TaxTMI 
TaxTMI 
TaxTMI 
2008 (10) TMI 59
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....niversity, Dehradun v. CC&CE, Hyderabad-II ST + Edu. Cess: Rs. 8,69,716 Penalties: Rs. 8,69,716 u/s 78 Rs. 150 per day u/s 76 Rs. 1,000 u/s 77 1- 12-2003 to 31-3-2005 3. ST/40/2007 M/s. The ICFAIAN Foundation v. CC&CE, Hyderabad-II ST + Edu. Cess: Rs. 9,43,91,378 Penalties: Rs. 9,43,91,378 u/s 78 Rs. 150 per day u/s 76 Rs. 1,000 u/s 77 1-7-2003 to 31 -3-2005 4. ST/46/2007 M/s. ICFAI University, Tripura ST + Edu. Cess: Rs. 1,62,205 Penalties: Rs. 1,62,205 u/s 78 Rs. 150 per day u/s 76 Rs. 1,000 u/s 77 1-8-2004 to 31-3-2005 2. Shri G. Shiva Dass, the learned Advocate, appeared on behalf of the appellants and Shri S.K. Choudhury, the learned Special Counsel for the revenue, assisted by the SDRs, appeared on behalf of the revenue. 3. We heard both sides. 4. The revenue proceeded against the appellants-Institute of Chartered Financial Analysis of India ('ICFAI' in short), Hyderabad; The ICFAIAN Foundation, Hyderabad; The ICFAI, University, Raipur; The ICFAI University, Dehradun and The Institute of Chartered Financial Analysis of India University, Tripura. The proceedi....
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.... Societies Registration Act, 1350 in the year 1984 and operating solely for educational purposes. Our attention was invited to Article VI of the Memorandum of Association, which deals with the deployment of funds stating that the funds shall be spent only for attainment of its objectives. The appellants launched the Chartered Financial Analysts (CFA) Programme in 1985. In 1995, they introduced the campus based full-time programmes in Business Management at Post-Graduate level by setting up 'ICFAI Business Schools (BS)' at various locations. In 1998, another non-profit society M/s. 'ICFAIAN Foundation' was promoted with objectives similar to that of ICFAI, Hyderabad. The ICFAIAN Foundation is a Society registered under the Andhra Pradesh (Telengana Area) Public Societies Registration Act. All the Business schools were brought under the aegis of the ICFAIAN Foundation in order to achieve operational convenience. In the year 2002, the State of Chhattisgarh passed the Chhattisgarh, Niji Kshetra VishwavidyalayaAdhiniyam (hereinafter referred to as 'the Chhattisgarh Act). Section 5 of the Chhattisgarh Act provided that the Chhattisgarh Government may declare by Notifi....
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....oaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams like entrance examinations for Indian Institute of Technology-Joint Entrance Examinations/Pre Medical Tests, Civil Services Exams etc. are chargeable to service tax." It was also clarified that 'some institutes like colleges, apart from imparting education for obtaining recognized degrees/ diploma/certificates also impart training for competitive examinations, various entrance tests etc." It was clarified that such institutes or establishments, which issue a certificate, diploma or degree recognized by law, are outside the purview of "commercial training or coaching institute". It was also clarified that 'even if such institution or establishment provides training for competitive examinations, such services rendered would be outside the scope of service tax'. 5.3 In order to understand the true import of 'commercial training or coaching', the learned Advocate gave an outline of the Constitutional provisions relating to Education. It was stated that 'Education' is a very general term and in its scope, it is very vast. Initially educat....
