Penalty leviable could not exceed the amount for Compounding of Offence under GST Act

Britt Worldwide India Pvt. Ltd. Vs Commissioner of Service Tax-VII (CESTAT Mumbai)

Conclusion:  While quashing an order for compounding of offence, the Revenue held that the amount for the compounding of offence under the GST Act should not exceed the maximum penalty specified in the Act for such offence. Since the demand itself failed on merit and limitation there could not be demand for interest and penalties imposed could not be sustained.

Held: Assessee-comapny were conducting Educational Colloquiums (seminar) for the distributors and prospective distributors of Amway India Enterprises (P) Ltd. (hereinafter referred as ‘Amway’) and in the sale of audio CDs, Video CDs, tapes etc, in connection therein. Based on intelligence, the officers of Director General of Central Excise Intelligence (DGCEI) conducted investigations against assessee. Intelligence suggested that assessee was earning income by holding Educational Colloquiums for the distributors of M/s. Amway. They were selling tickets for entry to such educational colloquiums to distributors of Amway and prospective distributors. However, no Service Tax was being paid by M/s. Britt on the income generated from sale of tickets. Prima facie it appeared that the Noticee was providing “Commercial Training and Coaching Services” to distributors. On the basis of this intelligence investigations were undertaken by the DGCEI.  Service Tax amounting to Rs.7,61,89,514/- towards the taxable services rendered from 16.06.2005 to 26.02.2010 under the category of “Commercial Training and Coaching Services” was demanded and recovered from them by invoking extended period, under as per proviso to Section 73(1) of the Finance Act, 1994. It was held that no coaching or training service was provided by assessee. The educational colloquiums were only conducted with a view to inspire distributors as well as prospective distributors to work for promotion of Amway product and to earn commission by selling the Amway products. The scheme of sale had been outlined in various literature such as code of ethics, the Amway sales and marketing plan and other literature kept in distributors kit. No training was provided by appellant, except for making the arrangements for the colloquiums. The case made out in the show cause notice was that assessee was not entitled for the exemption granted to vocational training as per the Notification No 24/2004-ST. . Once it was admitted that assessee imparted skill and knowledge which increased the sale of Amway products could it be said that by way of the said knowledge/skill the participants could not seek employment or undertake self-employment. Commissioner could have allowed the opportunity to assessee to produce the documents against which they intended to claim the CENVAT Credit and then decide upon the eligibility to the same. With regard to limitation, the issue was throughout in the knowledge of the department and investigated by various agencies from time to time. In such a case in our opinion the extended period of limitation could not be invoked. Since the demand itself failed on merit and limitation there could not be demand for interest and penalties imposed could not be sustained.

FULL TEXT OF THE CESTAT MUMBAI ORDER

This appeal is directed against order in original No dated of the Commissioner Central Excise and Service Tax Pune. By the impugned order following has been held.

“ORDER

30.1. I confirm the Service Tax demand of Rs.7,61,89,514/- (Rs. Seven Crores Sixty One Lakhs Eighty Nine Thousand Five Hundred and Fourteen Only (Service Tax Rs. 7,42,85,318/- + Ed. Cess Rs. 14,85,706/- + Higher Ed. Cess Rs. 4,18,490/-) and determine the same as payable by M/s. Britt Worldwide India Pvt. Ltd., Navi Mumbai, under the provisions of Section 73(2) of the Finance Act, 1994;

30.2. I order recovery of statutory interest at appropriate rate on the amount of Service Tax demand confirmed at para 30.1, from M/s. Britt Worldwide India Pvt. Ltd., Navi Mumbai, under the provisions of Section 75 of the Finance Act, 1994;

30.3. I impose penalty of Rs.7,61,89,514/- Rs. Seven Crores Sixty One Lakhs Eighty Nine Thousand Five Hundred and Fourteen Only] on M/s. Britt Worldwide India Pvt. Ltd., Navi Mumbai, under the provisions of Section 78 of the Finance Act, 1994, as amended.

34.4. I impose penalty of Rs. 10,000/- (Rupees Ten thousand only) under the provisions of Section 77 of the Finance Act, 1994, on M/s. Britt Worldwide India Pvt. Ltd., Navi Mumbai.”

2.1. Appellant is engaged for providing taxable services, viz., (i) Management Consultant, (ii) Commercial Training & Coaching, (iii) Intellectual Property Service other than Copyright, (iv) Transport of Goods by Road, (v) Business Auxiliary Service, (vi) Business Support Service, (vii) Sound Recording Service, (viii) Video Tape Production service and (ix) Event Management Service. They were conducting Educational Colloquiums (seminar) for the distributors and prospective distributors of Amway India Enterprises (P) Ltd. (hereinafter referred as ‘Amway’) and in the sale of audio CDs, Video CDs, tapes etc, in connection therein.

2.2. Based on intelligence, the officers of Director General of Central Excise Intelligence (DGCEI), Regional Unit, Indore conducted investigations against Appellant. The intelligence suggested that the appellant was earning income by holding Educational Colloquiums for the distributors of M/s. Amway. They were selling tickets for entry to such educational colloquiums to distributors of Amway and prospective distributors. However, no Service Tax was being paid by M/s. Britt on the income generated from sale of tickets. Prima facie it appeared that the Noticee was providing “Commercial Training and Coaching Services” to distributors. On the basis of this intelligence investigations were undertaken by the DGCEI.

2.3 On completion of investigations a Show Cause Notice dated 12.10.2010, was issued to the appellant asking them as to why :

(i) Service Tax amounting to Rs.7,61,89,514/- (Rs. Seven Crores Sixty One Lakhs Eighty Nine Thousand Five Hundred and Fourteen Only] (Service Tax Rs.7,42,85,318/-, Ed. Cess Rs.14,85,706/-, and Higher Ed. Cess Rs.4,18,490/-) towards the taxable services rendered from 16.06.2005 to 26.02.2010 under the category of “Commercial Training and Coaching Services”, should not be demanded and recovered from them by invoking extended period, under as per proviso to Section 73(1) of the Finance Act, 1994;

(ii) Interest at the appropriate rate should not be demanded and recovered from them as per section 75 of the Finance Act, 1994;

(iii) Penalty should not be imposed on them under Section 76, 77 and Section 78 of the Finance Act, 1994.

