Rachna Gupta ORDER
Rachna Gupta, Member (J)
1. Present is a common Order qua both the Appeals against Order-in-Original No. 177-180/ST/PKJ/CCE/ADJ/2012 dated 25.10.12 with corrigendum dated 27.11.2012, point of adjudication being similar.
2. The facts relevant for the purpose are that M/s. IILM Institute of Higher Education is being run by a charitable society registered under Societies Registration Act and had been running B.Sc. in Management/MBA, M.Sc. in International Business, PGDM/PGP/MBA and diploma in design courses under the aegis of IILM University, Chhattisgarh. It is Department's case that the said university was disfunctioned vide the Order of Hon'ble Apex Court dated 11.02.2005 but still the appellant was found running the above mentioned courses against collecting fees for providing the courses, resultantly, were alleged to have been providing the services of commercial training or coaching as defined under Clause 26 and 27 of Section 65 read with Sub-Clause zzc of Clause 105 of Section 5 of Finance Act, 1994. Since the appellant had not discharged their tax liability qua the aforesaid collected fee during the period March 2004 to March 2008 and also for the period April 2008 to August 2009, four Show Cause Notices were issued as follows:-
Resultantly, the present Appeal.
3. Heard arguments of both the parties. It is submitted by the Ld. Counsel for the appellant, while challenging the impugned order, that the appellant is rendering education and teaching by them is excluded from the ambit of being called as commercial training or coaching service as is alleged for one simple reason that they are teaching under the aegis of the recognised universities. The demand of Rs. 11,45,24,226/- has been confirmed in total. It has to be divided in four parts i.e. for giving PG diplomas, i.e. PGDM/PGP/MBA, B.Sc. in Management/BBA, M.Sc. in International Business and Diploma in Design. Three of these courses are denied to be affiliated by the Department and the fourth one i.e. diploma in design is denied to be vocational in nature. It is submitted that these courses are covered by the exclusion clause of the definition of commercial training or coaching centre as given in Section 65(27) of Finance Act, 1994. Adjudicating Authority below is alleged to have ignored this important fact. The confirmation of demand is therefore impressed upon as being not sustainable, Order to this extent is prayed to be set aside. With respect to diploma in design, it is however submitted that in lieu of Notification dated 27.02.2010 vide which the definition of vocational institute got changed, the appellants are liable to pay approximately 3 lakhs qua this cause for the period beyond February, 2010. Hence, the demand with respect to this cause is conceded.
4. While submitting about the Show Cause Notice dated 24.04.2009 it is mentioned that the Department has wrongly invoked the extended period of limitation beyond one year since there was no liability upon the appellant to be discharged for rendering services as defined under Section 65(27) of the Act, no question of intention to evade the same at all arises. Otherwise also, there is no evidence on record to prove any alleged positive act on the part of the appellant which may entitle the Department to invoke the extended period. The original Adjudicating Authority has rather denied the entitlement of the Department to invoke the same. Resultantly, is the cross Appeal of the Department. It is impressed upon that the said findings in the impugned order have no infirmity. Same is prayed to be upheld and both the Appeals are prayed to be accordingly decided.
5. While rebutting these arguments, it is submitted by Ld. DR that appellant was not apparently recognised during the period of demand vide various Show Cause Notices i.e. w.e.f. 2004 to 2011. The only document relied upon by the appellant to prove the affiliation is the convergence scheme but the same cannot be called as the recognition by the university authorised under law to so recognise. Hence, the demand has rightly been raised in the Show Cause Notice and has rightly been confirmed. The extent thereof is conceded. It is further submitted that the findings of the original Adjudicating Authority that no mala fide intention can be attributed to the appellants is objected as being self contradictory in the Order itself. Doing away the penalties on the said basis is also alleged to be an erroneous finding. The said findings are prayed to be set aside. Both the Appeals are prayed to be disposed of accordingly.
6. After hearing both the Counsels, we are of the considered opinion as follows:-
It is an admitted fact that the appellants are imparting education in following courses against consideration:
(i) B.Sc. Management/BBA
(ii) M.Sc. International Business
(iii) PGDM/PGP/MBA
(iv) Diploma in design
The point of consideration is as to whether imparting of these courses by the appellants constitute rendering a service of commercial training or coaching centre. These services were brought under service tax net under the Finance Act, 2003 w.e.f. 01.07.2003. The services shall be taxed if it is provided by a commercial training or coaching centre. For the purpose, it is important to know the following definitions:
(1) "Commercial training" or coaching which means any training or coaching provided by a commercial training or coaching centre. [Sector 65(26)], Finance Act, 1994 (the Act in short).
(2) Section 65(27) of the Act defines "commercial training or coaching centre to mean 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."
(3) Taxable Service, as per Section 65(105)(zzc) of the Act, means any service provided or to be provided, to any person by a commercial training or coaching centre in relation to commercial training or coaching;
W.e.f. 16.06.2005 the scope of levy was extended to "services to be provided" as against the earlier provision providing for levy of service tax on services actually provided.
The Finance Act, 2010 has inserted an explanation below sub-clause zzc of Section 65(105) of the Act to take retrospective effect from 01.07.2003 clarifying that the term "commercial" appearing in clause 27 only means that such training or coaching is being provided for consideration whether or not such training or coaching is conducted with a profit motive. After amendment Section 65(105)(zzc) of the Act stands as under:
"Taxable Service" means any service provided or to be provided, to any person, by a commercial training or coaching centre in relation to commercial training or coaching:
Explanation - For the removal of doubts, it is herby declared that the expression "commercial training or coaching centre" occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute by whatever name called, where training or coaching is imparted 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, [Section 65(105)(zzc)]
Further, under Notification No. 33/2011 : MANU/DSTX/0058/2011 dated 25.04.2011 exemption has been granted to any coaching and training leading to grant of a certificate or diploma or degree or any educational qualification which is recognised by any law for the time being in force. It reads as:
"In exercise of the power conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government on being satisfied that it is necessary in the public interest so to do, hereby exempt, - (i) any preschool coaching and training; (ii) any coaching or training leading to grant of a certificate or diploma or degree or any educational qualification which is recognized by any law for the time being in force; when provided by any commercial coaching or training centre from the whole of the service tax leviable under Section 66 of the Finance Act, 1994."
