By TIOL News Service

MUMBAI, AUG 21, 2013: NATIONAL Institute of Bank Management (NIBM) was established by the Reserve Bank of India (RBI) in consultation with the Government of India in the year 1969 as an apex autonomous and non-profit institution in the arena of banking and finance with the role of a "think-tank" for the banking system. The principal objective of NIBM is to help "translate national policies relating to the banking sector into meaningful training programmes at the level of individual bank and help the implementation of those policies by creating a climate of intellectual appreciation and emotional dedication". Research, Training and Consultancy are the three major activities of the Institute. NIBM is also recognized by the University of Pune as an approved "Centre for Post Graduate Research" and by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India as a Scientific and Industrial Research Organisation (SIRO).

NIBM conducted a number of training programs for the officials of various banks and also a post-graduate diploma programme for students in banking management. The appellant charged lumpsum amount for conducting these programmes from the participants or their sponsors.

The department was of the view that the service rendered by the appellant came under the category of ‘Commercial Training or Coaching' and accordingly a SCN dated 06/04/2009 was issued demanding service tax of Rs.3,58,38,984/- on a gross amount of consideration received of Rs.30,72,93,330/- during the period 01/10/2003 to 30/09/2008. The notice was adjudicated by the CCE, Pune-III and the demands were confirmed along with interest thereon. However, the adjudicating authority waived the penalties proposed in the show cause notice under Sections 76, 77 and 78 of the Finance Act, 1994.

When the Stay application had come up before the Bench, the applicant had submitted that they had sought a clarification from the department as to whether the activity undertaken by them is chargeable to service tax or not and it had been clarified by the department that the applicants are not covered under 'Commercial Training' for the purpose of levy of Service Tax vide letter dated 7.12.2006. Inasmuch as the demand is hit by limitation.

The Bench had while granting Stay - (2012-TIOL-1237-CESTAT-MUM) observed -

"6. We find that in this case the demand for the period 1.3.2003 to 30.9.2008 has been confirmed by invoking the extended period of limitation through a show-cause notice issued on 17.04.2009. In the letter dated 07.12.2006, issued by the Commissioner of Central Excise, Pune-II stated that "the activity undertaken by the applicant was examined and it was held that the fees charged by the NIBM is far less than those charged by the Indian Institute of Management which run similar training programmes on which no Service Tax is being discharged. In view of the above this Commissionerate is of the view that the banking training provided by the NIBM would not come under the scope of 'Commercial Training' for the purpose of levy of service tax."

6.1 We have also seen that the applicant has sought the Board's clarification also and the same was clarified in the year 2005, therefore, the activity undertaken by the applicant was well within the knowledge of the department. Therefore, the extended period of limitation is not invokable in this case."

The appeal was heard recently.

Apart from reiterating the submissions made on limitation at the time of hearing of the Stay application, the appellant also submitted that they had charged a lump-sum amount for the courses conducted which included charges for boarding and lodging. Therefore, even if the activity undertaken by the appellant is held to be taxable, the charges recovered for boarding and lodging should be excluded from the taxable value of the services rendered.

The Revenue representative submitted that the definition of ‘commercial coaching or training centre' was amended retrospectively vide Finance Act, 2010 and as per the amended definition, the expression ‘commercial training or coaching centre' occurring in sub-clause (zzc) of clause (105) of Section 65 and in clauses (26), (27) and (90a) of Section 65 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."

It is, therefore, submitted that whether the organization imparting the coaching or training makes profit or not, or is a non-profit organization, is not relevant for the purpose of levy of service tax. If the training or coaching is imparted for a consideration, service tax levy is attracted. Only the coaching or training imparted which is recognized under law is excluded from the purview of service tax.

The Bench extracted the retrospective amendment cited by the Revenue representative and observed -

Merits:-

"5.3 From the retrospective amendment cited above, it is clear that any centre or institute, by whatever name called, where training or coaching is imparted for a consideration is liable to service tax. There is no dispute in the present case that the appellant herein is charging for the training programmes/courses conducted by them. It is also an accepted fact that courses conducted by the appellant were not recognized by law during the relevant period.

5.4 …These cases were remanded back to the Tribunal for fresh consideration in the light of the newly inserted Explanation in section 65(105)(zzc) of Finance Act, 1994 by Finance Act, 2010, which was made effective from 1 st July, 2003. This decision of the apex court was in pursuance to the earlier decision of the hon'ble supreme court where a three judges bench of the Court allowed the appeal filed by the Commissioner of Service Tax against the order of this Tribunal in the case of Great Lakes Institute of Management reported in - (2010-TIOL-117-SC-ST-LB). It is in the context of remand by the hon'ble apex Court that the matter was once again considered by the South Zonal Bench of this Tribunal at Bangalore in the case of ICFAI, Hyderabad and Others vide Final order NO. 514-520/2012 dated 31/07/2012. All the averments made before us in the present case were also made before the Tribunal in the case of ICFAI with respect to the educational nature of the activity undertaken and this Tribunal observed as follows:-

"x xx"

 5.5 In view of the above decision of the Tribunal in ICFAI case, we are bound to follow the same as a matter of judicial discipline. The Apex Court in U.P. Gram Panchayat Adhikari Sangh & amp; others v. Dayal Ram Saroj & amp; others, (2007) 2 SCC 138 and also in Maharashtra University of Health Sciences represented by Deputy Registrar v. Paryani Mukesh Jawaharlal & others, (2007) 10 SCC 201 ruled that Judicial discipline is self discipline. It is an inbuilt mechanism in the system itself. Judicial discipline demands that when the decision of a co-ordinate Bench of the same High Court is brought to the notice of the Bench, it is respected and is binding, subject of course, to the right to take a different view or to doubt the correctness of the decision and the permissible course then often is to refer the question or the case to a larger Bench. This is the minimum discipline and decorum to be maintained by judicial fraternity". Since the facts/issues involved are identical in the cases decided by the Bangalore bench and the case before us, the decision of the co-ordinate bench at Bangalore is binding on us and therefore, we cannot take a contrary view.

 6. In view of the above, we hold that the activity undertaken by the appellant falls within the definition of ‘commercial coaching or training' as defined in Section 65(105)(zzc) of the said Finance Act."

Limitation:-

"7.1 The show cause notice has been issued on 06/04/2009 demanding service tax for the period 01/10/2003 to 13/09/2008. The evidence available on record indicates that the matter had been enquired into by the Pune-III Commissionerate and the department was aware of the activities undertaken by the appellant and the department was also of the view that the said activity does not come under the category of ‘commercial or training or coaching'. Further during the impugned period, there were a number of decisions by various benches of the Tribunal which also took the same view. However, in view of the amendment made in the Finance Act, 2010, the law underwent a change consequent to which the activity undertaken by the appellant became taxable. In such circumstances, there cannot be any suppression of facts on the parts of the appellant and, therefore, the service tax demand has to be restricted to the normal period of limitation. In this case, since the notice had been issued on 06/04/2009, only the demand for the period October, 2007 to September, 2008 would fall within the normal period of limitation and, therefore, the demand of service tax has to be restricted to this period only."

Abatement of boarding and lodging charges:-

"8. As regards the claim of the appellant that they have charged a lumpsum amount including the charges for boarding and lodging and the same should be excluded while computing the tax liability merits consideration. However, it is for the appellant to lead evidence in this regard and substantiate their claim with regard to the amounts charged for boarding and loading expenses from the trainees. On submission of such evidences, the same shall be considered by the adjudicating authority and the demand quantified after giving abatement for the boarding and loading expenses."

The appeal was disposed of in the above terms.

(See 2013-TIOL-1247-CESTAT-MUM)