Service tax on vocation training courses

Management/IT courses not recognized by law aren't vocational training courses; liable to service tax

Service Tax : Courses in field of Information Technology, Marketing, Personnel Management, Human Resources Development, etc. which were not recognized by law are liable to service tax and they are not eligible for exemption in respect of 'vocation training'

Service Tax : Receipts towards sale of prospectus, receipt of fine, uniform for students and sports cup sponsorship are not consideration for commercial training or coaching and are, therefore, not liable to service tax

CESTAT, MUMBAI BENCH

Balaji Society

v.

Commissioner of Central Excise, Pune-III

P.R. CHANDRASEKHARAN, TECHNICAL MEMBER
AND RAMESH NAIR, JUDICIAL MEMBER

FINAL ORDER NO. A/1397/2014-WZB/C-I(CSTB)
APPEAL NO. ST/167/2009-MUM

AUGUST  25, 2014 

Section 65(27) of the Finance Act, 1994 - Taxable services - Commercial Training or Coaching Services - Period 1-7-2003 to 31-3-2006 - Assessee, a charitable trust, was running three institutes providing qualification recognized by law, while five other institutes running courses in field of Information Technology, Marketing, Personnel Management, Human Resources Development, etc. which were not recognized by law - HELD : In view of explanation to section 65(105)(zzc), assessee was liable to pay Service Tax even if it was a Charitable trust or society - Since neither courses nor institutes/establishments conducting courses were approved/recognized by law, service tax was leviable - Assessee's argument that AICTE approval was not required to be obtained during material period was rejected, as AICTE approves courses/institutes, but, qualification has to be recognized by law, which was not there in this case - Said courses could not also be regarded as 'vocation training courses' and not hence, not exempt [Paras 5.4 and 5.5] [In favour of revenue]

Section 73 of the Finance Act, 1994 read with section 11A of the Central Excise Act, 1944 and section 28 of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Invocation of Extended Period of Limitation - Period 1-7-2003 to 31-3-2006 - Department sought information about assessee's courses on 30-12-2005 followed by another letter dated 27-2-2006 seeking details of fee - Required information was furnished by assessee on 8-3-2006 - Thereafter, statements of assessee were recorded on 17-4-2006 and 9-1-2007 and notice was issued on 31-3-2007 invoking extended period - HELD : Notice was issued almost within a year from commencement of investigation - There was no undue delay on part of department either in completing investigation or in issue of notice - Hence, invocation of extended period of time cannot be faulted - Assessee's plea of bona fide belief was rejected, as there was no material by way of expert opinion or otherwise as to basis for entertaining such belief; blind belief cannot be a substitute for bona fide belief [Para 5.9] [In favour of revenue]

Section 75 of the Finance Act, 1994 read with section 11AA of the Central Excise Act, 1944 and section 28AA of the Customs Act, 1962 - Interest - On delayed payment of duty/tax - Once demand for tax is upheld, demand for interest thereon is automatic and consequential [Para 5.9] [In favour of revenue]

Section 11B of the Central Excise Act, 1944 read with sections 73 and 83 of the Finance Act, 1994 and section 27 of the Customs Act, 1962 - Refund - Duty paid under protest - Assessee collected service tax from students and paid same to department under protest - Assessee argued that since demand was time-barred, tax paid has to be refunded - HELD : Time-limit for making demand would apply only in case of non-payment or short payment of tax - In respect of payments made, even if under protest, question of time limit does not apply; only protest has to be vacated and payments appropriated - Therefore, question of refund of amount on account of time bar will not apply - If amount was legally due and was lawfully received by revenue, same need not be returned even if amount was time barred - Even otherwise, demand is not time barred and hence, there is no question of any refund [Para 5.10] [In favour of revenue]

Section 67, read with section 65(27) of the Finance Act, 1994 - Valuation of taxable services - General - Receipts towards sale of prospectus, receipt of fine, uniform for students and sports cup sponsorship are not consideration for services rendered - Hence, their inclusion in value of taxable service is not correct in law [Para 5.11] [In favour of assessee]

Section 78 of the Finance Act, 1994 read with section 11AC of the Central Excise Act, 1944 and section 114A of the Customs Act, 1962 - Penalty - For evasion of duty/tax - Dispute in present case relates to classification of service - Further, assessee had discharged bulk of Service Tax demand before issue of show-cause notice - Hence, penalty under section 78 is not warranted [Para 5.12] [In favour of assessee]

Circulars and Notifications : Circular No. 59/8/2003-S.T., dated 20-6-2003 and Letter D.O. F. No. 334/3/2011-TRU, dated 25-4-2011, Notification No. 9/2003-S.T., dated 20-6-2003 and Notification No. 24/2004-S.T. dated 10-9-2004