TaxTMI 
TaxTMI 
2019 (1) TMI 75
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.....2009 with M/s. NRI Educational Society (hereinafter, 'the society'), a society formed under the Societies Registration Act with 7 members. A.Rajendra Prasad, the Managing Partner of the petitioner academy, is a member of the society and is also the President & Correspondent of the society's colleges for Intermediate education in the State of Andhra Pradesh. On the strength of this MoU, the petitioner academy operated 43 recognized junior colleges of the society, viz., NRI Junior Colleges, imparting education in Intermediate curriculum to students. These colleges were affiliated to the Board of Intermediate Education, Andhra Pradesh, and imparted Intermediate education to students in the streams of MPC, BiPC, CEC & MEC. The petitioner academy applied for service tax registration on 01.06.2011 and requisite documents for that purpose were submitted on 06.07.2011. Meanwhile, the Superintendent of Service Tax, Vijayawada, issued summons dated 20.07.2011 to the petitioner academy calling upon it to furnish certain information. On 27.07.2011, the petitioner academy requested the Superintendent not to initiate proceedings as it had already applied for registration on 01.06.2011. By lette....
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....ntends that the impugned Order-in-Original dated 29.11.2016 is unsustainable as the show-cause notice dated 17.04.2015 was issued invoking power under the proviso to Section 73(1) of the Act of 1994 but the extended period of limitation thereunder could only be invoked when fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions of Chapter V of the Act of 1994 or the Rules made thereunder is committed with intent to evade payment of service tax and no such situation was discernible on facts in the case on hand. The petitioner academy pointed out that the service tax department was well aware of the activity undertaken by it all through and could not accuse it of suppression. It therefore contended that the department had invoked the extended period of limitation without justification and the show-cause notice dated 17.04.2015 issued beyond the normal period of limitation was unsustainable. The petitioner academy stated that it did not obtain service tax registration till 29.01.2012 being under the bonafide belief that the coaching activity undertaken by it was not taxable, in terms of the earlier Notification bearing No.10/2003 a....
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....owards Intermediate curriculum was collected by the society while the fee towards specialized coaching was collected by the petitioner academy. He asserted that the petitioner academy and the society had suppressed the fact that they were both separate legal entities and the nature of their activities and claimed that the petitioner academy had acted with the conscious intention of evading payment of service tax, by not bringing the actual facts to the knowledge of the department. He stated that there was no merit in the argument that the department was well aware of the activities since 2011 and asserted that the extended period of limitation was rightly invoked. He pointed out that the petitioner academy was not entitled to claim benefit either under Notification No.10/2003-ST dated 20.06.2003 or under Notification No.33/2011-Service Tax dated 25.04.2011. He denied the petitioner academy's claim that the Commissioner's order went beyond the show-cause notice and pointed out that the nature of the entrance exams for which coaching was given by the petitioner academy was specifically mentioned in para 22.1(i) of the show-cause notice dated 17.04.2015.. The petitioner academy filed....
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....th Intermediate examinations and the petitioner academy approached the society to forward its students to write examinations and as the society had recognition from the Board of Intermediate, Andhra Pradesh, it agreed to forward its students to the petitioner academy. Clause 1 of the terms and conditions recorded that the society would forward all its admitted students in +2 courses to the petitioner academy for a period of seven years and the students would be allowed to complete their two years with the petitioner academy's institutions. Clause 2 provided that the application fee and tuition fee for coaching would be collected from students by the petitioner academy only and the society could not claim the said amounts. Clause 3 stipulated that the expenditure like rents, faculty benefit to the teaching staff and salaries to the non-teaching staff and other expenses would be borne by the petitioner academy only. Clause 4 provided that other statutory formalities like provident fund, ESI and Income-tax would be taken care of by the petitioner academy only. Clause 5 provided that students should be enrolled and recognition fee should be forwarded to the Board of Intermediate within....
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....2003 was issued by the Central Government, in exercise of power conferred by Section 93 of the Act of 1994, exempting the taxable service provided by a commercial training or coaching centre, in relation to the commercial training or coaching which forms an essential part of a course or curriculum of any other institute or establishment, leading to issuance of any certificate or diploma or degree or educational qualification recognized by law for the time being in force to any person, from the whole of the service tax leviable thereon under Section 66(2) of the Act of 1994. The proviso however states that such exemption would not be applicable if charges for such services are paid by the person undergoing such course or curriculum directly to the commercial training or coaching centre. This Notification came into force on 01.07.2003. Thereafter, by Notification No.33/2011-Service Tax dated 25.04.2011, the Central Government, in exercise of power conferred by Section 93(1) of the Act of 1994, exempted (i) preschool coaching and training; and (ii) coaching or training leading to grant of a certificate or diploma or degree or any educational qualification which is recognized by any la....
