2013 (8) TMI 712 - AT - Service Tax

Non-profit banking training center taxed for commercial services per Finance Act

The appellant, a non-profit organization providing training in the banking sector, argued against being classified as a commercial training center. ... Nature of Service - Commercial Training or Coaching u/s 65 (105) (zzc) - non-profit institution - training programmes at the level of individual bank - The department was of the view that the service rendered by the assesse came under the category of ‘Commercial Training or Coaching' - Held that:- The activity undertaken by the assesse falls within the definition of ‘commercial coaching or training' as defined in Section 65(105)(zzc) - The services rendered by the assesse was exigible to service tax under ‘commercial coaching or training service - The assesses were providing to their students 'training or coaching' for a consideration and would ipso facto fall within the ambit of 'commercial training or coaching centre' envisaged in the explanation to Section 65(105)(zzc) - As this explanation had retrospective effect from 01/07/2003, the activities undertaken by all the assesses during the periods of dispute would get covered within the meaning of the phrase 'training or coaching imparted for consideration' occurring in the text of the explanation - the explanation to Section 65(105)(zzc) of the Act had very wide scope to encompass the activities of the assesses and render them exigible to service tax under Section 65(105)(zzc) of the Act. U.P.Gram Panchayat Adhikari Sangh & others v. Dayal Ram Saroj & others [2006 (12) TMI 446 - SUPREME COURT] - It was an inbuilt mechanism in the system itself - Judicial discipline demands that when the decision of a co-ordinate Bench of the same High Court was brought to the notice of the Bench, it was 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 was to refer the question or the case to a larger Bench - This was the minimum discipline and decorum to be maintained by judicial fraternity. Time-barred Demand - Whether the demand was hit by time-bar – Held that:- Service tax demand shall be restricted to the normal period of limitation inasmuch as the assesse was under the bonafide belief that they are not liable to service tax and evidences on record also support this fact - There cannot be any suppression of facts on the parts of the assesse and, therefore, the service tax demand had to be restricted to the normal period of limitation - 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 the demand of service tax had to be restricted to this period only. Eligibility for Abatement - Held that:- The assesse was eligible for abatement towards the amounts levied for boarding and lodging expenses charged from the trainees subject to submissions of satisfactory evidences in this regard - on such evidences being furnished the service tax demand shall be re-computed and the assesse shall be liable to pay such recomputed service tax along interest. Issues Involved:1. Classification of services rendered by the appellant as 'Commercial Training or Coaching'.2. Applicability of service tax on the appellant's activities.3. Time-bar on the demand for service tax.4. Inclusion of boarding and lodging charges in the taxable value.Issue-wise Detailed Analysis:1. Classification of Services Rendered by the Appellant as 'Commercial Training or Coaching':The appellant, M/s. National Institute of Bank Management (NIBM), contended that they were not a commercial training or coaching center as they were a non-profit organization promoted by the Reserve Bank of India. They argued that their training programs did not prepare trainees for any particular vocation but enhanced the skills of already employed individuals in the banking sector. Therefore, their activities should not fall under 'commercial training or coaching'. However, the Tribunal referred to the amended definition under the Finance Act, 2010, which clarified that any center imparting training or coaching for consideration, irrespective of profit motive or registration status, would be considered a commercial training or coaching center. The Tribunal concluded that the appellant's activities fell within this definition.2. Applicability of Service Tax on the Appellant's Activities:The Tribunal noted that the appellant charged for the training programs and the courses conducted were not recognized by law during the relevant period. The Tribunal referenced past cases and the Supreme Court's decision which upheld that institutions imparting training or coaching for consideration, even if non-profit, were liable for service tax. The Tribunal concluded that the appellant's services were indeed exigible to service tax under 'commercial coaching or training service'.3. Time-bar on the Demand for Service Tax:The show cause notice was issued on 06/04/2009, demanding service tax for the period 01/10/2003 to 13/09/2008. The Tribunal found that the department was aware of the appellant's activities and had previously considered them non-taxable. Given the retrospective amendment in the Finance Act, 2010, the Tribunal determined that there was no suppression of facts by the appellant. Therefore, the demand was restricted to the normal period of limitation, covering only October 2007 to September 2008.4. Inclusion of Boarding and Lodging Charges in the Taxable Value:The appellant claimed that the lump-sum amount charged included boarding and lodging expenses, which should be excluded from the taxable value. The Tribunal agreed that this claim merited consideration but required the appellant to provide evidence to substantiate the amounts charged for boarding and lodging. Upon submission of satisfactory evidence, the adjudicating authority was directed to re-compute the service tax demand after giving abatement for these expenses.Conclusion:(a) The services rendered by the appellant are exigible to service tax under 'commercial coaching or training service'.(b) The service tax demand is restricted to the normal period of limitation due to the appellant's bona fide belief and the department's prior stance.(c) The appellant is eligible for abatement for boarding and lodging expenses upon submission of satisfactory evidence, and the service tax demand shall be re-computed accordingly.Disposition:The appeal was disposed of in these terms, with the Tribunal directing the re-computation of the service tax demand and the appellant liable to pay the recomputed amount along with interest. The judgment was pronounced in Court on 12/07/2013.