2.4 The show cause notice was adjudicated as per the order in original No 01/ST-II/RS/2014 dated 23.01.2014. This order was challenged by the appellant before Hon’ble Bombay High Court in writ petition No 6941 of 2014. Hon’ble High Court vide its order dated 11.01.2016 quashed the order as the same was passed after 17 months from the date of personal hearing and remitted the matter to original authority for fresh decision.

2.5 The show cause notice was adjudicated in remand proceedings as per the impugned order. Aggrieved appellants have filed this appeal

3.1 We have heard Shri Bharat Raichandani, Advocate for the appellants and Shri Nitin Ranjan, Deputy Commissioner, Authorized Representative for the revenue.

3.2 Arguing for the appellant learned counsel submits

> On perusal of the show cause notice, it becomes evident that the Department has also accepted that the appellant is not providing “coaching” or “training” service.

> The only case made out in the show cause notice is that the appellant is not entitled for the exemption granted to vocational training. However, the same proceeds on the assumption that the appellant is liable to pay service tax under commercial coaching or training service. This is clearly incorrect and impermissible in law.

> At Para 21 of the impugned order, the Commissioner has held that the appellants did not pay tax/claimed the benefit of exemption under Notification No. 24/2004-ST knowing their output service is liable to tax which is nothing but an deliberate act with intent to evade payment of service tax. According to the Ld. Commissioner there was no scope to interpret the meaning of vocational training institute in any other manner than the one provided in the said Notification No. 24/2004-ST

> The said notification is prospective in nature and not retrospective. The said notification is dated 27.02.2010. The notification itself states that the amendment would come into effect from the date of publication of the notification in the official gazette. It is well settled that all laws are presumed to be prospective, unless stated otherwise by express words or necessary implication. No such situation exists here. There is neither such allegation in the show cause notice nor any finding in the impugned order. Hence, as such, no reliance can be placed on the said notification.

> It is well settled that no decision can be read ignoring the facts of that case and the points which arise for determination in that case. All the observations made in a judgment are to be understood with reference to the context in which they are made. The essence of a decision is to be carved out from the conjoint reading of the facts, the scheme of the Act under consideration, points for consideration and the decision arrived thereon. The concept of a ratio decidendi has been elaborately explained by the Supreme Court in the case of Union of India and Others v. Dhanwanti Devi and Others (1996) 6 SCC 44.

> The decision of Sadhana Educational was explained and distinguished in Ashu Exports cited supra and considered by the Hon’ble Delhi High Court.

> The decision in case of Prof. Ulhas Bapat 2015 (37) STR 1034 and Balaji Society 2015 (38) STR 139 will not be applicable in the facts of the present case.

> If assuming the demand of service tax was to be sustained, the appellant would be entitled to utilize credit of service tax paid on input services. The demand of service tax has been confirmed on the gross value, without taking into consideration the cenvat credit available with the appellants. The appellants state and submit that they would be eligible to avail credit of duty paid on inputs, credit of duty paid on capital goods as well as credit of service tax paid on input services used for providing the alleged ‘commercial training or coaching service’. This view is supported by the decision in the case of Eminence Equipments Pvt Ltd v/s CCE 2015 (330) ELT 344. The relevant portion of the said decision is extracted below for ready reference:

11. Coming to the appellants’ request of permitting Cenvat credit, we are not in agreement with the reasoning given by the Commissioner in the impugned order. It is true that the Cenvat credit can be taken as per Rule 3 of the Cenvat Credit Rules. However, the peculiar facts in the present case are that the appellants did not pay the duty treating their goods as non-dutiable and hence they were not eligible for availment of Cenvat credit. Now since the goods are held to be dutiable, they are eligible for taking the Cenvat credit. The appellants, therefore, must be given a chance to provide the copies of various documents like invoices, etc, and other records as required to prove that the said inputs or input services were used in the manufacture of the goods and if the appellants are able to satisfy from the documentary evidence then the Cenvat credit should be extended to the appellants and the net duty should thereafter be worked out. Penalty will also change accordingly. We, therefore, remand the matter to the Commissioner for the limited purpose of examining the documents to be submitted by the appellants (within a period of three months from the date of receipt of this order) and the Commissioner would thereafter examine the said documents and in case he needs any other documents as per law, he may inform the appellants about the same and the appellants will submit those documents and, after examination of the said documents, take a view about the quantum of Cenvat credit available to the appellants.

> In the impugned order, it has been held that the appellants did not pay tax knowing their output service is liable to tax which is nothing but an deliberate act with intent to evade payment of service tax. Relying on the decision in the case Neminath Fabrics Pvt. Ltd. – 2010 (256) ELT 369 (Guj) it has been held that larger period of limitation is invokable in the instant case The question is one of, admittedly, interpretation of the section and the notification. The period involved in the appeal is one of nascent stage of the levy. If two views are possible, the appellant cannot be held to be guilty of suppression.

> This decision of Hon’ble Gujarat High Court has been explained and distinguished recently by the jurisdictional Bombay High Court in the case of Mahindra and Mahindra Limited 2018 (11) GSTL 126 (Bom),

> A change of opinion by the officers of the Revenue or newly dawned wisdom cannot be a ground to allege suppression of facts against the appellant. Hence, the extended period of limitation cannot be invoked in the facts of the present case.

> The appellant has maintained regular books of accounts. The appellant has shown the same in the income tax returns. The appellants had bonafide belief that they are not liable to pay service tax. Moreover, there being no positive act on part of the appellants to suppress any fact from the department and there being no evidence for such allegation, the appellant submits that the proposal to invoke extended period is not correct. Reliance is placed on decision of the Hon’ble Supreme Court in the case of Continental Foundation Vs. CCE – 2007 (216) ELT 177 (SC), wherein the Hon’ble Apex Court has held as under:

10. The expression “suppression” has been used in the proviso to Section 11A of the Act accompanied by very strong words as ‘fraud’ or “collusion” and, therefore, has to be construed strictly, Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. …(emphasis supplied)

> Furthermore, the Appellant submits that omission to inform the department cannot be equated with suppression of facts. The above finding of the Ld. Commissioner in the impugned order was indeed the reason

3.3 Arguing for the revenue learned authorized representaive while re-iterating the findings recorded in the impugned order submits

> The Appellant are engaged in providing commercial coaching services exclusively to Amway business owners/ABOs. These ABOs are engaged in the marketing and distribution of FMCG (fast moving consumer goods) on behalf of M/s Amway. The Appellant chargers the participants for attending these seminars/colloquiums and this amount is sought to taxed under the Commercial Training and Coaching Services category.

