TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 853
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.....2005 to 30.09.2010, Rs.2,43,977/-- under Convention service for the period from 01.05.2006 to 30.09.2010 and dis--allowance of CENVAT Credit of Rs.3,65,836/--, under proviso to Section 73(1) of the Finance Act, 1994 by invoking the extended period and also levy of interest and imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. 2. Brief facts are that the Appellant, engaged in rendering Scientific and Technical Consultancy Service are registered with Service Tax department with Registration No.CHEI04464FSTC001. The officers of Internal Audit Section, Service Tax Commissionerate visited the premises of the Appellant during May and June 2008 and during verification certain irregularities such as non--payment of service tax on the services rendered and wrong availment of CENVAT credit were noticed. Hence, the matter was referred to Survey, Intelligence and Research unit of Service Tax Commissionerate for a detailed investigation. 3.1 Investigation revealed that the Appellant was liable to pay Service Tax on the amounts received from Private Companies / Private Sponsors, towards the Sponsored research provided by the Appellant. In respect of researches sponsor....
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....04.2011 was issued to the Appellant by the Commissioner of Service Tax proposing to demand the Service Tax of Rs.1,29,89,850/-- on Scientific and Technical Consultancy Service and Rs.2,43,977/-- on Convention Service besides proposing to recover ineligible CENVAT credit of Rs.3,65,836/-- with proposal to levy interest under Section 75 and to propose penalties under Sections 76,77 and 78 of Finance Act, 1994. After due process of law, the Adjudicating Authority confirmed the above demands, levied interest and imposed penalties under Section 78 and Section 77 of the Finance Act, 1994. 4.1 Aggrieved by the above Order, the appellant is on appeal before this forum. 4.2 The Ld. Advocate Shri I. Dinesh appeared for the Appellant submitted that the Appellant was under the bona fide belief that receipts from grants for activity relating to pure research would not be covered under the Service tax net and that all materials relating to grants for sponsored Research were well within the domain of the department. The impugned order ought to have noted that the Sponsored research undertaken by the Appellant does not come within the purview of 'Scientific and Technical Consultancy' as defined ....
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....rms of a subsequent agreement. The method of operation of the Appellant is as under:-- (a) A Memorandum of Understanding is entered into between the Appellant and the third party who sponsors the research project. (b) A separate account is maintained wherein the grants are parked to conduct research. These grants are used to purchase materials, overhead expenses and other ancillary expenses. (c) A half--yearly report is to be submitted to the sponsor on the status of the project. (d) The final report will be submitted to the client on the research conducted. (e) As and when a commercial element is found in the research, a separate agreement is entered between the parties on exploring the same in a commercial means for which Service tax is charged and duly discharged. (f) Unspent / unutilized grant have to be returned back to the sponsor who funded the project. The projects are sponsored by Industries and Alumni. A bare perusal of the projects would make it clear that the research is towards educational purposes only. In any event, the clauses cannot be taken out of context and read in isolation, but to be seen in totality and the Agreement understood in the right persp....
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....d similar events that would necessarily involve public participation. The primary purpose of the IIT being dissemination of education and knowledge, holding of the above mentioned events is inevitable. In the event that programs are conducted for the benefit of their own staff or students, such events are not charged and the use of the convention center is provided gratis. Therefore, the impugned order has erred in imposing Service tax under Section 65(32)--Convention Service without keeping in mind the nature of activity intended to be covered by the provision as well as that actually engaged in. In fact, the CBEC has issued Circular No. 86/4/2006--ST stating that institutions such as IIT cannot be classified as 'Commercial concerns' in view of the activities carried on therein. A 'Convention' as defined under Section 65(32) of the Finance Act, 1994 refers to those events where public participation is restricted. However, in the present case, the events conducted in the Convention hall are substantially open to Public and the provision is thus not attracted. It is pertinent to take note that Section 65(105)(zc) was brought in w.e.f 16.07.2001 which initially covers the services re....
