Institute of Clinical Research (India) Vs Commissioner (CESTAT Delhi)
Conclusion: Commercial training or coach services that were provided by the Institute of Clinical Research (ICR) were liable to service tax as Commissioner had recorded a finding, after careful examination of the activities undertaken by the Indian Institute that it was providing training or coaching for a consideration. The matter was remitted to the Commissioner to decide whether out of the total demand that had been confirmed, Indian Institute would be entitled to the benefit of – Input credit of the expenses incurred as per the CENVAT Credit Rules, 2004; and the value of study material supplied; and cum-tax benefit under section 67 of the Finance Act.
Held: Assessee-charitable organization was engaged in imparting education in the field of Postgraduate Courses in ‘clinical research’ in India, entered into collaboration with Cranfield University, UK under an Agreement titled ‘Postgraduate Clinical Research Courses Collaboration Agreement’. It appealed against the order passed by the Commissioner, Service Tax for confirming the demand of service tax proposed in the two show cause notices under ‘commercial training or coaching’ services defined under section 65(26) of the Finance Act, 1994. It contended that the Indian Institute was imparting education to students in ‘clinical research’ and was not conducting any commercial training or coaching activity. Hence the activities of the Indian Institute fall outside the scope of commercial training or coaching services and the demand was, therefore, liable to be set aside. Department contended that the Indian Institute was engaged in providing commercial training or coaching services as it conducts a course in clinical research in collaboration with UK University and so the fees collected by the Indian Institute from the students intending to pursue the said degree course would attract service tax. It was held that Commissioner had recorded a finding, after careful examination of the activities undertaken by the Indian Institute that it was providing training or coaching for a consideration. There was no error in this finding as indeed the Indian Institute was engaged in imparting education in the field of Post Graduate courses in „clinical research‟ for a consideration. Commissioner had also recorded a categorical finding that the term recognized by law for the time being in force‟ would mean certificate/degree recognized by Indian law and so the certificates/degrees granted by the UK University would not fall in the category of certificates/degrees recognized by law for the time being in force. Thus, if the Indian Institute itself did not appear before the Commissioner despite ample opportunities having been provided, it could not be permitted to raise any grievance about violation of the principles of natural justice. It would be appropriate to remit the matter to Commissioner to decide this aspect only, namely as to whether the Indian Institute would be entitled to the aforesaid benefits out of the total demand that had been confirmed. Thus, the matter would have to be remitted to the Commissioner to decide whether out of the total demand that had been confirmed, Indian Institute would be entitled to the benefit of – Input credit of the expenses incurred as per the CENVAT Credit Rules, 2004; and the value of study material supplied; and cum-tax benefit under section 67 of the Finance Act. Thus, the service tax demand imposed against the assessee was upheld.
FULL TEXT OF THE CESTAT DELHI ORDER
M/s. Institute of Clinical Research (India)1 has filed this appeal to assail the order dated 26.02.2014 passed by the Commissioner, Service Tax (Adjudication), New Delhi2 adjudicating the show cause notice dated 15.03.2012 issued for the period from 01.10.2010 to 30.09.2011 and the show cause notice dated 16.04.2013 issued for the period from 01.10.2011 to 30.06.2012. The Commissioner has confirmed the demand of service tax proposed in the aforesaid two show cause notices under „commercial training or coaching‟ services defined under section 65(26) of the Finance Act, 19943 and made taxable under section 65(105)(zzc) of the Finance Act, with interest and penalty.
2. The Indian Institute claims to be a society registered under the provisions of the Societies Registration Act, 1860. It also claims to be recognized as a charitable organization under section 12AA of the Income Tax Act, 19614.
3. The Indian Institute, which during the aforesaid period was engaged imparting education in the field of Postgraduate Courses in „clinical research‟ in India, entered into collaboration with Cranfield University, UK5 under an Agreement dated 02.03.2006, titled as „Postgraduate Clinical Research Courses Collaboration Agreement‟. This Agreement was subsequently amended on 20.10.2008. Under the Agreement, the Indian Institute could conduct Post Graduation courses in clinical research of 2 years but the degrees were to be awarded by the UK University, which claims to be a University recognized under the UK laws.
4. During investigation by the department, it was noticed that that Indian Institute is engaged in providing „commercial training or coaching‟ services as it conducts a course in clinical research in collaboration with UK University and so the fees collected by the Indian Institute from the students intending to pursue the said degree course would attract service tax.
5. Accordingly, five show cause notices for the period from 16.08.2005 to 30.09.2010 were issued to the Indian Institute and they were adjudicated upon by a common order dated 03.01.2012. The proposed demand was confirmed under „commercial training or coaching‟ services. This order was assailed before the Tribunal, and the Tribunal by order dated 19.02.2013 remanded the matter for a fresh adjudication.
6. Another show cause notice dated 16.04.2013 for the period from 01.10.2011 to 30.06.2012 was issued to the Indian Institute proposing a demand under the „commercial training or coaching‟ services.
7. These two show cause notices have been adjudicated by a common order dated 26.02.2014, which order has been impugned in this appeal.
8. The details of the demands proposed in the two show cause notices are as follows:
