TaxTMI 
TaxTMI 
2025 (6) TMI 1013
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....inance Act 1994 [the Finance Act]. The Commissioner has also directed for recovery of interest under section 75 of the Finance Act and also imposed penalty of Rs. 10,000/- under section 77 of the Finance Act and a further penalty of Rs. 3,05,92,676/- under section 78 of the Finance Act. 2. The appellant claims to have been running Study Centres under Distance Education Mode for various Universities for imparting education in various courses such as B.Com, BBA and MBA and it is the Universities that award the degrees or diplomas to students undertaking education at such centres. 3. It was noticed by the department that though the appellant provided "commercial training or coaching centre" service as defined under section 65(26) of the Finance Act and made taxable under section 65(105)(zzc) of the Finance Act but the appellant was not paying service tax and was filing 'nil' ST-3 returns on the premise that this service was exempted under a Exemption Notification dated 20.06.2003 [the Exemption Notification dated 20.06.2012] prior to 01.07.2012 and, thereafter, it was included in the negative list of services under section 66D(l) of the Finance Act. Accordingly, investigati....
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.... 8. The Commissioner found that the appellant could not take the benefit of the Notification dated 20.06.2003 for the following reasons: "46. xxxxxxxxxx. It can be observed from the said Notification No.10/2003-ST dated 20.06.2003 that, exemption was granted to the taxable service provided to any person by a commercial training or coaching centre, in relation to commercial training or coaching, which form 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 recognised by law for the time being in force subject to the condition that the charges for such services were not paid by the person undergoing such course or curriculum directly to the commercial training or coaching centre. In the instant case, admittedly the fee has been collected by the Noticee themselves directly from the students which is being shared by them with the concerned Universities, thereby, they have contravened the condition prescribed under the said exemption Notification No.10/2003-ST dated 20.06.2003. Hence, I am of the considered opinion, that the Noticee is also not entitled to ....
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....ssful completion of the course, are alone excluded from levy of service tax as per the said definition. In the instant case, it is an undisputed fact that, the Noticee is a Study Centre engaged in imparting educating qua courses of the various Universities and the certificate or diploma or degree are issued by such Universities to the students after successful completion of their respective courses, and not by the Study Centre of the Noticee. Hence, the Noticee's claim that they fall under the exclusionary clause of the said definition till 30.04.2011 is incorrect." (emphasis supplied) 12. The Commissioner then examined the position from 01.07.2012 to 10.07.2014 and from 11.07.2014 onwards. 13. In respect of the period from 01.07.2012 to 10.07.2014, the appellant had placed reliance upon serial no. 9 of the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. The relevant portion of this Exemption Notification dated 20.06.2012 at serial no. 9 is reproduced below: "9. Services provided to or by an educational institution in respect of education exempted from service tax, by way of,- (a) auxiliary educational services; or (b) renting ....
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....includes a declared service but shall not include,----. Thus, any activity carried out by a person for another for consideration, is a service. It is inherent that the consideration in lieu of services provided or agreed to be provided should be paid by the service recipient to the service provider. As discussed, supra, educational auxiliary services provided by the service provider under the said Notification are exempt only when such services are provided by him to the educational institutions. Thus, it becomes clear that the S.No.9 (a) of the said exemption Notification No.25/2012-ST dated 20.06.2012 is applicable only when the consideration in lieu of services provided by the service provider is paid by the educational institution, and not by the students of such institution. As the Noticee has received the fee directly from the students and not from the universities in question, I am of the considered view that, they are not eligible to the benefit sought from 01.07.2012 to 10.07.2014 under S.No.9(a) of the said exemption Notification dated 20.06.2012. I further find that the services provided by the Noticee from 11.07.2014 also do not fall under Sr. No.9 of Notification No. 2....
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....hat there is no complex legal provision which requires interpretation. The proceedings unfolded above clearly establish that the services in question of the Noticee were taxable. There is no evidence as to whether the Noticee had at any point of time approached the department to ascertain the applicability of tax. xxxxxxxxx. Thus, forming a view, suomotu, without approaching the Department at any given time that service tax was not payable on the impugned services, is not a bonafide belief, especially when the assessee is registered with the Department. In the era of self- assessment, the statutory provisions of service tax casts an obligation upon the assessee to comply with provisions and Rules made there under, to self-assess their liability and pay it to the government exchequer and to file periodical returns correctly. The Noticee in the instant case has failed to do so. They had never disclosed to the department about the provision of impugned taxable service. All these facts narrated above go to show that, the Noticee suppressed the facts, by non-compliance of the obligations cast upon them by the statutory provisions. The suppression of facts clearly indicates that the Noti....
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....ant. However, the Government by Notification dated 25.04.2011 specifically exempted 'commercial coaching and training center' providing any coaching/training leading to grant of certificate/diploma/degree/educational qualification recognized by any law for the time being in force for the levy of service tax. The services provided by the appellant would be covered by the said Notification; (v) With effect from 01.07.2012 the services provided by the appellant would be covered under clause (I) sub-clause (ii) of the section 66D (Negative List) of the Finance Act; (vi) The service provided by the appellant would be exempted under entry 9 of Notification 25/2012 dated 20.06.2012; (vii) Investigation was initiated against the appellant in 2012, whereas the show cause notice was issued to the appellant on 16.10.2015. Therefore, no suppression can be leveled against the appellant. Thus, the demand confirmed by invoking the extended period is not sustainable; (viii) No suppression can be alleged as there were divergent views with respect to the issue involved. The extended period has, therefore, wrongly been invoked; (ix) The appellant had also ....