> The meetings are only for imparting education training about product information and their application to their business systems and culture, including motivational lectures for growth of their business with M/s Amway, the source of income is through the sales is such tickets of seminars and meeting the revenue is shown as selling entry tickets bracket meeting admission revenue in accounts.

> They are also engaged in sales business sales material BSM through the distributors for which they get Commission. They are registered under commercial training and coaching services and have paid service tax from July 2004 to September 2004 till the issue of Notification Number 24/2004-Service Tax.

> They also conducts such training Institutions for their corporate in corporate employees counterparts and have been charging and discharging the service tax liabilities on the same. They show this revenue as ‘Meeting Admissions Revenue in their books of account.

> Post 26th February, 2010 they are now discharging service tax in view of the amendment Notification Number 03/2010/-Service Tax dated 27.02.2010, which had amended the earlier definition ‘vocational training”.

> The allegations made in the Show Cause Notice Dated 12.10.2010, show that the appellants were providing Commercial Training and Coaching Services (CTCS).

> The Appellant are conducting educational course for distributors and prospective distributors and they were charged in entry fee for the seminar there is no fixed curriculum and no certificate provided. It is purely a motivational inspirational lecture for existing distributors for the experience is to increase the sales and help them get increased Commission on the sales of a product of Business Support Material is produced by third party vendors like Britt Worldwide, Flash Winners dream and Network 2i India

> The distributor start getting Commission when his/her sales reach 5.5 lacs . As a statement recorded of the CEO and other officials there is no specialized training of marketing for the no entry of employment to the person attending such seminars .We can see from the Code of Ethics that there is no employer employee relationship.

> As per Department,

• • the seminar was organized by the Appellant does not relate to self employment but only imparts some knowledge about the sale of a product. They are not offering any courses under the designated trade under Apprenticeship Act. Also there is ‘Nil’ value against this category till 31 March 2006 and also therefore was declared the nature of service to avail the tax and hence extended period has been invoked.
  • these are not vocational training programs as it is not imparting any skills and for seeking self employment but specialised training and a product information and as well as the business training. These training programs are only recognised by Amway and not recognised under law. The applicant or actually imparting training and education to Amway Business Owners with a motivating profit by a charging ticket fare from participants as the demand was confirm the penalty.
  • they mis-declared the value in ST-3 returns from April 2005 September 2005, October 2005 and March 2006 where they are shown the value of the service under this category as Nil on their earnings, whereas they had earned Rs 18.8 Crores during this time.

> As per Section 65(27) of the Finance Act, 1994,commercial training and coaching centre means any institute establishment providing commercial training and coaching for imparting skill or knowledge on lesson on any field as evidence was with without issuance of certificate includes coaching water tutorial classes but does not include personal coaching and training institutes for any institute for establishment we should issues any certificate for diploma degree or any educational qualification recognised by law for the time being in force.

> The Appellant themselves has been classifying and paying service tax for other periods in the category of CTCS only and hence there is no dispute regarding the same.

> Notification No.24/2004-ST, provides exemption to the taxable services provided in relation to commercial training or coaching, by a vocational training institute or a recreational training institute. Also, “vocational training institute” was defined to mean a commercial training or coaching centre which provides vocational training or coaching that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching

> As per CBIC circular dated 28th June, 2003 while service tax was imposed on commercial training and coaching services it was clarified with respect to exemption notification “Therefore, vocational coaching and training services provided by typing and shorthand institutes, TV/ vehicle repair training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer-training centers, hobby classes, institutes teaching martial arts, painting, dancing etc would not be chargeable to service tax. This exemption would remain in force upto 29th February 2004.”

> Subsequently, as per CBIC Circular dated 28th January, 2009 (para 4), it was clarified that ‘vocational training’ only covered those course which enabled the trainee to directly take up an employment after completion of the course and not improve the chances of employment :

“..4. VOCATIONAL TRAINING INSTITUTE The vocational training institutes are exempted from service tax vide notification no. 24/2004-ST, dated 10.09.2004 (as amended). By definition, such institutes should provide training or coaching that imparts skill to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching. Disputes have arisen in respect of institutes that offer general courses on improving communication skills, personality development, how to be effective in group discussions or personal interviews, general grooming and finishing etc. It is claimed that such training or coaching improves the job prospects of a candidate and therefore they are eligible for exemption as vocational training institutes. However, a careful reading of the definition shows that the exemption is available only to such institutes that impart training to enable the trainee to seek employment or self employment. The courses referred to above do not satisfy this condition because on their own such courses do not prepare a candidate to take up employment or self employment directly after such training or coaching. They only improve the chances of success for a candidate who already has the required skill. Therefore, such institutes are not covered under the exemption…”

> In India, the activities of Amway India have been the focus of many regulatory action by the Ministry of Consumer Affairs. For instance, in Amway India Enterprise vs. Union of India (2007 (4) ALT 808) the Andhra Pradesh High Court held that the scheme run by Amway (multi­level marketing) falls within the scope of a ‘money circulation scheme’ under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (the “PCMCS Act”). Hence, it can be held that the activities of Amway Business Owners cannot be held to be providing employment.

> It has been held by the Apex Court in M/S DILIP KUMAR AND COMPANY AND ORS VS COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI[2018-TIOL-302-SC-CUS CB). That in the case of exemptions, a strict and literal interpretation of such exemption statutes has to be done. There is no scope for liberal interpretation in favor of the taxpayer.

> Notification No04/2004-ST grants exemption benefit to only vocational training institutes or recreational training institutes. The Appellant is clearly neither but only provides seminars to Amway Business Owners in the Britt Line of Sponsorship. It is stated that vocational training has to be one where some general or technical skills are provided which enable the trainee which would enable him/her to gain direct employment subsequently. Hence, following the ruling of the Apex Court in DILIP KUMAR (supra) strict interpretation of exemption notification, it is seen that conducting these seminars which provide some lesson on direct selling of Amway does not come under the ambit of vocational training.

