TaxTMI 
TaxTMI 
2009 (3) TMI 298
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....hing Service Rs. 21,82,27,998/- Penalty Rs. 5,00,000 u/s 76 of the Act Rs. 1,00,00,000/-u/s 76 of the Act. Rs. 1,05,00,000/- 3. We heard both sides. 4. The appellant M/s. Indian School of Business (ISB), Gachibowli, Hyderabad is a 'not for profit' company incorporated in the year 1997 under Section 25 of the Companies Act, 1956. They are offering several courses on management like Post Graduate Programme in Management and Executive Education Programme. They are also receiving fees for the expenses incurred from the participants. At present the details of the courses offered by them need not concern us. Suffice it to say, that as per the memorandum and articles of the appellant, their math objects include inter alia promoting education and the advancement of knowledge in various disciplines, especially in the areas of Management. They are also registered under Section 12 of the Income Tax Act, 1961 as a charitable institution making its income non-taxable. They have also been recognized under-Section 80G of the Income Tax Act, 1961 in the letter dated 29-6-2007, enabling donors to get 50% tax exemption. They had applied exemption under Section 10(23C)(vi) ....
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....27), Section 105 (zzc) relating to Commercial training or coaching. 5.3 Our attention was also invited to Board's Circular No. 59/8/2003-S.T., dated 20-6-2003 issued by the department explaining the scope of levying of Service Tax under the category of Vocational Training and Coaching Centres'. It was emphasized that in terms of the above circular, the department's understanding is that 'commercial training or coaching service' has a very limited coverage and covers only the services provided by coaching institutes/tutorials engaged in preparing students for appearing in various examinations. An institution providing high level of training and coaching and training was never intended to be covered under the taxable service of 'commercial training and coaching. Further, our attention was invited to Circular No. 86/4/2006-ST., dated 1-11-2006 issued by the department in the context of applicability of Service Tax on IITs and IIMs under 'manpower recruitment or supply agency service', wherein it has been clarified that a 'commercial concern' is an institution that is primarily engaged in commercial activities having profit as the primary aim. This circular specifically clarified th....
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..... 'Commercial concern' has been interpreted in the following decisions. (a) Board of Control for Cricket in India v. CCE - 2007 (7) S.T.R. 384 (Tribunal) = 2007-TIOL-CESTAT-Mum. (b) Institute of Banking Personnel Selection v. Commissioner of Service Tax, Mumbai - 2007 (8) S.T.R. 579 ('Tri. - Mumbai) = 2007-TIOL-1393- CESTAT-MUM. (c) Commissioner of Central Excise, Siliguri v. M/s. Mahabir International - 2008 (9) S.T.R. 162 (Tribunal - Kolkata) = 2007-TIOL-1663-CESTAT- Kol. (d) M/s. Great Lakes Institute of Management Ltd. v. CST, Chennai - 2008 (10) S.T.R. 202 (Tribunal - Madras) = 2008-TIOL-134-CESTAT-MAD. (e) CCE, Mangalore v. Employ Me - 2006 (4) S.T.R. 303 (T) = 2008 (12) VST 428 (CESTAT-Bang.) (f) CC, Madras v. Murugappa Chettiar Research Centre - 1998 (100) E.L.T. 439. 5.6 The objects clause of Memorandum of Association of the appellant provides in unambiguous terms that the purpose of the company is to be engaged in research and education and not to earn profit. The dissolution clause of the MOU which provides that in case of dissolution and surplus property shall not be paid to or distributed among the members of the college, but shall be given to such....
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....ion on the ground that the appellants have misrepresented the facts by projecting themselves as an university and have suppressed the fact that the appellants were actually providing "commercial training or coaching service". The period covered by the first show cause notice is from 1-7-2003 to 31-3-2006 and subsequent show cause notice is from 1-4-2006 to 31-3-2007. The first show cause notice is issued on 27-9-2006 and second one on 17-9-2007. The appellants have never misrepresented facts by projecting themselves as a University either to the department or the public in general. Full disclosures were made, in the prospectuses issues by them, wherein the general public was informed in unambiguous terms that ISB is established for imparting world class education in management. The appellants had nowhere claimed themselves to be a university. They have also been maintaining their website - www.isb.edu which contains exhaustive details of all the courses, colleges, activities, etc. The department had started the inquiry proceedings as early as in July 2004 by issuing notices, summons, etc. This clearly shows that the department had knowledge about the appellant's activities even at ....
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....the definition is very significant clearly reflecting the legislative intent. It covers all types of institutes or establishments. If the legislative intent was to cover only 'commercial institute or establishment", the definition would have read as "any commercial institute or establishment providing training or coaching", which is not the case. It was also stated that the word 'commercial' used in the definition, qualifies training or coaching and not institute or establishment. 6.1 Service Tax by its very definition is a tax on rendering of taxable services at a given percentage of the taxable value. It is not a tax on income generated for providing such services. On the same ground, therefore, the appellant having been granted exemption under the Income Tax Act is of no assistance to them in matters relating to their liability under Service Tax laws. It is an admitted position that the appellants have got themselves registered under "Management Consultancy" with effect from 2-6-2006. 6.2 None of the case laws cited by the appellant are relevant to the issue in the present appeal. These cases relate to eligibility to Income Tax exemption for which it was necessary to deter....
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....he category of the taxable service of "commercial training or coaching". Throughout his order, he has emphasized the point that the appellants are collecting huge fees from the participants in order to conduct the courses. He has also stated the fact that the appellant are registered under Section 12 of the Income Tax Act as charitable institution and enjoy exemption from certain provisions of the Income Tax Act, do not matter much. He has relied on certain case laws to hold the view that the appellants are indeed rendering the service of "commercial training or coaching". He has stated that the income generated is only in the form of profits and these profits remain ultimately with the appellant only and do not pass on to the general public or cause for promoting education for general public. He has stated that the ISB have failed to show that their main or prominent activity remained charitable and hence, they fall outside the scope of commercial training or coaching centre. He has mentioned that the appellants would not come within the excluded category as they do not confer any degree recognized by law. He has justified the invocation of the longer period stating that the ignor....
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....ibunal has to interpret the law. When we go strictly by the definition of "commercial training or coaching centre" in terms of the statutory provisions, we are of the view that the said provisions can be applied only in respect of the institutions which are commercial in nature. How to decide whether the objective of the institution is commercial? One has to only go through the Memorandum of Association and Articles of Association and find out. In the present case, as per the memorandum and articles of the appellant, the main objects include promoting education and advancement of knowledge in various disciplines, especially in the areas of management providing support, maintaining, giving grants or subsidies to schools, colleges, universities, institutions, etc., promoting education and advancement of knowledge to graduate or undergraduate course, diploma course, etc., and providing learning understanding and, guidance in all areas, branches, disciplines arid in matters including administration, advertising, publicity, management, marketing, manufacturing, etc., by itself through its branches, whether in India or abroad. It is also seen that the appellant's institution had affiliat....