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....elonging to MPC Intermediate who chose Techno-Scholars (JEE Main + BITSAT + VIT) was charged Rs. 52,000/- for the first year and Rs. 60,000/- towards the second year. As opposed to this, a candidate who opted for MEC group in Intermediate was charged only Rs. 10,000/-. A brochure brought out by the petitioner academy, reproduced in the notice, indicated that there was a vast discrepancy in the day scholar fee particulars for the academic year 2014-15 depending on the points that the student was aiming for. The notice also adverted to the differences between the petitioner academy and the society in status and functioning. Referring to the grant of affiliation to the society's colleges by the Board of Intermediate Education, Andhra Pradesh, it was pointed out that the same specifically required appointment of qualified teaching staff as per the prescribed procedure to impart Intermediate education to the students. The notice referred to the fact that the petitioner academy and the society were independent and separate legal entities engaged in separate activities, i.e., the society was providing education to Intermediate students whereas the petitioner academy was providing coaching....
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....a or certificate being given to such students. He accordingly opined that the petitioner academy would come within the category of a 'coaching centre' falling within the ambit of Section 65(27) of the Act of 1994 and its activity would be liable to taxation under Section 65(105)(zzc). Basing on the investigation undertaken and in the light of what he had discussed in the body of the show-cause notice, the Additional Director General summed up the outcome of the investigation in para 22.1 and called upon the petitioner academy to show cause as to why the amount of evaded service tax to the tune of Rs. 60,19,70,994/- leviable on coaching fees, amounting to Rs. 522,89,65,907/-, collected in respect of the taxable service of 'commercial coaching or training service' provided by the petitioner academy during the period 01.10.2009 to 31.03.2015 should not be recovered from it under Section 73(1) of the Act of 1994 by invoking the extended period of five years as per the proviso to Section 73(1); interest at the appropriate rate under Section 75 of the Act of 1994 should not be collected apart from penalties under Sections 77 and 78 of the Act of 1994. Along with the show-cause notice, th....
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....issue of a Certificate or Educational Qualification which is recognized by the law. Neither M/s NRI Education Society is providing education to intermediate students nor does M/s NRI Academy provide coaching. Only the recognized junior colleges belonging to M/s NRI Education Society, managed by M/s NRI Academy, impart education in intermediate curriculum. NRIA have not been organizing any campuses or conducting any separate classes for coaching in competitive examinations. Their activity is confined only to managing junior colleges imparting formal education in intermediate curriculum under a MOU with M/s NRI Education Society.' It further stated that exemption from service tax was intended for any coaching or training that led to grant of a certificate or diploma or degree or any educational qualification recognized by law, in terms of Notification No.33/2011-Service Tax dated 25.04.2011. As regards the extended period of limitation, it claimed that it was under the bonafide belief that the activities of junior colleges were not chargeable to service tax and therefore, it did not apply for service tax registration in 2009. It further stated that when advised and with an intentio....
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....he Act of 1994. The contention of the petitioner academy that its coaching falls under the exclusion clause was not accepted as it was an admitted fact that it did not issue any certificate to the students undergoing the entrance exam coaching. He pointed out that the petitioner academy did not have any recognition or own any colleges affiliated to the Board of Intermediate Education, Andhra Pradesh, and that the students enrolled in the society's junior colleges affiliated to the Board of Intermediate Education, Andhra Pradesh, through the society, which collected relevant tuition fees and Intermediate examination fees, were entrusted to the petitioner academy to impart coaching relating to Intermediate course also apart from coaching for entrance examinations. The Commissioner also noted that Notification Nos.10/2003-ST dated 20.06.2003 and 33/2011-ST dated 25.04.2011, sought to be relied upon by the petitioner academy, were withdrawn with effect from 01.07.2012 and further found that it did not fall within the ambit of either of the Notifications, whereby it could claim exemption from service tax. He pointed out that the coaching provided by the petitioner academy was not an ess....
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....could not be classified as merely higher secondary school education, whereby the petitioner academy could claim to fall within the ambit of Section 66D of the Act of 1994. He accordingly concluded that the services provided by the petitioner academy were classifiable under the head 'commercial training or coaching' falling under Section 65(26) of the Act of 1994 for the period 01.10.2009 to 30.06.2012 and from 01.07.2012, the said activity fell within the category of a taxable service under Sections 65B(44) and (51) and not within the negative list in Section 66D of the Act of 1944. As regards the petitioner academy's claim that the amounts collected towards mess charges, hostel charges, sale of books and reading material, transportation charges, snacks, etc., had to be deducted, the Commissioner observed that the fee invoices did not indicate collection of amounts under specific heads and the amounts sought to be deducted were shown as expenditure straightaway. The Commissioner however allowed the benefit of CENVAT credit on the inputs/input services used by the petitioner academy for providing the taxable services. Taking into account the fact that the petitioner academy had not ....