> He would rely on the following decisions:

• • • ICFAI [2013-30-STR-273-Tri-Bang]
    • Sadhana Education & People dev. Services Ltd. [(2014-33-STR-575-Tri Mum]
    • Balaji Society [(2015-38-STR-139-Tri-Mum]
    • Sadhana Education & People dev. Services Ltd. [(2015-40-STR-1107-Tri Mum]
    • Jay Ajit Charia [2015-40-STR-1139-Tri-Ahm]
    • Ulhas Vasant Bapat [2015 (37) S.T.R. 1034 (Tri. – Mumbai)]

> In Ashu Exports [2012-25-STR-359-Tri-Del/2014034-STR-161-Del] relied upon by the appellant it was held that a training Japanese engaged in the training in the field of import export Merchandise and Retail Management as per the applying the nature of training was purely procedural knowledge as against theoretical knowledge as per them Export Import practices and documentation is one of the designated trade as recognised and the Apprentice Act 1961 issued by the central government as per than 70% of the students of pressures and provides skills and training to them.

> In this case, the assessee has also quoted the Eleventh Five Year Plan 2012) Document Volume 1 to argue that the concept that vocational skill will cover only skill requiring low levels of education is not correct. They have produced copy of Chapter 5 dealing with “Skill development and Training” Para 5.4 and 5.39 are particularly relevant.

> Here, the courses are essentially 2.5 hour long seminars about the Direct Selling Practices of Amway where for one hour, an experienced Amway distributor speaks and for the rest of the time some general motivational speech is given. General training in direct selling techniques of Amway cannot be held to be vocational training by threshold of strict interpretation of exemption notification as laid down by the Apex Court in M/S DILIP KUMAR (supra).

> Extended period of limitation has been correctly invoked to make the demand from the appellants.

> Since ‘mens rea’ is not a requirement under Service tax law for penalty and bona fide of the taxpayer is not forthcoming from the facts of this case, extended period and penalty are applicable on the appellant.

4.1 We have considered the impugned order along with the submissions made in the appeal and during the case of arguments

On Merits

4.2 For confirming the demands Commissioner has in the impugned order on the merits of the demand held as follows:

“7. The Show Cause Notice contends that the Noticee was arranging educational colloquiums for Amway. It is alleged that the Noticee was providing education in the line of Britt System and the main purpose of such education is to increase the number of distributors of Amway. It is further alleged that the program of the colloquium are in the nature of motivation, development of personality to the distributor or the prospective for sale of Amway products. Such services provided by the Noticee has been considered as taxable service covered under the category “Commercial Training or Coaching Service” classifiable under Section 65(105)(zzc) of the FA Act, 1944. The revenue totally amounting to Rs. 67,48,84,301/- earned by the Noticee by arranging such educational colloquiums during the period 16.06.2005 to 26.02.2010 and which has been categorized by the Noticee as ‘Meeting Admission Revenue in their Books of Accounts, has been considered as the taxable value, on which Service Tax demand of Rs. 7,61,89,514/- has been made in the Show Cause Notice. The Show Cause Notice has demanded the said Service Tax by invoking extended period under proviso to Section 73(1) of the FA, 1994 and has proposed to recover interest in terms of Section 75 ibid. Penalty is also proposed under Section 76, 77 and 78 of the Finance Act, 1994.

8. The Noticee’s submission is that they are not providing commercial or training service. They are organizing educational colloquiums for educating and training distributors of Amway but the discourse is merely informative. They do not train or coach any person by imparting skill or knowledge or lessons in any field or subject but only motivate the distributors by sharing personal experiences for promotion and sale of Amway products. The Noticee’s contention is that the service provided by them does not fall within the scope of Commercial Training or Coaching Service. They further claim that the activity carried out is Vocational Training, which is exempt under Notification No. 24/2004-S.T. dated 10.09.2004.

9. Thus, the issue to be decided in this case is whether or not the above said activities performed by the Noticee amount to provision of taxable service and whether the same is classifiable as “Commercial Training or Coaching Service” as defined under Section 65(105)(zze) of the Finance Act, 1994.

10. From the material available on record, it is seen that the Noticee organizes the educational colloquiums specially designed for Amway, which is exclusively for the distributors of Amway. The participants pay the fee and also regularly attend the programmes. The objective of the programme is to enhance the skill and impart knowledge on the participants, namely, Distributors or prospective Distributors of Amway products, so as to increase the sale of Amway products. The distributor is required to purchase a kit for a price containing Amway Code of/ Ethics and Rules of Conduct. Amway Sales and Marketing Plan is an integral part of Rules of Conduct. The events are organized by the Noticee on the line of Code of Ethics’ as mentioned under Business Support Materials (BSM) policy and restricted for use only for promotion of Amway products and the participants are only distributors of Amway products. For the purpose of business promotion, Business Support Materials (BSM) is made available to distributors. BSM is defined as any privately produced materials and meetings which may be developed, produced and distributed for the purpose of training and motivating the distributors as well as the purpose of attracting prospects in becoming Amway Distributors. BSM includes any event/function/ meeting. The content of BSM is to be approved by Amway before they are sold to Amway Distributors. The price for such events/ meetings/ business building seminars/ conferences/conventions is fixed by Amway. Such activities / events were not be used to promote any non-Amway business but for promotion of Amway products only. Shri. Ambar Bharadwaj, (Executive Events), in his statement dated 03.06.2010 stated that the rate of ticket for attending the programme and to be paid by the participants was fixed by Amway under BSM policy and the tickets were sold through distributors of Amway. The income generated by sale of tickets was accounted as ‘Meeting Admission Revenue’.

11. Thus, evidently the educational colloquiums were organized by the Noticee for Amway distributors in accordance with the BSM policy of Amway. The Noticee had been receiving consideration from the participants for such services provided as per the rates fixed by Amway under BSM policy. The objective of such colloquiums is to impart skill and knowledge to the distributors of Amway with the objective to improve Amway business.

12. Whether the services provided by the Noticee, as detailed above, would be leviable to Service Tax under the category Commercial Training or Coaching service or not can be decided by examining the nature of the services provided vis-à-vis the definitions provided under the Finance Act, 1994. Commercial Training or Coaching’, as defined under Section 65(26) of Finance Act, 1994 means any training or coaching provided by a commercial training or coaching centre. ‘Commercial Training or Coaching Centre, as defined under Section 65(27) of the Finance Act, 1994, means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training centre or 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.