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....ities impart education and offer degrees conferred by law, they would be excluded from the scope of commercial training or coaching centre. 5.4 An elaborate submission was made with regard to the difference between 'education' and 'coaching or training'. The activities of the appellants are in the nature of education. It was stated that they do not engage in coaching or training. It was explained that 'coaching' normally refers to a special teaching or a personalized teaching in certain subjects. 'Training' is generally used to refer to practical instruction or learning process. 'Education' is the process of overall development of a person. It includes moral, intellectual and physical development of a child or a person. It is not restricted to a particular subject and it covers various subjects and areas. Moreover, as distinguished from coaching, education is not meant for succeeding in an examination or test but for overall development of the student. Reliance was placed on the following decisions:- (i) Bihar Institute of Mining and Mine Surveing v. CIT [1994] 208 ITR 608 (Pat.); (ii) CIT v. Delhi Kannada Education Society [2000] 246 ITR ....
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....The Preamble of the Act specifically states that only societies formed to promote literature, science or fine art or for the diffusion of useful knowledge, the diffusion of political education or for charitable purposes can be registered under this Act. This clearly indicates that only societies formed for non-commercial nature can be registered under this Act. It is also provided in section 14 that once a society is formed under the Act, then, on dissolution, no member can receive the profit and the same is given to another society. Thus, it is clear that the societies registered under the Act are non-profitable or non-commercial organizations. Reference was made to the Objects clause of the Memorandum of Association of the ICFAI Society and ICFAIAN Foundation which provides that the purpose of society is to engage in research and education and not to earn profit. The dissolution clause of the College memorandum which provides that in case of dissolution and surplus property shall not be paid or distributed among the members of the College but shall be given to some other Society having similar objectives. Our attention was also invited to Circular No. 86/4/2006-ST, dated 1-11-200....
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.... was submitted that the issue on the interpretation of 'commercial concern' stands concluded in their favour in the following decisions:- (a) Board of Control for Cricket in India v. CCE [2007] 9 STT 399 (Mum.-CESTAT); (b) Institute of Banking Personnel Selection v. CST [2007] 10 STT 489 (Mum.-CESTAT); (c) CCE v. Mahabir International [2008] 15 STT 487 (Kol.-CESTAT); (d) Great Lakes Institute of Management Ltd. v. CST [2008] 12 STT 306 (Chennai -CESTAT); (e) CCE v. Employ Me 2008 (12) VST 428 (Bang.-CESTAT); (f) Collector of Customs v. Murugappa Chettiar Research Centre [Final Order No. C/1029 (Delhi) of 1997-B2, dated 17-4-1997]. It was emphasized that the appellants are granted exemption from payment of income-tax, which is given only to educational institution existing solely for educational purposes and not for profit. The order specifically provides that the institution will apply its income or accumulate for application, wholly and exclusively to the objects for which it is established. Further it states that the surplus funds shall be invested or deposited in accordance with provisions of section 11(5) of the Income-tax Act, 1961 which prescribes the forms and....
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....order. He stated that the appellants are charging enormous fee for the training imparted by them and they are receiving consideration for the training which they impart. Therefore, definitely, they are commercial training centre and they render services, which are taxable. Our attention was invited by the Special Counsel to the decision of the Principal Bench while dealing with an appeal filed by the ICFAI, Jaipur against the rejection of their appeal by the Commissioner (Appeals) for failure to pre-deposit the amount of service tax as a condition precedent to the appeal for being heard on merits. The Principal Bench, after taking note of the findings by the original authority, including educational programmes and training being imparted by the appellant and the qualifications conferred not being recognized by the UGC or other statutory bodies like AICTE, NCTE, Bar Council of India, made the observation that :- "We are of the view that the dispute involves examination of records but unfortunately, the Commissioner (Appeals) did not go into the merits of this case as the appellant did not pre-deposit the amount. We do not find prima facie case in favour of the appellant and, theref....
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....ted to the Commissioner's detailed findings stating that as against merely 247 numbers shown as In-Campus students, as many as 57,820 students got what they call Off-Campus training provided by ICFAI Hyderabad/ICFAIAN Foundation without any legal authority from any of the Universities. The entire fees for organizing these courses were collected by ICFAI, Hyderabad or ICFAIAN Foundation. It was stated that the various Universities under the respective State legislations have been used only as a facade to give an impression that the various programmes were actually conducted by an existing University in the name of the ICFAI University when in reality no such University existed. It was also stated that the farcical nature of the certificate would be evident from the fact that degrees were conferred for three year courses dating back to the time when none of these Universities were in existence. It is a fraud on gullible students and anxious parents. 6.2 Degrees to all students .are conferred in the name of 'the ICFAI University' admittedly a non-existing entity and not in the name of individual University. Such degree cannot be said to have legal recognition so as to qua....
