2023 (6) TMI 245 - AT - Service Tax

Tribunal remands case of SRM Institute of Hotel Management for further investigation. Appellant granted personal hearing.

The Tribunal remanded the case involving M/s. SRM Institute of Hotel Management and Catering Technology back to the adjudicating authority for further ... Commercial Training or Coaching Services - Commercial Training or Coaching Centre - vocational training institute - exemption - remand for de novo adjudicationCommercial Training or Coaching Services - remand for de novo adjudication - Demand of service tax in respect of the Degree (B.Sc. Hotel and Catering Management) course - HELD THAT: - The Tribunal found that the material on record (including attendance lists, pass lists and the degree conferred by the University of Madras) created uncertainty about whether the appellant (SRM Institute of Hotel Management) or the affiliated Arts & Science College under Valliammai Society actually rendered the course and collected the fees. The Department did not furnish clear evidence showing that the income tabulated in the Show Cause Notice derived from provision of commercial training by the appellant itself. Given this lack of clarity as to the source of the income and the institutional affiliation (including references to SRM Deemed University), the Tribunal concluded that the question whether the services rendered were taxable could not be finally adjudicated on the existing record and therefore remanded the matter to the adjudicating authority for de novo consideration after affording the appellant an opportunity of personal hearing. [Paras 11, 12, 13, 16]Demand in respect of the Degree course remanded to the adjudicating authority for de novo adjudication after affording opportunity of personal hearing.Vocational training institute - exemption - Commercial Training or Coaching Services - Demand of service tax in respect of the diploma/ vocational course (diploma course previously adjudicated) provided by the appellant - HELD THAT: - Having considered earlier Tribunal decisions in the appellant's own case and analogous precedents applying Notification No. 9/2003 (which exempted services by vocational training institutes providing skills enabling direct employment), the Tribunal held that the diploma/vocational course fell within the exemption for the relevant period and therefore the demand in respect of the diploma course could not be sustained. The Tribunal relied on prior findings that such courses are vocational in nature and not equivalent to general academic courses excluded from the exemption, and set aside the demand accordingly. [Paras 14]Demand in respect of the diploma (vocational) course is set aside.Commercial Training or Coaching Services - remand for de novo adjudication - Demand of service tax in respect of the one year Arts and Crafts / certificate course conducted with permission of the State Industries Department - HELD THAT: - The Tribunal examined the permission letter produced by the appellant and observed that the letter grants temporary recognition for specified units and subjects but does not clearly indicate whether separate fees were collected by the appellant for that course or which portion of the impugned demand related to that approved course. Because the record did not clarify how much (if any) of the assessed income related to the course approved by the Industries Department or whether that income was distinct from other receipts, the Tribunal found the issue required fresh consideration and remanded the matter to the adjudicating authority for de novo adjudication with opportunity for the appellant to furnish details and be heard. [Paras 15, 16]Demand in respect of the Arts and Crafts / one year certificate course remanded to the adjudicating authority for de novo consideration.Final Conclusion: Impugned order set aside; appeal allowed in part - demand relating to the diploma (vocational) course is set aside, while demands relating to the Degree course and the one year Arts & Crafts/certificate course are remanded to the adjudicating authority for de novo adjudication after affording the appellant opportunity of personal hearing. Issues Involved:1. Whether the appellant is liable to pay Service Tax under the category of 'Commercial Training or Coaching Services'.2. Whether the demand of Service Tax on the Arts and Craft course conducted by the appellant is sustainable.Summary:Issue 1: Liability to Pay Service Tax for Hotel and Catering Management CoursesThe Department alleged that the appellant, M/s. SRM Institute of Hotel Management and Catering Technology, provided training courses in Hotel and Catering Management that were not recognized by any statutory authority and did not lead to a government-recognized diploma or degree. Consequently, the courses fell under 'Commercial Training or Coaching Services' as defined in Sections 65(26), 65(27), and 65(105)(zzc) of the Finance Act, 1994. The appellant did not discharge the service tax on the income received from such services during the period from April 2008 to March 2012, leading to the issuance of a Show Cause Notice invoking the extended period for demanding Service Tax along with interest and penalties.The appellant argued that they are a separate wing of SRM Arts and Science College, a unit of M/s. Valliammai Society, a registered non-profit society, and that the courses in question were recognized by the University of Madras. They provided evidence, including registration certificates and documents showing the affiliation and degree awards by the University of Madras. However, the adjudicating authority ignored these submissions and held the appellant as an independent entity imparting unapproved courses.The Tribunal noted that the income details provided by the Department lacked clarity on whether the income was derived from the collection of fees for the courses. The appellant also failed to provide evidence that the income was from other business activities. Consequently, the Tribunal found that the matter required remand for further investigation and clarity.Issue 2: Demand of Service Tax on Arts and Craft CourseThe appellant contended that the one-year Arts and Craft course was conducted with the approval and recognition of the Industries Department of the State of Tamil Nadu, and thus, the demand for service tax was unsustainable. The Tribunal examined the permission letter from the Industries Department, which listed various subjects under the course, but found no clear evidence on whether separate fees were collected for this course and how it related to the demand.The Tribunal concluded that this issue also required remand for further investigation and clarity on the details of the demand related to the fees collected for the course approved by the Industries Department.Conclusion:The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for denovo consideration. The appellant was to be given sufficient opportunity to furnish details and for personal hearing. All issues were left open, and the appeal was allowed by way of remand.(Order pronounced in open court on 05.06.2023)