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.... exempted under Serial No. 9(a) of the Notification dated 20.06.2012; and (vi) The services provided by the appellant from 11.07.2014 do not fall under Serial No. 9 of Notification dated 20.06.2012 or under the amended Notification dated 11.07.2014, since none of the specified services under Serial No. 9(b) relates to imparting education provided by the service provider to the educational institution; (vii) The extended period of limitation was correctly invoked; and (viii) Penalties were correctly invoked. 24. The submissions advanced by the learned chartered accountant appearing for the appellant and the learned authorized representative appearing for the department have been considered. 25. The appellant claims that it is running study centres for various Universities for imparting education in courses such as B.Com, BBA and MBA. The appellant does not dispute that degrees or diplomas to the students who undertake coaching at the study centres are awarded by the Universities. 26. The issue that arises for consideration is whether the appellant provided 'commercial training or coaching centre' services. 27. Section 65(26) of the Finance....
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....ct or field with or without issuance of a certificate and includes coaching or tutorial classes, but does not include any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force. 31. The first issue that arises for consideration in this appeal is whether the appellant can take the benefit of the Notification dated 20.06.2003 to support the plea that service tax was not leviable under 'commercial training or coaching centre' services. 32. It would, therefore, be useful to reproduce the Notification dated 20.06.2003 and it is as follows: "In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services provided by a commercial training or coaching centre, in relation to commercial training or coaching, which form 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 recognised by law for the time ....
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.... benefit of this Notification. There is, therefore, no error in the finding recorded by the Commissioner. 36. The next issue that arises for consideration is whether the appellant is entitled to exemption from 11.07.2014 onwards in terms of the Notification dated 11.07.2014 that amends the earlier Notification dated 20.06.2012. The amended Notification has been reproduced in paragraph 17 of this order. The benefit of clause 9(b) is not available to the appellant as none of the conditions are satisfied. The conditions do not relate to imparting of education provided by the service provider to the educational institution. The finding recorded by the Commissioner, therefore, that the benefit of this Notification cannot be taken by the appellant does not suffer for any illegality. 37. The last issue that arises for consideration is whether the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could be invoked by the department. 38. The relevant portion of the show cause notice dealing with this aspect has been reproduced in paragraph 5 of this order. All that the show cause notice mentions is that the appellant deliberately and wi....
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.... 13 13-Oct-13 13-Apr-15 16-Oct-15 186 Yes 8. Oct' 13 to Mar' 14 12-Apr-14 12-Oct-15 16-Oct-15 4 Yes 9. Apr' 14 to Oct' 14 11-Oct-14 11-Apr-16 16-Oct-15 -178 No 10. Oct' 14 to Mar' 15 23-Apr-15 23-Oct-16 16-Oct-15 -373 No 41. The contention of the learned counsel for the appellant is that the necessary ingredients for invoking the larger period of limitation contemplated under the proviso to section 73 (1) of the Finance Act, namely wilful suppression of facts with an intent to evade payment of service tax do not exist and, therefore, the extended period of limitation could not have been invoked. 42. There is substance in the contention advanced on behalf of the appellant that mere suppression of fact is not enough as it has also to be conclusively established that suppression was wilful with an intent to evade payment of service tax. 43. It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be "wilful' since "wilful' precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression "wilful" before "suppres....
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....ion 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render ....
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....ions of the Act with an intent to evade service tax. Thus, the main question to be addressed is whether the allegation that MTNL had suppressed material facts for evading its tax liability, is sustainable. ***** 41. In the facts of this case, the impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared t....
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....s that it bona fide believed that it was entitled to avail the benefit of the Exemption Notification and it cannot be said that the belief of the appellant is a mala fide belief merely because it may ultimately be held that the appellant is not entitled to the benefit of the Exemption Notification. This contention deserves to be accepted. 52. In this connection, it may be pertinent to refer to the decision of the Supreme Court in Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd. - 2023 (385) E.L.T. 481 (S.C.). The Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona fide manner. The relevant portion of the....
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....hanagar Telephone Nigam and the relevant portion of the judgment is reproduced below: "32. xxxxxxxxxxx. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious." 54. The Commissioner also observed that in an era of self-assessment an obligation is cast upon the assessee to self-assess the liability and file periodical returns correctly and since the appellant did not disclose that it was providing a taxable service, the appellant suppressed facts and knowingly failed to discharge the obligation cast upon the appellant. 55. This approach of the Commissioner cannot be countenanced. It is the duty of the officers scrutinizing the returns to examine the information disclosed by an assessee and the department cannot be permitted to take a plea that it is the duty of the assessee to disclose correct information and it is not the duty of the officers to scrutinize the returns. 56. In this connection, reference can be made to the decision of the Tribunal in M/s. Ray....
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....has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below: xxxxxxxxx 26. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT. xxxxxxxxxx 27. It is thus evident that not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so." (emphasis supplied) 57. The view that has been taken by the Commissioner was also not accepted by the Tribunal in M/s G.D. Goenka Private Limited vs. The Commissioner of Central Goods and Service Tax, Delhi South-Service Tax Appeal No. 51787 of 2022 dated 21.08.2023 and the observations are as follows: "16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and ta....