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.... School of Business Vs. Commissioner of Customs & Central Excise, Hyderabad [2009 22 STT 189 ( Bang- CESTAT)] has reiterated that the principle activity of institutions like IIT and IIM is to impart education without any object of making profits and accordingly they cannot be termed as 'Commercial Concerns'. Being a public institution, the records of the Appellant are available for scrutiny. The impugned order thus erred in invoking the extended limitation in terms of the proviso to Section 73(1). 4.11 The Ld. Counsel has also relied on the following judicial pronouncements: -- (i) Sical Distiparks Vs. Commissioner of Central Excise, Chennai [2012 (28) S.T.R. 525 (Commr. Appl.)] (ii) Commissioner of Central Excise Vs. Nita Textiles and Industries [2013 (295) E.L.T. 199 (Guj.)] (iii) SOTC Travel Services Pvt. Ltd. Vs. Principal Commissioner of Central Excise, Delhi-I [2021 (55) G.S.T.L. 332 (Tri. - Del.)] (iv) Abhishek Alkobev (P) Ltd. Vs. Commissioner of Central Excise- [2022 (62) G.S.T.L. 178 (Tri. - All.)] (v) Commissioner of Central Excise Vs. Northern Operating Systems (P) Ltd. [2022 (61) G.S.T.L. 129 (S.C.)] (vi) National Remote Sensing Agency Vs. Commissioner of ....
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....429 (Tri.-- Hyd.)] and also in the case of National Remote Sensing Agency Vs. Commissioner of Customs, Central Excise and Service Tax, Hyderabad IV [2020 (78) GSTR 278 (CESTAT--Hyd.)] to affirm that the appellant is rendering Scientific and Consultancy Services and so demand raised is justified. 6. Heard both sides and carefully considered the submissions and evidences on record. 7. The following issues arise for decision in this appeal: (i) Whether the demand of Service Tax on grants / funds / consideration received by the appellant in respect of projects under sponsored research under Scientific and Technical Consultancy Services is justified and whether there is any provision of service in respect of sponsored research classifiable under Scientific and Technical Consultancy Service? (ii) Whether the demand of Service Tax on activity / events undertaken by the Appellant at its Convention center is sustainable? (iii) Whether the Appellant is eligible to avail input service credit on Travel, Postage and freight relating to Scientific and Technical Consultancy services rendered? And (iv) Whether invocation of extended period in terms of Section 73(1) of the Finance act, 19....
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....hey employ experts in various disciplines. The person having technical knowledge as well as managerial knowledge or expertise gives advice for such rehabilitation. Thus, even if a technocrat gives advice through other organizations, the same will be liable for Service Tax as the services are rendered indirectly. 8.4 We find that the appellant is rendering two types of services viz., Consultancy and Sponsored Research Projects. The appellant is discharging Service Tax in respect of Consultancy Services provided. In case of sponsored research projects, the appellant has submitted that the project was undertaken with the prime motive of furthering knowledge through study and research and the focus was solely on the generation and imparting of knowledge. These projects are funded by grants either by private parties or the Government and consideration is received from the sponsor towards the research activities undertaken by the appellant. The appellant has argued that there is no service rendered in respect of these sponsored projects or organizing workshops either to the Government or to the private agencies. These sponsored research projects involves research in specific and demarca....
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....c Center or Energy and Environments and other branches of IIT for conducting workshops and meetings. The appellant summarized the modus operandi of activities relating to sponsored research as follows: i. Applications are received from various entities such as Government, Private Agencies, Alumni and other entities engaged in the furtherance of study and research for carrying out research in specific and demarcated areas. ii. After detailed discussion regarding the subject and object of the proposed study, the sponsor agrees to sponsor by way of grant, and ICSR agrees to conduct research in an agreed field/ area of study. A formal agreement is entered into by the parties in this regard. iii. The grant offered covers the incurrence of expenditure in relation to faculty cost, staff cost, equipment cost and cost of overheads, infrastructure and premises cost and other expenditures incurred by ICSR. iv. Normally, there is a specific clause to the effect that if the actual expenditure incurred by IIT is less than the grant supplied by the sponsor, the excess shall be refunded to the sponsor. 8.5 Thus, the appellant contended that there was no liability towards service tax, sinc....
