2020 (1) TMI 943 - AT - Service Tax

Private University Wins Tax Case for Diploma Course Exemption

The Tribunal ruled in favor of the appellant, a private university, in a case concerning the demand for service tax on fees charged for the 'Post Graduate ... Exemption under Notification No.25/2012 - Service Tax (entry for education as part of curriculum) - education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force - recognition of courses under state enactment and authorization by State Government - scope of UGC Section 22 and non-application to diplomas - extended period of limitation for demand - imposition of penalty under section 78 of the Finance Act, 1994Education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force - recognition of courses under state enactment and authorization by State Government - scope of UGC Section 22 and non-application to diplomas - exemption under Notification No.25/2012 - Service Tax (entry for education as part of curriculum) - Whether the Post Graduate Diploma in Liberal Studies conducted by the appellant is a recognized course entitling the appellant to exemption from service tax under Notification No.25/2012 - ST, and consequently whether service tax demand is sustainable - HELD THAT: - The Tribunal found on the record that the appellant is a private university established under the Haryana Private Universities Act, 2006 and obtained authorization from the State Government to start the PG Diploma in Liberal Studies by Memo dated 14.7.2014, in compliance with Sections 34/34A of the Haryana Act which require prior government authorization before first enrolment. The UGC Expert Committee report recorded that the University was running the PG Diploma programme and noted approved and current intake figures, without objection. Section 22 of the UGC Act relates to the right to confer degrees and does not empower UGC to specify diplomas; UGC's FAQs confirm that diploma/certificate courses are not specified by UGC and may be run by universities with approvals where required. In these circumstances the course was held to be recognised in law by the State regulatory process and by the UGC inspection records, and therefore falls within the scope of 'education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force' for purposes of the exemption at S. No.9(a) of Notification No.25/2012 - ST. Consequently the service tax demand was unsustainable. [Paras 23, 24, 25, 26, 27]The PG Diploma in Liberal Studies is a course authorised/recognised in law for the time being in force; the appellant is entitled to exemption under Notification No.25/2012 - ST and no service tax is payable.Extended period of limitation for demand - imposition of penalty under section 78 of the Finance Act, 1994 - Whether the extended period could be invoked to sustain the demand and whether penalty under section 78 could be imposed - HELD THAT: - The Tribunal recorded that the department had full knowledge of the material on record and that the case was booked on the basis of the record submitted by the appellant. Given the finding that no service tax was payable because the services were exempt, the Tribunal held that the extended period of limitation was not invokable in the facts of the case. As no service tax liability subsists, penalty could not be sustained. [Paras 28]Extended period is not invokable and penalty cannot be imposed; consequential relief to the appellant follows.Final Conclusion: The appeal is allowed: the appellant's PG Diploma in Liberal Studies is recognised/authorised in law and exempt under Notification No.25/2012 - ST, no service tax is payable for the period in dispute, the extended period is not invokable and penalties cannot be sustained; the impugned order is set aside with consequential relief. Issues Involved:1. Whether service tax can be demanded from the appellant on the fees charged from students for the 'Post Graduate Diploma in Liberal Studies' or not.2. Whether the 'Post Graduate Diploma in Liberal Studies' course conducted by the University is covered under the scope of the expression 'education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force' or not.3. Whether the appellant is entitled to the benefit of exemption from service tax in terms of Sr.No.9(a) of Notification No.25/12-ST dated 20.6.2012 or not.4. Whether the extended period can be invoked to demand service tax and whether the imposition of penalty can be sustained under section 78 of the Finance Act, 1994, in the facts and circumstances of the case or not.Issue-wise Detailed Analysis:1. Demand of Service Tax on Fees Charged for the Course:The Tribunal examined whether service tax could be demanded from the appellant on the fees charged for the 'Post Graduate Diploma in Liberal Studies' course. It was established that the appellant is a private university recognized under the Haryana Private Universities Act, 2006. The course in question is authorized by the Government of Haryana, as evidenced by Memo No. KW 20/14-2011 UNP (5) dated 14.07.2014. The Tribunal concluded that the appellant is running a course recognized by law, thus, service tax cannot be demanded.2. Recognition of the Course Under the Law:The Tribunal considered whether the 'Post Graduate Diploma in Liberal Studies' falls under the expression 'education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force.' The Tribunal noted that the appellant had complied with the Haryana Private Universities Act, 2006 and obtained necessary authorizations from the Government of Haryana. Furthermore, the UGC Expert Committee had acknowledged the course, and there were no objections to its conduct. Thus, the course was deemed to be recognized by law.3. Entitlement to Exemption from Service Tax:The Tribunal evaluated whether the appellant could avail the benefit of exemption from service tax under Sr.No.9(a) of Notification No.25/12-ST dated 20.6.2012. Given that the course was recognized by the Government of Haryana, the Tribunal concluded that the appellant was entitled to the exemption. The Tribunal also referenced UGC clarifications that diploma/certificate courses do not require UGC approval, further supporting the appellant's claim for exemption.4. Invocation of Extended Period and Imposition of Penalty:The Tribunal assessed whether the extended period for demanding service tax and the imposition of penalties under section 78 of the Finance Act, 1994, were justified. It was found that all relevant facts were within the knowledge of the department, and the case was based on records submitted by the appellant. Consequently, the Tribunal held that the extended period could not be invoked, and penalties could not be imposed.Conclusion:The Tribunal set aside the impugned order and allowed the appeal, granting the appellant consequential relief. The appellant was entitled to the benefit of exemption Notification No.25/12-ST dated 20.6.2012, and no service tax or penalties were payable.