13. As stated above, the Noticee was organizing educational colloquiums for the distributors of Amway. The objective of the Noticee in organising or conducting the programme was to cultivate skill and knowledge on the participants so as to facilitate the sale of Amway products, Admittedly, the programmes are organized for a consideration. Such training or coaching imparted for a consideration are squarely covered under the category of ‘Commercial Training or Coaching Service’. The Noticee’s contention that they are not covered under the taxable head of ‘commercial training and coaching’ is not in consonance to the definition of the said services provided in Finance Act, 1994. Further, issuance of a certificate is not a pre-condition for a service to qualify as ‘commercial training or coaching services’. Besides, whether the programme relates to employment opportunity or not is of no relevance.

14. In view of the definition of Commercial Training or Coaching’ and ‘Commercial Training or Coaching Centre, as defined under Section 65(26) and 65(27) of the Finance Act, 1994, respectively, I hold that the services provided by the Noticee is appropriately covered by the definition of “Commercial Training or Coaching Service”, as defined under Section 65(26) of the Finance Act, 1994 and is a taxable service as per Section 65(105)(zzc) ibid.

15. It is relevant to note that the Noticee had taken Service Tax registration and discharged Service Tax liability for such services during the period 01.07.2004 to 09.09.2004. However, on introduction of Notification No. 24/2004-S.T. dated 10.09.2004 they stopped paying Service Tax on the same considering their services as Vocational training.

16. The said Notification No. 24/2004-S.T., inter-alia, exempts services provided by a 1 vocational training institute or a recreational training institute from payment of Service Tax. As per the Explanation to the said Notification, ‘vocational training institute’ means an Industrial Training Institute or an Industrial Training Centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961 (52 of 1961). “Recreational training institute’ has been explained as a commercial training or coaching center which provides training or coaching relating to recreational activities such as dance, singing, martial arts or hobbies. ‘Computer training institute’ has been explained as a commercial training or coaching centre which provides coaching or training relating to computer software or hardware.

17. The Noticee does not fits into any of the three categories covered under Notification No. 24/2004-S.T. Therefore, exemption under the said Notification is not available to the Noticee. It has to be noted that vocational training means training or coaching that imparts skill to enable the trainee to seek employment or undertake self-employment directly after such training or coaching. The colloquiums organized by the Noticee for the distributors of Amway does not relate to self-employment opportunity. The objective of the training is only to promote sale of Amway products. The objective is not to enable the participants to undertake self-employment directly after such training or coaching. The Noticee cannot use the training for any other purpose. In other words, the objective of the training is limited only to impart skill and knowledge for facilitating the sale of Amway products and not to impart any skill or knowledge to the participants so as to enable them to undertake self-employment. Thus, the activity of the Noticee cannot be considered as vocational training. In view of this position, I am of considered view that the Noticee is not entitled for exemption under Notification No. 24/2004-S.T. dated 10.09.2004.

4.3 The first question that needs to be addressed is whether the appellant was providing any Commercial Training and Coaching Services as defined by Section 65 (27) of the Finance Act, 1994. The relevant paragraphs from the show cause notice are reproduced below:

“7. in view of the aforesaid discussion it appears that for becoming a Amway distributor no specific skill is required. The distributors and third party vendor have to abide by the business support policy as mentioned in Section 7 of code ethics and rule of conduct. The definition of BSM policy under Section 2 of the Code of Ethics is very relevant and read as under: “Business Support Materials” (BSM) refer to any privately produced materials, in both written and recorded form, and meetings which may be developed, produced, and distributed by Distributors for the purpose of training and motivating the Distributors in their Business Group, as well as for the purpose of attracting prospects in becoming Amway Distributors, which is regulated in terms of Section 7 herein below

Para 7.1.2. of Code of Ethics specifically directs that Distributors must not use with prospects or distributes to prospect BSM which suggest, imply, promise or guarantee, either directly or indirectly that any specific level of amount of sales income, profit or eamings may be derived from Amway business, or from selling any specific line or lines of Amway product. Para 7.2.7.3 specifically clarifies that the distributors who choose to sell business support materials shall not say, suggest or employ that use of any such materials will guarantee success The business Support Materials should also indicate that the techniques and approaches suggested have worked for others, no one can guarantee that these techniques will work for you

8.1. emphatically speaks that when inviting a prospective distributor to attend the presentation of the Amway Sales and Marketing Plans and Amway distributor shall not give the impression that it relates to an employment opportunity. The aforesaid discussion also reflects that M/s. Amway have provided already detailed code of conduct, marketing plan, about their product and ideas for selling their product. They have given option to distributor and third party vendor (owner of whom is also distributor) to sale business support materials and conducting seminars to attract more persons to become distributor and in turn it will help business of the Amway.

