2018 (8) TMI 1397 - AT - Service Tax

Educational Institution Not Liable for Service Tax

The Tribunal held that the appellant, an educational institution, was not liable for service tax under manpower recruitment services as the charges were ... Manpower recruitment service - whether the appellant, Indian Institute of Technology, Delhi – I, have provided manpower recruitment service in the activity of providing facility for recruitment of their students, wherein they charged some fee for such activity from the students? - Held that:- The appellant is not liable to service tax under manpower recruitment and supply service as they are not a commercial concern nor they have provided any service to a commercial concern - the issue is squarely covered in the appellant’s favor by this Tribunal in the case of Motilal Nehru National Institute of Technology vs. CE & ST, Allahabad [2015 (8) TMI 1138 - CESTAT ALLAHABAD], where it was held that The placement facilitation provided by educational institutions whereunder the placement charges are collected from students and not from an employer or a prospective employer, do not on a fair and reasonable interpretation of the taxable service as defined in the Act, fall outside the purview of either the definitional or enumerative provision of the Act - Accordingly, this issue is decided in favor of the appellant and against the Revenue. Online information and data base access or retrieval services - services received from abroad - Whether the appellant have received online information and data base access or retrieval services from abroad, whether the same is taxable? - Held that:- The liability of tax arises only if ‘online information and data access or retrieval service’ are received by the recipient located in India “for use in business or commerce” - the OIDA service received by the appellant is not in relation to any business or commerce and accordingly the same is not taxable - further, it is found that such service was received by the appellant as a representative of all the educational institutions and as such also, they are not liable to service tax. Appeal allowed - decided in favor of appellant. Issues Involved:1. Whether the appellant provided manpower recruitment service by charging a fee for facilitating student recruitment.2. Whether the appellant received taxable online information and database access or retrieval services from abroad.3. Short-payment of service tax for the period from October 2004 to March 2008.4. Applicability of extended period of limitation and penalties.Detailed Analysis:1. Manpower Recruitment Service:The appellant, an educational institution, charged 'Training and Placement Charges' from its students as part of the fee structure. The demand for service tax under the category of manpower supply services (MPS) was based on the incorrect assumption that these charges were received from recruiter companies, but it was later clarified that the charges were received from students. The Tribunal held that the appellant is not a manpower recruitment or supply agency and does not render MPS services. The charges were part of the fee structure and not specifically for recruitment, thus not liable under MPS services. Reliance was placed on decisions such as Commissioner v. Arvind Mills Limited and Motilal Nehru National Institute of Technology v. Commissioner.2. Online Information and Database Access or Retrieval Services:The appellant argued that the Online Information Data Access (OIDA) services were received by the INDEST consortium and not directly by them. The Tribunal found that the consortium, a separate legal entity, entered into subscription agreements with overseas vendors, and thus the liability to pay service tax, if any, was on the consortium, not the appellant. Furthermore, even if the appellant had received the services, they were not for business or commerce but for educational purposes, which are not taxable under Rule 3(iii) of the Import Rules read with Section 66A of the Finance Act, 1994. Circular No. 84/6/2006-ST clarified that IITs are not commercial concerns, supporting the appellant's position.3. Short-payment of Service Tax:The impugned order confirmed a demand of Rs. 7,626 for short-payment of tax from October 2004 to March 2008. The appellant contended they had paid excess tax, supported by evidence submitted during the investigation. A previous show cause notice for the period from October 2004 to March 2005 had been adjudicated, dropping the demand due to excess payment. Thus, the Tribunal found no short-payment, rendering the confirmation of demand unsustainable.4. Extended Period of Limitation and Penalties:The Tribunal noted that the appellant was under a bona fide belief that they were not liable to pay service tax on the alleged services, supported by various decisions. The Adjudicating Authority's extension of the benefit of Section 80 for waiver of penalties confirmed the absence of malafide intent. Consequently, the invocation of the extended period of limitation was not justified. The confirmation of demand for periods beyond the normal limitation was set aside.Conclusion:The Tribunal concluded that the appellant is not liable for service tax under manpower recruitment and supply service as they are not a commercial concern and did not provide any service to a commercial concern. The OIDA services received were not for business or commerce and thus not taxable. The short-payment demand was found unsustainable, and the extended period of limitation was not applicable due to the absence of suppression or malafide intent. The appeal was allowed, and the impugned order was set aside, entitling the appellant to consequential benefits in accordance with the law.