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2019 (10) TMI 412

..... service tax - Profit motive or not - scope of word 'commercial' - Benefit of N/N. 24/2004-S.T., dated 10-9-2004 - extended period of limitation - HELD THAT:- It is not disputed that the appellant has collected fees from the newly recruited drivers and conductors for giving them training. The training imparted was not rendered free of charge. This being the case, as per the Board's Circular No. 59/8/2003-S.T., dated 20-6-2003, the activity of training imparted by the appellant would fail under the category of ‘Commercial Training or Coaching Services”. Profit motive or not - scope of word 'commercial' - second contention taken by the Learned Counsel is that the appellant being a Public Sector Undertaking their activity had no profit motive - HELD THAT:- The amendment brought forth on 26-2-2010, has introduced an Explanation wherein, it is stated that "commercial" means "any training or coaching that is provided for consideration irrespective of the presence or absence of any profit motive." The said Explanation is applicable retrospectively, which means, it is applicable from 1-7-2003 onwards. Thus, the second argument of the Learn .....

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..... service tax. Show cause notice was issued proposing to demand the service tax along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand of ₹ 19,10,945/- along with interest and imposed equal penalty under Section 78 of the Finance Act, 1994. The amount already paid by the appellant was appropriated. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal. 2. On behalf of the appellant, the Learned Counsel Shri M. Saravanan appeared and argued the matter. The appellant is a State Transport Corporation carrying out transport service for the public and they are not a Commercial Training or Coaching Centre providing any Commercial Training or Coaching to anyone. The training is given to the newly recruited drivers and conductors and the cost incurred for giving the training is recovered from them, which is nothing but reimbursement of expenses only. It is not the case of the department that the appellant has given training to third party i.e., persons other than their own employees. Since they are not into business of giving training to any third person they don't fall under the definition of &q .....

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..... such training or coaching is a vocational training institute. 2.6 In the instant case, the appellant are nothing but a vocational training institute, as the training provided to the drivers and conductors is to impart skills, which enables them to seek employment or undertake self-employment, after such training or coaching. The persons who undergo training only can continue to be in employment. Further with this training they can seek employment or undertake self-employment, directly after such training or coaching. 2.7 Prior to 27-2-2010, any institution providing training or coaching that impart skills to the trainee and that enable him to seek employment or undertake self-employment, after training or coaching is a Vocation Training Institute and the same is exempted from payment of Service Tax in terms of Notification No. 24/2004-S.T. Hence, in this case also, they are Vocational Training Institute and exempted from payment of Service Tax up to 26-2-2010. 3. Since appellants are not a commercial concern, they were of the bona fide belief and understanding that the service tax is not payable by them, as it will apply only to commercial concern and not to Government undertaking .....

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..... It is further argued by her that the clarification issued by the Board dated 26-2-2010 is only to make it clear as to the meaning of the word "commercial". The Explanation was introduced in the definition for clarifying the meaning of the word "commercial" used in the definition of 'Commercial Training or Coaching Services". The amendment which is brought forth introducing the Explanation is applicable retrospectively from July, 2003 onwards. Therefore, the contention of the appellant that they were under the bona fide belief that being a State Government undertaking, they would not fall under the category of "Commercial Training or Coaching Service" is misplaced and not acceptable. With regard to the invocation of extended period, she submitted that when the definition as well as circulars were very clear, the appellants cannot take shelter by contending that they were under a bona fide belief that their activity is not subject to levy of service tax. The show cause notice issued invoking the extended period is legal and proper. 8. Heard both sides. 9. The issue is with regard to the demand of service tax under the category of "Commerci .....

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..... t;Commercial Training or Coaching Service". It is not disputed that the appellant has collected fees from the newly recruited drivers and conductors for giving them training. The training imparted was not rendered free of charge. This being the case, as per the Board's Circular No. 59/8/2003-S.T., dated 20-6-2003, the activity of training imparted by the appellant would fail under the category of Commercial Training or Coaching Services . 11.1 The second contention taken by the Learned Counsel is that the appellant being a Public Sector Undertaking their activity had no profit motive and, therefore, would not fall within the meaning of the word "commercial". The amendment brought forth on 26-2-2010, has introduced an Explanation wherein, it is stated that "commercial" means "any training or coaching that is provided for consideration irrespective of the presence or absence of any profit motive." The said Explanation is applicable retrospectively, which means, it is applicable from 1-7-2003 onwards. Thus, the second argument of the Learned Counsel also fails 11.2 The third argument put forward by the Learned Counsel is that the training imparte .....

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..... tion to evade payment of tax/ duty. 14. From the above discussions, we are able to conclude that there are no ingredients for invoking the extended period. There is, ho positive act of suppression of facts with intention to evade payment of tax established by the department. The issue as to whether a Public Sector Undertaking can be considered to be a "commercial concern" is also an interpretational one. For these reasons, the demand raised invoking the extended period cannot sustain. The show cause notice issued for the extended period cannot sustain and requires to be set aside, which we hereby do. Any demand that falls under the normal period would sustain. For the reasons discussed above, the penalties imposed for the normal period also requires to be set aside, which we hereby do. The appeal succeeds on the ground of limitation. 15. From the foregoing, we hold that, the impugned order to the extent of the demand invoking extended period is set aside. Any demand and interest thereon which falls for the normal period is not interfered. However, the penalties for the normal period are set aside. The appeal is disposed of on above terms. (Pronounced in open Court on 29-4 .....

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