TMI Blog2008 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... bad-II Commissionerate. The details of the Appeals are given in the following tabular column: Sl. No. Appeal No. Name of the Parties Amount Involved Period of dispute 1. ST/32/2007 M/s. ICFAI, Hyderabad v. CC CE, Hyderabad-II ST + Edu. Cess: Rs.18,91,52,645 Penalties: Rs. 18,91,52,645 u/s 78 Rs. 150 per day u/s 76 Rs. 1,000 u/s 77 1-7-2003 to 31-3-2005 2. ST/39/2007 M/s. The ICFAI University, Dehradun v. CC CE, Hyderabad-II ST + Edu. Cess: Rs. 8,69,716 Penalties: Rs. 8,69,716 u/s 78 Rs. 150 per day u/s 76 Rs. 1,000 u/s 77 1- 12-2003 to 31-3-2005 3. ST/40/2007 M/s. The ICFAIAN Foundation v. CC CE, Hyderabad-II ST + Edu. Cess: Rs. 9,43,91,378 Penalties: Rs. 9,43,91,378 u/s 78 Rs. 150 per day u/s 76 Rs. 1,000 u/s 77 1-7-2003 to 31 -3-2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or service tax. He has also not accepted the contention of the appellants that they are University and they are conferring degrees recognized by law. Therefore, he has rejected the contention that they are excluded from the scope of definition of the 'Commercial Training or Coaching Centre' as given in the Finance Act. He has also stated that the appellants indeed earn profit, which they call it as surplus. He has mentioned that the surplus is euphemism for profit. He has rejected almost all the contentions of the appellants. He has given his own reasons for rejecting them and has confirmed the demands as given in the tabular column above. 5. We heard at length the learned Advocate for the appellants. 5.1 Institute of Chartered Financial Analysis of India (ICFAI), Hyderabad, is a non-profit Society registered under the provisions of the Andhra Pradesh (Telengana Area) Public Societies Registration Act, 1350 in the year 1984 and operating solely for educational purposes. Our attention was invited to Article VI of the Memorandum of Association, which deals with the deployment of funds stating that the funds shall be spent only for attainment of its objectives. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2(f) of the UGC Act, 1956. It was urged that all the above institutions are exempt from the payment of Income-tax as Educational Institutions either under section 12A or under section 10(23C)(vi) of the Income-tax Act, 1961. 5.2 The point that was urged by the learned Advocate was that service tax was levied on 'commercial coaching or training service' with effect from 1-7-2003. Our attention was invited to section 65(26) of the Act, which defines the term commercial training or coaching . Section 65(27) defines the term commercial training or coaching centre and section 65(105)(zzc) defines Taxable Service in relation to commercial training or coaching'. Then, our attention was also invited to the Circular No. 59/8/2003-ST, dated 20-6-2003 issued by the Department explaining the scope of levy of service tax under the category wherein it has been stated that Commercial coaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams like entrance examinations for Indian Institute of Technology-Joint Entrance Examinations/Pre Medical Tests, Civil Services Exams etc. are chargeable to service tax. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excludes all educational qualifications recognized by law for the time being in force. The learned Advocate referred to the judgment of the Hon'ble Supreme Court in the case of Professor Yashpal v. State of Chhattisgarh wherein the term 'recognized by law' was explained. There is an elaborate discussion also on what is a 'Degree'. It was stated that the three ICFAI Universities namely Raipur, Dehradun and Tripura which make up the ICFAI Consortium, all have been established under the respective State Acts. Soon after the Chhattisgarh Act was struck down by the Supreme Court, the students of ICFAI, Raipur were adopted by ICFAI, Dehradun by virtue of the Advance Standing Admission Process. It was strongly urged that in view of the fact that ICFAI Universities were established under the respective State Acts, the degree conferred by them becomes recognized in law. Once these Universities impart education and offer degrees conferred by law, they would be excluded from the scope of commercial training or coaching centre. 5.4 An elaborate submission was made with regard to the difference between 'education' and 'coaching or training'. The activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... courses are not recognized bylaw, still they qualify as education, even if non-formal in nature. Merely due to lack of recognition, the process of education will not cease to be an education and it will definitely not become coaching or training. This view was supported by the judgment of the Hon'ble Delhi High Court in the case of Delhi Kannada Educational Society (supra). It was also stated that if the reasoning that only Institutions awarding decrees or c recognized by law are excluded from the levy of service tax is accepted, then, it will lead to an absurd conclusion that all schools in the country which do not confer any degree or diploma certificate recognized by law are 'commercial training or coaching centre' and subject to service tax. 5.6 The appellants are registered under the Societies Registration Act, 1860, which is an Act for the registration of Literary, Scientific arid Charitable Societies. The Preamble of the Act specifically states that only societies formed to promote literature, science or fine art or for the diffusion of useful knowledge, the diffusion of political education or for charitable purposes can be registered under this Act. This cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial has to be accorded specific significance while interpreting section 65(26) and 65(27). It was submitted that the definition reads as 'training and coaching provided by a commercial coaching and training centre'. The term 'commercial' has been used with reference to 'coaching and training centre' as a person and not with reference to coaching or training as an activity. In fact, it was submitted that there cannot be a coaching or training which is commercial in nature. Coaching and training is the activity, which is undertaken and not the product of a service. An activity cannot be commercial in itself and it is the intention of the person undertaking those activities has to be commercial. Therefore, test of commercial nature has to be applied with reference to the centre providing the service and not to the activity, which he is undertaking. This is clear from the contemporaneous circular dated 20-6-2003 issued by the CBEC. 5.8 It was submitted that the issue on the interpretation of 'commercial concern' stands concluded in their favour in the following decisions:- (a) Board of Control for Cricket in India v. CCE [2007] 9 ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e www.icfai.org. which contains exhaustive details of all the courses, colleges, activities, etc. The Department initiated proceedings against the appellants as early as in 2003 by issuing notices, summons, etc. This clearly shows that the Department had knowledge about the appellants' activities even at that time. The appellants were formed as early as in 1985 and the Memorandum of Association has always stated that the appellants will be functioning solely for educational purposes and not for profit without any regard whatsoever to the imposition of service tax on 'commercial training or coaching centre' in future. In view of the above submissions, it was prayed that the service tax is not leviable. Our attention was also specially invited to the decision of the Madras Bench on similar issue in the case of Great Lakes Institute of Management Ltd. (supra), which has been cited supra. 