relatives have failed to produce documentary proof of source of their income and purported documents like fees receipt, ledger of relatives, thus there is no other way for the department except to conclude the investigation by considering the income persons as the fees receipt by the appellant for coaching classes. 9. We are unable to accept the findings of the adjudicating authority. On perusal of t .....

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from Stitching and Design. The income tax assessee had paid tax on the income shown in the Income Tax return under the Income Tax Act. There is no material available on record that the Central Excise Officers had made any inquiry of the property shown in the income tax returns and from the Income Tax Department in respect of such Income Tax returns. Hence, we are unable to accept the clubbing of the income of the other relatives of the appellant as fees on the basis of the Income Tax returns. 10 .....

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s made payment of fees of ₹ 8,200/- by cheque to the appellant s father. These transactions are indication that the appellant had distributed his coaching fees in the account of his relatives. In our considered view, it is a serious infirmity in the present proceeding that the Revenue considered the income of the other relatives as taxable service on the basis of their Bank Account and Income Tax returns, but, no notice was issued to them, which is a gross violation of principle of natural .....

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ld show non-application of mind on the part of the authorities. There are several decisions of the Tribunal on identical issue as under: (a) S.K.N. Gas Appliances vs. CCE, New Delhi 2000 (120) ELT 732 (Tribunal) (b) Ramsay Pharma (P) Limited vs. CCE, Allahabad 2001 (127) ELT 789 (Tri. Del.) (c) Premier Printers vs. CCE, Cochin 2000 (126) ELT 788 (Tri.) (d) Shree Krishna Minerals vs. CCE, Hyderabad 2005 (190) ELT 251 (Tri. Bang.) (e) Copier Force India Limited vs. CCE, Chennai 2008 (231) ELT 224 .....

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(Tri. Mum.) 12. The Hon ble Calcutta High Court in the case of CCE, Kolkata-II vs. Diamond Scaffolding Company 2011 (274) ELT 10 (Cal.) held as under:- 8 In respect of the second point, i.e., clubbing of clearance, the Tribunal further came to the conclusion that clearances of two other units were clubbed with the clearance made by the importer without issuing any show cause notice to the other units and there was no notice to the two units for clubbing clearance with the clearance of the import .....

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12 and (c) Fees collected/ income (by clubbing the income shown in the income tax return of the 13 persons/firm). The highest amount, among all these three sources in each year had taken on year-wise taxable value for determining demand of tax. We find that there is no definite stand taken by department for a particular source and documents for determining taxable value. In our considered view, service tax cannot be levied in such manner, on the basis of pick and choose method of the documents, .....

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