This Notification came into force on the 1st day of May, 2011. Thus, two identical courses may be treated differently merely because one of the institute also conducts another course that is recognized by law. This anomaly is proposed to be corrected by subjecting all such unrecognized education to tax.
Conduct of degree courses by colleges, universities or institutions which lead to grant of qualifications recognized by law would be covered under exemption. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification.
The Board through Circular No. 164/15/2012-ST dated 28.08.2012 (appended as Annexure - I) has clarified that the words "recognized by an law" will include such courses as are approved or recognized by any entity established under a central or state law including delegated legislation, for the purpose of granting recognition to any education course including a VEC.
7. Though the contention of the appellant is that they are recognized universities under IGNOU and AICT and PTU all being the state functionaries, the appellant also becomes the university recognized by law. We observe that there is no single document produced by the appellants to show that IILM has ever been recognized as deemed university by any of the universities constituted under law. Mere approval in their favour by any such government university for conducting certain courses by distant education or by permitting them to do so under convergence scheme cannot cloth them with the title of deemed university. The copies of degrees as produced on record shows that the students getting education from appellants have been granted degree by IILM i.e. appellants only. The degree is not issued by the university constituted under the force of law. In the given circumstances and in view of the admitted fact that IILM are charging heavy fee for rendering these courses, we opine that the adjudicating authority has not committed any error while holding the appellant to have been rendering the services of commercial training or coaching centre. The demand to that extent is hereby confirmed.
8. Now coming to the only course which is vocational in nature, we have read the definition of vocational training institute to mean a commercial training or coaching centre which provides vocational coaching or training that imparts skill to enable the trainee to seek employment or undertake self-employment directly after such coaching or training. Since the definition itself clarifies that vocational training institute is nothing but a commercial training or coaching centre and the appellants have already been held to have been rendering commercial training or coaching centre services, we again find no infirmity with the Order under challenge. Above all, the appellant has conceded that said demand in lieu of Notification dated 27.02.2010.
9. The appellant while challenging the levy qua this cost have claimed the exemption in their favour under Notification No. 24/2004-ST : MANU/DSTX/0035/2004 dated 10.09.2004 but the perusal of said Notification clarifies that the same is not applicable to the appellants. Vocational training institute as per the explanation of said Notification is held to mean an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training offering courses in designated trades as notified under the Apprentices Act, 1961. There is nothing on record to prove said affiliation. The exemption has rightly been declined by the adjudicating authority below. The demand to this vocational course is also therefore confirmed.
10. Now, coming to the entitlement of the Department for invoking extended period, it is held as follows:-
Department also has preferred an Appeal challenging the impugned order for doing away the penalties while denying the benefit of invoking extended period of limitation to the Department on the ground that the appellant's case is not at all a case of bona fide doubt. The appellant on the other hand has justified the said findings in the impugned order. We are of the opinion that the appellants are admittedly imparting education against heavy considerations. It is apparent on record that they have tried to avoid their tax liability under different pleas i.e. on the ground of them being a charitable trust, another ground of them being a deemed university and of them being imparting education under the aegis of the bodies constituted under the force of law. As already discussed above, none of the ground is opined favouring the appellant's case. The notifications and circulars as relied upon by the appellant are also several in number as already discussed above but none of them also are opined to cover the appellant's case squarely. The said act and conduct of appellant's, to our opinion is the apparent strategy on the part of the appellant to just to make the tax evasion. The institute in academics, is otherwise cannot be presumed, from any stretch of imagination, to have a lack of clarity qua the language of legal provisions and the respective notifications/circulars. Therefore, we are of the opinion that question of appellants being under any bona fide doubt does not at all arises. The findings of Ld. Commissioner while holding the same and doing away the penalties on that ground are accordingly held to be erroneous. The intent of the appellants is very much apparent while submitting themselves to be entitled to exemption under certain Notifications which otherwise is not correct, that the same is mala fide. Therefore, the same is opined to be the mis-representation of the facts and is held to definitely be a willful and positive act on part of appellant thereby entitling the Department to invoke the extended period of limitation. We draw our support from the adjudication of Hon'ble Apex Court in the case of Cosmic Dye Chemical Vs. Collector MANU/SC/0791/1995 : 1995 (75) ELT 721 (S.C.). In another adjudication of Hon'ble Apex Court in Anand Nishikawa Company Ltd. Vs. Commissioner, Meerut MANU/SC/0641/2005 : 2005 (188) ELT 149 (S.C.), the Hon'ble Supreme Court has held that suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade the payment of duty. As already held above that the appellants being an education imparting institute cannot be presumed to have acquired a wrong interpretation of the legal provisions or notifications or circular still taking the benefit thereof is definitely a deliberate non-disclosure of correct fact and as such suppression of fact. In view of these findings, we hereby set aside the impugned order to the effect of holding the appellants to be under bona fide doubt while doing away the penalties.
11. As a result of the entire above discussion, the Appeal of the appellants bearing No. ST/55526/2013 is hereby rejected and that of the Department bearing No. ST/56508/2013 is hereby allowed. Consequentially, the demand of the impugned order is confirmed alongwith the proportionate interest and penalty.
[Pronounced in the open Court on 30.07.2018]
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