6. The learned Special Counsel made submissions on behalf of the Department. He reiterated all the findings in the Commissioner's order. He stated that the appellants are charging enormous fee for the training imparted by them and they are receiving consideration for the training ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax on education is against the spirit of Constitution and against the directive principles is only to be rejected and I do so. It was stated that the appellants' attempt to make a distinction between 'education' and 'training', therefore, is baseless. Further, reliance was placed on other decisions of the Andhra Pradesh High Court in the case of Pasha Educational Training Institute v. CC CE [Writ Petition No.28/44 (AP) of 2007, dated 31-12-2007] and also the decision of this Tribunal's Single Member Bench in the case of JMC Educational and Charitable Trust v. CCE [2008] 12 STT 308 (Chennai-CESTAT) stating that the appellant had not made Out prima facie case in their favour and directed them to pre-deposit an amount. Reliance was also placed on the following decisions: (a) Wigan and Leigh College ( India ) Ltd. v. CCE [ST No. 346 (Bang.) of 2007, dated 16-4-2007] (b) Bio Campus v. CC CE 2006 (4) STR 108 (Trib.-Bang.) In all these cases, there was an order to pre-deposit the amount demanded. Our attention was invited to the Commissioner's detailed findings stating that as against merely 247 numbers sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he requested to dismiss the appeals. 7. We have gone through the records of the case carefully. In order to appreciate the issue, we are reproducing the definitions of 'commercial training or coaching' and also the 'commercial training or coaching centre'. 'Commercial training or coaching' means any training or coaching provided by a commercial training or coaching centre. 'Commercial training or coaching centre' means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the 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. On going through the above definitions, it is very clear that 'commercial training or coaching' is any training or coaching provided by a commercial training or coaching centre. Therefore, what is important here is the centre which provides traini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s essential to provide minimum quality of life to the people of a country. As the demand for these services cannot be met by the Public Sector alone, private sector fills the gap. For most of them in the private sector, health and education are lucrative business. However, we find that education in the instant case is not a business. The primary object of GLIM is to impart education. Profit making is not its main motive. The refrain of the several judicial authorities cited is that profit motive characterizes commercial concern as against general public utility in the case of a charitable organization. Therefore GLIM is not a commercial concern and the training or coaching provided by GLIM is not a commercial activity. 7.2 We are going to the exclusion later. Coming to the next point, we would like to understand whether the services rendered by the appellant amounts to training or coaching. It is not in dispute that the appellant confers degrees in management or financial analysis or financial management. We need not go to the nitty-gritty of it. In any case, they confer post-graduate degree. The appellants are registered under the Societies Registration Act. We do not think ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exam, etc. Such coaching or training centres have definitely a profit motive because they have to train the students to become proficient in getting through particular examinations. Hence, certain skills are imparted and in consideration, money is collected generally by these institutes. We are reproducing now below the Board's Circular No.59/8/2003, dated 20-6-2003 wherein the scope of service tax on commercial training and coaching service is given. Clarification on levy of Service Tax on Commercial Training/Coaching Service Circular No. 59/8/2003, dated 20-6-2003 2.2-1 Commercial coaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams like entrance examinations for Indian Institute of Technology, Joint Entrance Examinations/ Pre Medical Tests, Civil Services Exams etc. are chargeable to service tax. However, services in relation to commercial coaching and training, provided by, (a) voacational training institute; (b) computer training institute; and (c) recreational training institute; have been exempted from service tax with effect from 1-7-2003 vide Notification No. 9/2003-Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /certificates, also impart training for competitive examinations, various entrance tests etc. It is clarified that by definition, such institutes or establishments, which issue a certificate, diploma or degree recognized by law, are outside the purview of 'commercial training or coaching institute'. Thus, even if such institutes or establishments provide training for competitive examinations, etc., such services rendered would be outside the scope of service tax. (3) Whether individuals going to houses to impart tuition/coaching would be chargeable to service tax: It is clarified that service tax is on institutions/establishments. Therefore, only those service providers are covered under the service tax who have some establishment for providing commercial coaching or training, i.e., institutional coaching or training. Thus, individuals providing services at the premises of a service receiver would not be covered under service tax. However, if coaching or training centre provides commercial coaching by sending individuals to the premises of service receivers, such services would be chargeable to tax, as in this case, the individuals are rendering services on behalf of an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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