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....upplied study material to such students who were desirous of appearing for competitive exams, it was only an extension of the instruction and curriculum taught to such students for the Intermediate course and as there is no possibility of distinguishing and delineating the teaching imparted under the individual heads of Intermediate curriculum coaching and coaching for competitive examinations respectively, the service tax department could not treat the entire fee receipts of the petitioner academy as liable to taxation under the service tax regime. Learned senior counsel would point out that the fee collected towards Intermediate course would be exempt as such coaching would result in issuance of a certificate or a qualification and was thereby exempted from service tax. Learned senior counsel would further state that the Board of Intermediate Education stipulates that the management of an Intermediate college should collect tuition fees/special fees/miscellaneous fees from the students at the rates not exceeding the limits prescribed by the Government or the Director of Intermediate Education from time to time. The learned senior counsel would state that it was on the strength of....
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....academy from students during the last five years had already been taken under a panchanama. He also admitted that the petitioner academy and the society were separate legal entities engaged in separate activities, i.e., the petitioner academy was providing commercial coaching services while the society was providing education services to Intermediate students for which both of them collected separate fees. When asked as to why the petitioner academy had not paid any service tax leviable on the coaching fees of Rs. 474,70,20,803/- received by it during the financial years 2009-10 to 2013-14 for all its branches and again in the financial year 2014-15, for the Guntur branch, he answered that as regards payment of service tax, only A.Rajendra Prasad, the Managing Partner, could give a reply as he was the final authority. Essentially what has to be looked at is whether the core activity of the petitioner academy was taxable, i.e., whether it was in the nature of imparting education to students for the purpose of enabling them to get a qualification or whether it was in the nature of commercial training or coaching for other purposes, bringing it within Section 66 of the Act of 1994. T....
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....e matrix was interlocked due to the fact that the content was the same, cannot be accepted. There may be no possibility of dissecting such coaching but the inescapable fact remains that the fees paid by the students for the two were distinct and separate as the society and the petitioner academy collected fees separately. The material placed on record also indicates the manner in which the fee was collected for specialized coaching as opposed to the fee collected from a student for just the Intermediate curriculum. The details so collected were sufficient for the authorities to undertake such dissection of the fees charged by the petitioner academy and the society. The edict of the Supreme Court in COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, KERALA V/s. LARSEN AND TOUBRO LTD. (2016) 1 SCC 170 is of no consequence as that was a case where an indivisible works contract was under consideration and it was not possible to segregate parts thereof for application of the service tax regime, unlike the case on hand. Reliance placed by Sri S.Ravi, learned senior counsel, on SRI CHAITANYA EDUCATIONAL COMMITTEE V/s. COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, GUNTUR 2018-TIOL-1504....
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....vit to completely disown its coaching activity for entrance exams clearly highlights its lack of bonafides and its real intention. That being so, the question of giving it the benefit of the normal limitation period would not arise. Reference was made by Sri S.Ravi, learned senior counsel, to Section 11A(1) of the Act of 1944 in relation to the extended period of limitation under the proviso thereto. However, the case law cited in that regard is also distinguishable on facts. For example, in JAYANT JUNEJA V/s. COMMISSIONER OF CENTRAL EXCISE, JAIPUR 2015 (326) ELT 634 (S.C.), the Supreme Court was dealing with a case where the assessee bonafide believed that the manual manufacture of wooden furniture by artisans/craftsmen was wholly exempt from payment of duty. A specific declaration to this effect was furnished to the Central Excise Department about the activity being carried out by the assessee in July, 1987 and the department did not take any action thereon till October, 1996, when it issued a show-cause notice. It was in these circumstances that the Supreme Court held that the same would clearly be time-barred and the proviso to Section 11A(1) of the Act of 1944 could not be in....
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....e the complete facts before them, a presumption that they were aware of the core activity of the petitioner academy, i.e., coaching for entrance examinations, would not arise. Invocation of the extended period of limitation was therefore justified. As regards the contention of Sri S.Ravi, learned senior counsel, that non-includable items were also brought within the ambit of taxable services, we find from the order under challenge and also the material placed on record that separate heads were not shown in the invoices under which fees were collected by the petitioner academy, whereby students were made aware of how much they were paying for the coaching and how much they were paying for other services, such as transportation, snacks, etc. These were straightaway shown as expenditure by the petitioner academy and claimed as such. The Commissioner opined that when there was no separate receipt towards each head and what was collected was fees alone, the petitioner academy could not thereafter claim deductibles from such fees by showing such self-serving and unauthenticated expenditure. The amounts claimed towards expenditure under various heads by the petitioner academy cannot be t....