TaxTMI 
TaxTMI 
2025 (6) TMI 1013
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....missioner 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, investigation was initiated against the appellant in th....
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....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 the benefit of Notification No.10/2003-ST dated 20.06.2003 for the ....
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.... 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 of immovable property"; 14. 'Auxiliary educational services' is defined in clause (f) of the Definition Clause as follows: "(f) "auxiliary ....
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....uld 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. 25/2012-ST dated 20.06.2012, as amended by the Notification No.6/2014-ST dated 11.07.2014 simply because none of the specified services under S.No.9 (b) relates to imparting of education provided by the service provider to the educational i....
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.... 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 Noticee had no intention to pay the tax. Had the department not investigated the case, the evasion of tax would have not come to the fore. Hence, it is concluded that, the Noticee had contravened the said provisions of the Finance Act with the intention of not paying s....
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....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 recorded all transactions in books and supporting documents were made available to the investigation team, which beyond reasonable doubts proves that there was never an intention on the part of the appellant to evade the payment of service tax; (x) Service tax demand should be calculated on Cum Tax basis; (xi) Penalty u....
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....ider 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 Act, which was inserted w.e.f. 01.07.2003, defines 'commercial training or coaching' and it is reproduced: "65(26) 'Commercial Training or Coaching' means any training or coaching provided by commercial training or coaching centre;" 28. 'Commercial training or coaching centre' has been defined in section 65(27) of the Finance Act and it is reproduced: "65(27) 'Commercial training or coa....
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.....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 being in force, to any person, from the whole of the service tax leviable thereon under sub-section (2) of section 66 of the said Act: Provided that this exemption shall not be applicable if the charges for such services are paid by the person undergoing such course or curriculum directly to the commercial training or coaching centre: 2. This notification shall come into force on the 1st day of July, 2003. [Notification ....
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.... 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 willfully suppressed facts with an intention to evade the payment of service tax as the appellant did not disclose to the department that it was providing "commercial training or coaching centre" service which is a taxable service and this fact would not have come to the notice of the department had the department not conducted investigation against the appellant. 39. The impugned order dated 21.06.2017 passed by the Commissioner has dealt with this iss....
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....s 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 "suppression of facts" under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be "wilful' and there should also be an intent to evade payment of service tax. 44. Before adverting to the decisions of the Supreme Court and the Delhi High Court, it would be useful to reproduce the proviso to section 11A of Central Excise Act, 1944, as it stood when the Supreme Court explained "suppre....
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....wise. 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 it suppression." (emphasis supplied) 46. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) -2018 (12) GSTL 368 (Del.) also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as follows; "27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word "suppression' in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion....
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....t 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 the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL's contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return." (emphasis supplied) 48. It is, therefore, clear from the aforesaid discussion that the extended period of limitation could have been invoked only if there was suppression of facts with intent to evade payment of service tax. 49. It is keeping in mind the aforesaid discussion that it would have to be examined whether the Commissioner ....
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....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 judgment is reproduced below: "23. We are in full agreement with the finding of the Tribunal that during the period in dispute it was holding a bona fide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a mala fide belief particularly when such a belief was emanating from the view taken by a Division Bench of Tribunal. We note that the issue of valuation involved in this particular matter is indeed one were two plausible views could co-exist. In such cases of disputes of interpretation of legal provisions, it ....
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....scharge 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. Raydean Industries vs. Commissioner CGST, Jaipur-Excise Appeal No. 52480 of 2019 decided on 19.12.2022. The Tribunal, in connection with the extended period of limitation, observed that even in a case of self assessment, the department can always call upon an assessee and seek information and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the assessee. The Division Bench also noted that departmental instructions issued to officers also emphasis that it is the duty of the officers to scrutinize the returns. The relevant portion of the decision of the Tribunal is reproduced below: "24. It would be seen that the ER-III/ER-I returns filed by the ap....
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.... 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 take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect self-assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply beca....