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....g centre. Therefore, what is important here is the centre which provides training or coaching should be a commercial centre. There fore, the word 'commercial' is very important. We cannot say that the word 'commercial' had no significance. The Coaching Centre or Training Centre should be a commercial one. That is a very relevant point. 7.1 The second thing is the service rendered should be either training or coaching. This is also an important ingredient of the taxable service. A taxable service should be either training or coaching. We know the meaning of training or coaching. Training means imparting skill or knowledge in a particular field which is given in the definition of commercial training or coaching centre. There are several skills. For example, we can take spoken English. There are many centres which train people to speak English well. It is one example. It is a skill and if some training is imparted, then it is definitely a training. To train somebody in speaking English, to train somebody in solving mathematical problems, to train somebody in basics of computer. Hence, these are all included in a training. Then, that Centre should be a Commercial Centr....
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....e registered under the Societies Registration Act. We do not think any coaching or training centre can be registered as a Society. The objective of a Society under the Societies Registration Act is very broad. It is mainly, meant for cultural, educational, charitable purposes. One thing is clear. A society cannot be commercial in nature. Though it may receive money, it is a different thing. Whatever money is received even if one calls it a profit or surplus, the surplus is flowed back into the institution or society to attain its objectives. These facts are kept in mind while granting income-tax exemption. These points have been thoroughly gone into by the Chennai Tribunal in their decision cited supra. So we entirely agree with them. We have gone through the various records submitted by the appellants, the UGC Notification dated 22-7-2005 recognizing ICFAI, Dehradun as University; another UGC Notification dated 1-11-2006 recognizing ICFAI, Tripura as University and also the Notifications of the State Governments. We have also seen the records relating to the Registration of Society, income-tax exemptions. The Indira Gandhi National Open University's recognition is available. W....
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....from 1-7-2003 vide Notification No. 9/2003-Service Tax, dated 20-6-2003. Therefore, vocational coaching and training services provided by typing and shorthand institutes, TV/vehicle repair training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer-training centres, hobby classes, institutes teachingmartial arts, painting, dancing, etc., would not be chargeable to service tax. This exemption would remain in force upto 29-2-2004. 2.2-2 Institutes like the Institute of Chartered Accountants of India sometime hire the services of other institutes to impart some part of training (like language or computer training) to the students undertaking courses for obtaining recognized degrees/diplomas (like Chartered Accountancy) from their institute. Whereas institutes the Institute of Chartered Accountants of India will not be chargeable to service tax because they confer qualifications recognized by law, the institutes or centres providing such part of training may be otherwise under service tax net. Vide notification No. 10/2003-Service Tax, dated 20-6-2003, exemption has been provided with effect from 1-7-2003 to such services rendered b....
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....are rendering services on behalf of an institution. (4) Whether free summer training/in-house training provided by employers to their employees are covered under service tax net: It is clarified that in case employers provide any free training themselves, no service tax is chargeable. However if an employer hires an outside commercial coaching or training centre for imparting some training to its employees, then the payment made by the said employer to such coaching centre will be chargeable to service tax." In fact, the institutions which impart education even if they provide training for competitive examinations, services rendered would be outside the scope of the service tax. Therefore, this is very important. From the Certificates and the recognitions and the brochures submitted by the appellants, we have no doubt that the appellants impart education. They confer degrees which are recognized by law. There is recognition of Bar Council of India. There is a recognition by JNT Universities and various Government bodies have recognized the courses imparted by the appellants. Therefore, it cannot (sic) be said that the appellants impart higher education and confer degrees recogniz....