By TIOL News Service

MUMBAI, JUNE 23, 2015: ON enquiries it was revealed that Sinhagad Technical Education Society was issuing certificate of Diploma/ Degree of various courses conducted by them. Revenue authorities were of the view that the constituent institutes of appellant-assessee and other courses conducted by them were not recognized by law and they also did not furnish any documentary proof regarding recognition of their institutes by statutory body established for the said purposes.

SCN was issued by the CCE, Pune III alleging that appellant have failed to pay service tax for the period 01.07.2003 to 31.3.2006 of approximately Rs.15 crores.

Appellant-assessee contested the show-cause notice on merits by adducing various evidence before the adjudicating authority and submitted that the courses/degrees/post graduation degrees are recognized by various Universities as well as by All India Council for Technical Education (AICTE).

Adjudicating Authority held that most of the courses conducted by the appellant-assessee would not fall under the category of "Commercial Training or Coaching Services" hence not liable to tax as they are recognized by AICTE and University of Pune, but held against appellant-assessee in respect of the other courses conducted viz. Post Graduation diploma in Business Administration (PGDBA) by one of their Institute as being covered under the definition of "Commercial Training or Coaching services" as the said course was not recognized or provided under any statutory authority. Accordingly, a demand of Rs. 7.29 lakhs was confirmed along with interest/equivalent penalty and the amount already paid by the appellant-assessee was appropriated.

Both, the Appellant-assessee & Revenue is aggrieved with the portion of order confirming/dropping the demand respectively.

The appellant submits that the entire demand of tax in respect of PGDBA has been paid before issuance of show-cause notice along with interest and, therefore, the penalties imposed should be be set aside. In the matter of the appeal filed by Revenue, the assessee submitted that the courses conducted are recognized by a statutory body confirmed under an Act and, therefore, dropping of the demand is proper.

The AR submitted that there is nothing on record to show that the courses conducted by the appellant-assessee are recognized by law for the time being in force & that the findings recorded by the adjudicating authority in paragraph No. 31 is incorrect and getting grant from University Grant Commission is different and recognition of Commercial Training or Coaching Centre is another thing.

The Bench extracted the definition of "Commercial Training or Coaching Services" & observed -

+ It can be seen from the reproduced provision that only education in the field or sports, pre-school coaching and training centres, institutes or establishments which issue any certificate, diploma or degree or any education qualification recognized by law for the time in force are excluded from the service tax net.

+ The appellant-assessee has maintained a stand that the courses conducted by them are recognized by University of Pune and Tilak Maharashtra Vidyapeeth and the courses are approved by AICTE.

+ The findings of the adjudicating authority clearly indicates that the courses conducted by the appellant-assessee were recognized by AICTE.

+ On perusal on the said documents (copies of mark sheets as well as certificate issued in respect of courses conducted by the appellant-assessee) we do find that statement of marks as well as provisional passing certificate are issued by Tilak Maharashtra Vidyapeeth and University of Pune mentioning the name of the appellant-assessee as Institute/College from where the student appeared for the examination. The said mark sheet and provisional passing certificate having been issued by Tilak Maharashtra Vidyapeeth and University of Pune it cannot be doubted as to the courses conducted by the appellant-assessee are recognized by law for time being in force. As against such an evidence produced before the adjudicating authority as well as before us, Revenue's appeal has not adduced any evidence contrary to the evidence produced.

The reliance placed by the AR on the decision in the case of Institute of Chartered Financial Analysis of India - 2012-TIOL-2028-CESTAT-BANG was distinguished by observing - "On reading of the said judgement we find in paragraph 14 of the said order, the tribunal has specifically recorded that appellant therein i.e. "ICFAI entity did not issue any certificate, diploma, degree or other education qualifications recognized bylaw for the time being in force". In the case in hand, it has been amply evidenced that the courses conducted by the appellant-assessee are recognized by AICTE as degree, diploma and post graduation degree are issued by the University of Pune."

The Revenue appeal was rejected.

In the matter of the appeal by the assessee for dropping of penalties the Bench observed - "We find that the entire service tax and interest has been discharged by the appellant-assessee before the issue of show-cause notice and they could have entertained a bonafide belief that having recognized by various Universities for all courses, PGDBA may also fall under the same category, hence non-discharge of service tax liability seems to be under bonafide belief. By invoking the provision of Section 80 we set aside the penalty imposed by the adjudicating authority and also hold that Revenue has not made out any case for imposing penalty under Section 76 of the Finance Act, 1994."

The appeal of the Revenue was rejected and that by the assessee was allowed.

(See 2015-TIOL-1213-CESTAT-MUM)