Space Technology and Education Pvt Ltd Vs Principal Commissioner of Central Tax (CESTAT Delhi)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi dismissed the appeal challenging the demand of service tax, interest and penalty on coaching services in astronomy, while remanding the matter only for recalculation of tax after extending the benefit of cum-tax under Section 67(2) of the Finance Act, 1994. The dispute centered on whether training or coaching in astronomy qualified for exemption under Entry 8 of Mega Exemption Notification No. 25/2012-ST dated 20 June 2012, which exempts services by way of training or coaching in recreational activities relating to arts, culture or sports.
The Department alleged that the appellant had been providing taxable coaching services without obtaining service tax registration, filing ST-3 returns or paying service tax. Consequently, a show cause notice was issued demanding service tax of Rs. 2,58,56,903 for the period from Financial Year 2013-14 to 2016-17 by invoking the extended period of limitation. The adjudicating authority confirmed the demand, leading to the present appeal.
The appellant argued that astronomy formed part of “culture” and, therefore, coaching in astronomy was covered by Entry 8 of the exemption notification. It relied upon dictionary meanings of “culture” and submitted that astronomy had been an integral part of Indian culture for centuries. The appellant also claimed the benefit of cum-tax under Section 67(2), contended that it had acted under a bona fide belief regarding the exemption, and challenged the invocation of the extended limitation period, interest and penalty. The Revenue, however, argued that astronomy is a science distinct from art or culture and that exemption notifications must be interpreted strictly. It also submitted that the appellant had suppressed material facts by operating commercially without registration or payment of service tax.