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....ng and consultancy in the field of environment its services were held as taxable. In the case of National Remote Sensing Agency supra it was held that the supplier of goods and services to be distinct from the person receiving the grants in aid. Such supplier of goods and services will not be automatically exempted from payment of Service Tax or Excise Duty unless there is a specific exemption Notification in respect of such goods or services, though National Remote Sensing Agency is receiving the grants in aid from the Government. In the present appeal what is required to be decided is whether any service is rendered in respect of sponsored research projects and whether such a service can be classifiable under Scientific and Consultancy Services in terms of Section 65(92) of the Finance Act, 1994. 8.8 Further, we find from appeal records that the Appellants have rendered Scientific and Technical Consultancy Services during the period from October 2005 till September 2010 in both Government Sponsored Research Projects and Projects Sponsored by Industries, Alumni, etc. and have received consideration as detailed below: Category of Sponsored Research Projects Amount received (Rs.)....
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....ious clients against reasons mentioned against each: Name of Client Reasons for receiving consideration for workshop Nokia Research Centre For enabling students to attend international conferences. BHEL To meet expenses for holding an international workshop on coal gasification ACC Technology assessments in health care and to disseminate research findings to academic community and other researchers BTCL To disseminate research findings on Low Carbon technologies to academic community and other researchers Parryware For making a science-based programme to create awareness among the public Synergy Engineering Solutions India To disseminate research findings on Renewable energy to academic community and other researchers Besides, the Appellant is also receiving amounts in Foreign Currency from overseas clients like World bank, Chevron Products Corporation, Hewlett Packard Company, Proctor and Gamble, etc. From the above it is clear that the Appellant is conducting research work for various clients and workshops are being conducted for dissemination of research findings to academic community and others involved. The Appellants are receiving consideration from various Spo....
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....3 demanding Service Tax in respect of sponsored research projects cannot be sustained. We order so accordingly. 9.1 Regarding demand of Service Tax on Convention services, we find that the CBEC Circular No. 86/04/2006-ST does not pertain to clarification on Convention services and hence not applicable to the facts of the case. The relevant definition of the Finance Act, 1994 has been reproduced below: "Convention" means a formal meeting or assembly which is not open to the general public, and does not include a meeting or assembly the principal purpose of which is to provide any type of amusement, entertainment or recreation; (Section 65(32) of the Finance Act, 1994) "Taxable Service" means any service provided or to be provided [to any person], by any person in relation to holding of convention, in any manner; (Section 65 (105) (zc) of the Finance Act, 1994) 9.2 We find that the Centre for Industrial Consultancy and Sponsored research (IC & SR) building of the Appellant had facilities for conferences, meetings and video conferencing and facilities were available to respective departments of the Appellant, the cultural affairs secretary and private industries, industrial ass....
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....le input services in terms of definition of input services. We considered that the institution is one single entity and carrying out various activities related to education as well as scientific analysis simultaneously where some of the services are taxable and some are exempted or not liable to service tax. The appellant have declared the entire Cenvat credit availed by them to the department. In view of this fact, the appellant made out-fit case for waiver of penalty under Section 76 invoking Section 80 of Finance Act, 1994. However, there is failure on the part of the appellant inasmuch as they have not maintained separate accounts therefore, they are liable for penalties under Section 77 and Rule 15(3) of CCR, 2004. Appellant on pointing out by the department paid entire Service Tax along with interest and now they are not disputing the same. We find the ratio of facts of the above case are squarely applicable to the facts of this case and in a number of decisions cited by the Appellant and hence hold that the invocation of extended period is not justified in this case. Hence the demand for the normal period only sustains. The Appellant is also liable for levy of Interest on ....