9. Thus it appears that commission to a distributor of amway is only paid if he achieves minimum sales amount of Rs. 16500 per month (currently) of the Amway product. M/s. Britt Word Wide India Pvt. Ltd. is the third party vendor of M/s. Amway who sells various BSM that includes tickets for attending seminars magazine, Books, Audio Tapc, CD, VCD, DVD, etc. only as per the maximum prices fixed by the Amway Amway has got no objection if BSM duly approved by Amway is sold free of cost The content of the BSM produced by third party vendor during the seminar has to be approved by M/s. Amway to ensure that the content does not contain any materials other then promotion of the products of Amway or mis represent by policies of the Amway. M/s. Britt Word Wide India Pvt. Ltd. is associated with Bill Britt who is senior Amway distributor and thus qualify to be third party vendor. The cover page of monthly magazine Amagram (Annexure – 16) issue 75 published by M/s. Amway India Enterprises Pvt. Ltd is the photograph of peggy and Bill Britt holding Amway crown pin who is associated with Bill and Peggy Britt Marketing India Pvt. Ltd Any person without active association of any distributor of Amway are not permitted to act as a third party vendor The BSM policy and amendment of the same is communicated to third party vendor for the adhering the same. The cross group selling is not allowed as one distributor in his group lead by senior distributor will like to add prospective distributor in his group to gain more profit. The educational colloquiums are being conducted with speaker as senior distributor of emerald pin level of Amway Such seminar cannot be used to promote any non Amway business. The third party vendors cannot use forum where assistance of Amway distributors are present for their own profession or business other than Amway. Though no formal permission is granted to third party vendor by M/s. Amway but as Amway distributors are present in the seminar so M/s. Amway keeps a track of the meeting the literature such as Eagle Programme, Diamondship ka Mahamarg Published by M/s. Britt that M/s. Britt is solely working for promotion of business of Amway product. The tickets are being sold through distributors of Amway by M/s. Britt for various seminars and showing as meeting admission revenue in their Balance sheet There are three educational systems (i) Britt Word Wide System (ii) Network 21 aystem (iii) Winner System Any distributors following Britt Word Wide System under senior distributors cannot leave Britt System without permission from Senior distributors and finally from Amway In such meeting seminar will be for two and half hours and in which first hour is assigned for speakers who have achieved silver grade due to quantum of their sales of Amway products in the second hour the speaker (emerald) speaks about the business system of Amway based on his experience This reflects that no major special technical training is conducted by M/s. Britt This educational colloquiums are only conducted with a view to inspire distributors as well as prospective distributors to work for promotion of Amway product and to earn commission by selling the Amway products The pattern of sale is well defined by Amway in their various literature such as code of ethics the Amway sales and marketing plan and other literature kept in distributors kit While going through the list of business support materials for Britt Word Wide approved in 2010 by M/s. Amway it appears that maximum BSM are CD/DVD/VCD prepared by M/s. Britt in various celebrations of Amway speakers who have spoken about his experiences of Amway sales product and his personnel achievement. Similary general books written by distributors who have achived success about Amway sales method have been approved. Thus it appears that M/s. Britt is not engaged in any specialized training of marketing The most vital point is that all the senior officers and distributors have admitted that no guarantee of employment is given to any person who are invited to attend the seminars Para 7.1.2. also clarifies that Distributors must not use with prospects or distributors to prospects BSM which suggest imply promise or guarantee either directly on indirectly that any specific level or amount of sales income profit or earnings may be derived from the Amway Business or from selling any specific line or lines of AMWAY products Further it is specifically mentioned in Para 7.2.7.3 of Code of Ethics that business support materials shall contain instruction the technique and approaches suggested have worked for others and no one can guarantee that these techniques and approaches will work for everyone The same message shall also appear in the audio portion of any audio tape Business Support Material or be communicated through a substantially equivalent means.

13. From the aforesaid documentary evidences it appears that Bill and Peggy Britt holding pin level crown of Amway Distributorship are main associated person behind the company M/s. Bill & Peggy Britt India Pvt. Ltd is successful organization of M/s. Amway and working in 80 markets all over word where M/s. Amway have an effective existence. The training through motivational tapes video seminars, open plan presentation educational colloquiums and personal quidance are solely used for distributors or prospective distributors of Amway. The senior Distributors of Emerald and above of Amway are used a speaker in different colloquiums being organized by M/S. Britt. However for success in selling the products of the Amway infact there is no training in the colloquiums except motivation by the speakers and sharing of their experience in the field of Amway business which may help in gaining confidence/ personality development in the distributors. M/s. Amway have already prepared an effective plan of marketing and they are also giving training to their distributors M/s. Britt dose not add anything in the training of their colloquiums and rather they can not add any extra matter as speaker of the colloquiums are distributors of Amway and being Amway distributors the speakers has to abide the code of ethics of Amway and being Amway distributors the speakers has to abide the code of ethics of Amway. The content of the Schedule 17 (Note to the Account ) clearly gives a picture that the principal activities of Britt are in assisting the distributors in spreading the Britt teachings in the conduct of Amway business through sales of books and tapes (audio/ video) containing these teachings and other related information They are selling tickets through the distributors of Amway. They are also selling their product through distributors of Amway as commission paid by M/s. Britt to different person for sale of their product are distributors of Amway

16.1 Board vide circular No. 59/08/2003 dated 20.06.2003 clarified vocational coaching and training services provided by typing and shorthand institute TV/ vehicle repair training institute Tailoring Institute, Industrial Training Institute foreign languages institute would not be chargeable to Service Tax. This gives background of type of training which Government had intention to cover under exemption under vocational training institute The basic ingredients to be satisfied for availing exemption under Notification No. 24/04 dated 10.09.2004 is that after undergoing such training the student should be able to seek employment or undertake self employment in this case the colloquiums being arranged by the noticee are sort of providing motivation for sale of product of Amway It does not follow a prescribed course material and does not put any requirement on the distributors of Amway to attend the colloquiums for specified period. The sale pattern of Amway is very unique and this is already in details has been prepared by Amway and required material is placed in each Amway kit and Amway Marketing plan M/s. Britt being one of the successful of Amway are the person behind M/s. Britt I a distributors of Amway so they follow the code of ethics being prepared by M/s. Amway M/s. Britt the third party vendor have to strictly adhere to the BSM policy of M/S. Amway in the colloquiums where speaker is distributors of Amway He has to work under the four corner of the ethics of the Amway He cannot talk any additional matter other than his experience in sell more and more Amway products The CD prepared of the lecture being delivered by the distributor f Amway in various colloquiums being arranged by the Noticee are sold by the Noticee and requests the distributors /prospective distributors to listen CD number of times The vital point is that as per BSM policy the third party vendor has to write following instructions. While the techniques and approaches suggested have worked for others no one can guarantee that these techniques and approaches will work for you This same message shall also appear in the audio portion of any audiotape, Business Support Materials or be communicated through a substantially equivalent means; Section 7.1.2. also restrict distributor that they must not be used with prospect or distribute to prospect BSM which suggest imply promise or guarantee either directly or indirectly that any specific level of amount of sales income profit or earmings may be derived from Amway business or from selling any any specific line or lines of Amway products

16.2. Section 8.1.1 also categorically speaks that while calling any distributor or the prospective distributor to attend the colloquiums categorically no guarantee of employment should be given Finally Shri Sachin Adhikari, CEO of the Noticee specifically clarified that their teaching in colloquiums dose not give any guarantee of employment/entrepreneurship (self employment)

…. (underlining and emphasis supplied)

