By TIOL News Service

MUMBAI, DEC 28, 2018: THE appellant is engaged in providing Graduate and Post Graduate Diploma in the field of Design such as, Graduate Diploma in Interior Space & Equipment Design, Graduate Diploma in Animation Design, Post Graduate Diploma in Product Design etc. by charging fees for the said courses.

Alleging that the services provided by the appellant fall under the category of 'Commercial Coaching and Training Services', a show-cause notice demanding Service Tax for the period from 2006-07 to 2010-11 was issued.

In adjudication, the demand was confirmed with interest and penalty.

The Tribunal by its order dated 12.10.2017 held thus –

ST - Except training or coaching falling in the exclusion category, all training or coaching falls under the definition of commercial training or coaching service - issue is no longer res integra in view of LB decision in Great Lakes Institute of Management Ltd. - 2013-TIOL-1480-CESTAT-DEL-LB, hence demand upheld - appellants have neither declared the receipt nor of consideration towards commercial training or coaching - appellant also did not make any effort to seek any clarification on such an important legal aspect - Therefore, there is a clear suppression of fact on the part of the appellants - case was detected only on the independent investigation carried out by the departmental officer - extended period of limitation correctly invoked – in the matter of the second appellant, the adjudicating authority had not considered the challenge to the quantification of demand as well as the admissibility of cum-tax price and CENVAT, therefore, there has been violation of principles of natural justice – matter remanded in the case of second appellant for re-computing demand as well as corresponding penalties : CESTAT [para 6]

We reported this decision as 2017-TIOL-4131-CESTAT-MUM.

Against this order, the appellant had filed a ROM application and which was dismissed by the CESTAT on 11.07.2018 holding thus –

ST - From the wordings used in the section 35C(2) of the CEA, 1944, it is quite evident that Appellate Tribunal can rectify any mistake apparent from record by amending the order passed by it - For invoking the jurisdiction under this section, it has to be shown that what is being rectified is a mistake apparent from record - It is not the case of the applicant that the pleas raised by them in appeal or argument have not been considered by the bench while disposing of the appeal but they have filed this rectification application on the ground that tribunal has failed to consider and give a specific finding - Tribunal has also given a finding that extended period of limitation has been rightly invoked - it is a settled principle in law that whether extended period of limitation can be invoked or not is dependent on the facts of the case and cannot be dependent on the case law cited - if the finding of fact arrived at by Tribunal is not acceptable, then the same needs to be challenged by way of an appeal before appropriate authority and could not be challenged by way of an application for rectification of mistake - powers vested in Tribunal in terms of section 35C(2) of the CEA, 1944 are very limited to rectification of mistakes without re-appreciating the entire facts, evidence and law on the subject matter of appeal - no merit in applications, hence dismissed: CESTAT [para 7, 8, 13, 14]

Please see 2018-TIOL-3532-CESTAT-MUM .

Incidentally, the appellant was issued with Statement of Demand (SOD) on 07.01.2013 for the subsequent period 1.4.2011 to 31.3.2012 demanding Service Tax of Rs.1,06,82,645/-. Also, later the Department sought information to issue further demand notices for the period after 01.4.2012 through various letters and on receipt of the necessary data and balance-sheet for the respective years, the show-cause notice was issued to the appellant demanding Service Tax on commercial coaching and training services for the period from 1.4.2012 to 30.6.2012 and 01.7.2012 to 31.03.2013 amounting to Rs.1,74,40,967/- and Rs.22,29,914/- for the period April, 2011 to March, 2012 on other incomes.

On adjudication, the Commissioner reduced the total demand of Service Tax to Rs.2,55,96,240/- and appropriated the amount already paid; besides, imposing various penalties.

Against this order, the appellant is before the CESTAT.

It is inter alia submitted that the appellant has been imparting 'education' neither coaching nor training and hence will not be covered under the definition of commercial coaching or training services;that the appellant's institute is established solely for the purpose of imparting education in the field of design and it is a non-profit society registered under the provisions of Indian Trust Act, therefore, the activity undertaken by the appellant is in no manner akin to training or coaching of the student; that the courses offered by the appellant are in collaboration/affiliation with the foreign universities, therefore, such diploma courses and the diploma certificate awarded subsequently is indeed recognized by law, as the respective foreign universities are recognized university formed under the laws of the respective foreign countries. Reliance is placed in support on the decision in ITM International Pvt. Ltd. Vs. CST, Delhi – 2017-TIOL-3635-CESTAT-DEL .

Insofar as the demand on “other income” is concerned, it is submitted that the same is erroneous, is based on mis-interpretation of the taxable entry and in some cases is beyond the scope of the SCN. Moreover, the demand is barred by limitation.

The AR submitted that on the subject matter, for the earlier period, the Tribunal had already passed a decision (supra) and as there is no change in the facts and circumstances for the subsequent period, hence the judgment of the Tribunal is squarely applicable to the facts of the present case also for the subsequent period.

The Bench considered the submissions and observed that the demand pertains to the period from 1.4.2011 to 31.3.2013; that the total Service Tax of Rs.2,55,96,240/- has been confirmed in both the notices relates to –

(i) non-payment of Service Tax on commercial coaching and training services for the normal period of limitation,

(ii) other income shown in the balance-sheet for the year 2011-12 relating to various services on which Service Tax not paid invoking the extended period of limitation.

Furthermore, for the period after 1.7.2012 to 31.3.2013, the entire amount of Service Tax with interest has been discharged by the appellant and the appellant is only contesting the liability of Service Tax for the period 1.4.2011 to 30.6.2012.

After extracting in entirety paragraph 6 of the CESTAT order dated 17.10.2017 - 2017-TIOL-4131-CESTAT-MUM, the Bench held –

"6.2 We do not find any justification or reason in not following the aforesaid finding of the Tribunal in the appellant's own case that the services rendered by the Appellant are in the nature of commercial training or coaching services and leviable service tax for the period in question."

Insofar as the demand of Service Tax on 'Other income' as reflected in the respective Balance Sheet, the Tribunal noted that the Commissioner had, after analyzing each and every element of charge collected with the fees in relation to the service provided under the category of commercial coaching or training services, held that only the amount of Rs.37,74,375/- collected could be considered to fall under the taxable category of commercial training or coaching services and accordingly reduced the demand from Rs.22,29,914/- to Rs.3,88,762/-, and which findings do not have any discrepancy. However, as all the information was reflected in the balance-sheet under the head 'other income' and was available to the department while issuing the second show-cause but no objection was raised by the Revenue, invocation of extended period was held as as untenable in law. The demand to the said extent was, therefore, set aside.

As regards penalty, since the present demand notices were for normal period of limitation, imposition of penalty under Section 78 cannot be sustained against the appellant, the Tribunal held. However, penalty and interest imposed under the other provisions of the Finance Act, 1994 were upheld.

The appeal was partly allowed.

(See 2018-TIOL-3899-CESTAT-MUM)