4.4 From the above paragraphs it is evident that no coaching or training service was provided by the appellant. The educational colloquiums are only conducted with a view to inspire distributors as well as prospective distributors to work for promotion of Amway product and to earn commission by selling the Amway products. The scheme of sale has been outlined in various literature such as code of ethics, the Amway sales and marketing plan and other literature kept in distributors kit. No training is provided by appellant, except for making the arrangements for the colloquiums. The case made out in the show cause notice is that the appellant is not entitled for the exemption granted to vocational training as per the Notification No 24/2004-ST. . The impugned order holds that the objective of the training is limited only to impart skill and knowledge for facilitating the sale of Amway products and not to impart any skill or knowledge to the participants so as to enable them to undertake self employment. Once it is admitted that the appellants impart skill and knowledge which increases the sale of Amway products can it be said that by way of the said knowledge/skill the participants cannot seek employment or undertake self-employment. In Ashu Exports Pvt Ltd [2014 (34) STR 161] tribunal held as follows:

17. We have considered arguments of both sides. The main argument for the department is that vocational training would mean only training in skills like carpentry, smithy, making of gem and jewellery etc. which are skills meant for people with relatively low levels of education and training imparted to a person with education up to 12th standard, training them for white collar jobs can not considered as vocational training. Concise Oxford Dictionary gives the meaning for “vocation” as “a person’s employment or main occupation especially one requiring dedication”. Meaning of the term “vocational according to the said dictionary is “relating to an occupation or employment”. In relation to education and training it gives the meaning “directed at a particular occupation or its skill”. When engagement in occupation or employment becomes outcome of vocational training, pedantic approach as that is made by Revenue is undesirable.

4.5 Affirming this decision, Hon’ble Delhi High Court, vide [2014 (34) STR 161 (Del)] observed as follows:

2. The assessee in this case at the relevant time in 2003 was running courses which is to impart procedural and practical skill based training in areas such as export import management, retail management and merchandising. Concededly, these courses were not accredited or certified by any Central or State Government or statutory authority such as AICTE. The appellant – Service Tax Department issued a notice alleging that the respondent had not paid Service Tax for the relevant period even though the activities carried on by it are taxable service under Section 65(zzc).

3. It appears that the Section 65(zzc) was introduced w.e.f. 1­7-2003 by the Finance Act, 2003. It was notified to come into force w.e.f. 1-7-2003 by a Notification No. 7/2003, dated 20-6­2003. The assessee relied upon an earlier Notification, i.e., No. 9/2003 as well as the subsequent Notification No. 10/2004 to contend that its Institution was not covered by the section. However, the adjudicating authority confirmed the demand upon the assessee. It, therefore, approached the Tribunal which relied upon its previous judgment in Wigan & Leigh College (India) Ltd. v. Joint Commissioner, S.T., Hyderabad, 2007 (8) TMI 61 (CESTAT) = 2007 (8) S.T.R. 475 (Tri. – Bang.).

4. Counsel for the Revenue contends that the impugned judgment of the Tribunal following Wigan & Leigh and distinguishing other judgments which took a different view is incorrect. It was contended that according to the Revenue’s understanding the exemption Notification applied in terms of only to vocational training imparted by Institutes such as ITI and State sponsored or recognized educational training institute generally imparting technical and vocational skills immediately after the 10 + 2 grade. Learned counsel submitted that a coaching centre or a commercial training centre cannot be construed as widely as the assessee’s institution which imparts managerial and management skills akin to MBA. He relied upon an order of CESTAT in M/s. Sadhana Educational and People Development Services Ltd. v. Commissioner of Central Excise, 2013 (12) TMI 735 of the Mumbai Bench in this regard and stated that Wigan & Leigh has been dissented by this order.

5. Section 65(zzc) as it originally stood when it was notified w.e.f. 1-7-2003 reads as follows :-

(26) “commercial training or coaching” means any training or coaching provided by a commercial training or coaching centre;

6. It would be relevant to notice that concurrently with the introduction or levy of vocational institutions in 2003, the Government deemed it fit to exempt that activity almost simultaneously by the Notification dated 20-6-2003. The only condition that Notification attached was that it would be enforced till 29-2-2003; in all other particulars it was nearly identical with the exemption Notification of 10-9-2004 quoted in the preceding portion of this judgment. On 4-2-2004 by a Notification No. 1/2004-S.T., the period of validity of the previous Notification was extended to 30-6-2004. It was in these circumstances that on 10-9-2004 Exemption Notification No. 24/2004-S.T. relied upon by the assessee was brought into force. We may also notice that subsequently in 2010 by a Notification, the following Explanation was substituted in place of the Explanation that existed earlier :-

“Notification : 3/2010-S.T., dated 27-Feb-2010

Commercial Training or Coaching service – Exemption Notification No. 24/2004-S.T., amended

In exercise of the powers conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 24/2004-Service Tax, dated the 10th September, 2004, published in the Gazette of India, Extraordinary, vide number G.S.R. 598(E), dated the 10th September, 2004, namely :-

In the said Notification, in the Explanation, for (i) and the definition against it, the following item shall be substituted, namely :-

“(i) vocational training institute” means an Industrial Training Institute or an Industrial Training Centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961 (52 of 1961).

2. This notification shall come into force on and from the date of its publication in the Gazette of India.”

7. Simultaneously, the Department also issued another Notification on 27-2-2010 amending the previous Notification of 10-9-2004 to the following effect :-

“In exercise of the powers conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 24/2004-Service Tax, dated the 10th September, 2004, published in the Gazette of India, Extraordinary, vide number G.S.R. 598(E), dated the 10th September, 2004, namely :-

In the said Notification, in the Explanation, for (i) and the definition against it, the following item shall be substituted, namely :-

(i) “vocational training institute” means an Industrial Training Institute or an Industrial Training Centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961 (52 of 1961).

2. This notification shall come into force on and from the date of its publication in the Gazette of India.”

8. It is evident from the above narration that the levy was sought to be introduced for the first time w.e.f. 1-7-2003. Simultaneously, vocational training institutes defined specifically by a Notification No. 9 were exempted. It is not in dispute that the exemption continues even till date. The only difference being that by the latest Notification of 2010, the expression had been narrowed to mean that “those institutes affiliated to the National Council for Vocational Training and offering courses in designated trade as noticed in the Apprentice Act”.

9. As to what is vocational has been left advisedly open to the authorities. Wigan & Leigh was a case where the institution was unrecognized and not affiliated to AICTE or any technical body. The contention – that was ultimately accepted by the Tribunal as to the meaning of the expression “vocational training institute” of “coaching centre” is found in the following extract of that judgment :-

“2. The Senior Counsel pointed out that the Notification does not envisage registration of a “Vocational Training Institute”. He submits that so long as the trainees who achieve skills seek employment or undertake self-employment directly after such training or coaching, then they are eligible for the benefit of the Notification. It is his submission that the training which is being granted to the trainee is only with an objective to find a vocation. The appellant is a training institute and providing coaching and training in business management and fashion technology, advertising, graphic design, media studies to the students. They are covered under the category of “Vocational Training or Coaching Services”. The question in this appeal only pertains to the extension of benefit of Notification No. 9/2003-S.T., dated 20-6-2003 and the Commissioner (A) has given a narrow interpretation to deny the benefit solely on the ground that the assessee are not registered with AICTE as a “Vocational Institute”. He submits that the order is not legal and proper.”

10. The Tribunal noticing the specific term of what is meant by vocational training institute, i.e., computer training institute or recreation training institute or a coaching centre, was of the opinion that so long as the broad nature of the activity is to impart skills to enable the beneficiaries to seek employment or undertake self-employment directly, the conditions were satisfied. In M/s. Sadhna Educational and People Development Services Ltd. v. Commissioner of Central Excise, 2013 (12) TMI 735 = 2014 (33) S.T.R. 575 (Tri. – Mum.), the findings of the Tribunal – whose order is an elaborate one – mostly containing the extract of the entire syllabus and brochure of the institution is as follows :-

“8. Learned Advocate for the appellant has quoted a catena of case laws listed earlier. We have gone through each of the cases. We find the facts of the present case are distinguishable as none of these cases cover a general M.B.A. program with content of the program as wide and academic as in the present case. We do not consider it necessary to discuss each of these cases here.”

11. It is evident that the term “vocational training institute” included the commercial training or coaching centers which provide vocational coaching or training meant to “impart skills to enable the trainees to seek employment or to have self-employment directly after such training or coaching”. The notion of such training institute having been recognized or accredited to nowhere emerges from such a broad definition. The further Notification of 2010 substitutes the existing explanation to the term “vocational training institute” and narrowing it to those institutes affiliated to National Council for Vocational Training offering courses in designated trade in fact supports the assessee. Had the intention been to exempt only such class or category of institutions, the appropriate authority would have designed such a condition in the original Notification of 2003 and Notification No. 10 of 2004 which had been relied upon in this case.

12. For these reasons, this Court is of the opinion that the Tribunal did not fall into error in following its previous ruling in Wigan & Leigh (supra). The question of law framed is accordingly answered against the Revenue and in favour of assessee.”

4.7 Similar view has been taken by this Tribunal in the following cases:

> Act Careers Private Limited 2015 (39) STR 632

> Anurag Soni 2017 (52) STR 18

> Innovative Training Place Pvt Ltd 2017-TIOL-1724-CESTAT-Del

4.8 In the case of Sadhana Education & People Dev. Services Limited [2014 (33) STR 575] relied upon by the revenue, following has been held:

“7. The nearest Trade is Human Resource Executive, Marketing Executive, Finance Executive. These trades are in very narrow campus compared to M.B.A. Course being conducted by the appellant. Even the level as name “Executive” suggest is elementary. Under the circumstances, we do not consider that the course conducted by appellant can be considered as Vocational Course within the scope of Notification No. 24/2004-S.T., dated 10-9-2004. Accordingly, we hold that service provided by the appellants are not eligible for the benefit of Notification No. 24/2004-S.T., dated 10-9-2004.

8. Learned advocate for the appellant has quoted a catena of case laws listed earlier. We have gone through each of the cases. We find the facts of the present case are distinguishable as none of these cases cover a general M.B.A. program with content of the program as wide and academic as in the present case. We do not consider it necessary to discuss each of these case here.

9. We also note that Notification No. 24/2004-S.T., dated 10-9­2004 has been amended vide Notification No. 3/2010-S.T., dated 27-2-2010, wherein the Explanation relating to Vocational Training Institute is replaced by new definition. As per new definition, Vocational Training Institute means as Industrial Training Institute or Industrial Training Centre affiliated to the National Council for Vocational Training, offering courses is designated trades as notified under the Apprentices Act, 1961 (52 of 1961). Though the said explanation was inserted in 2010, but indicates the scope of term vocational training in specific terms.”

This decision is of no assistance to the case of the Revenue. The facts of the present case are totally distinguishable from the facts of the cited case. At Para 8, the CESTAT has held that general MBA programmer with the content of the program as wide and as academic as in the case of the appellant, cannot be considered as “vocational training”. Here, admittedly, the appellant is not providing any degree/diploma course, hence this decision is clearly distinguishable.

4.9 This decision has been followed by the tribunal in various cases relied upon by the revenue, since we find this decision distinguishable on the facts in our view the other decisions relied upon by revenue too are distinguishable.

On the availability of the CENVAT Credit and the Benefit of Cum tax Price

4.10 Appellant have made claim to CENVAT Credit and also the benefit of cum tax price before the original authority. The same was rejected by the authority stating as follows:

“18. The Noticee has further submitted that the value should be treated as cum-tax value. It is to be noted that wherever the Noticee does not recover Service Tax separately but claims that the same is composite in the consideration charged, there should be an indication that the consideration so charged is inclusive of the Service Tax liability. In the instant case, the Noticee has not conceded their Service Tax liability and is still contesting the levy of Service Tax on the said services provided by them. According to the Noticee no Service Tax is payable on such services as the same is not a commercial training or coaching service. The Hon’ble Supreme Court in the case of Amrit Agro Industries Ltd. vs. CCE – 2007 (210) ELT 183 (SC), had held that unless it is shown by manufacturer that price of goods includes excise duty payable by him, no question of exclusion of duty element from price will arise for determination of value. Following the aforesaid judgement of Hon’ble Apex Court, the Mumbai Bench of the Hon’ble Tribunal in the case of CCE vs Rudra Galaxy Channel Ltd. – 2015 (38) S.T.R. 445 (T) had held that cum-tax benefit not extendable in absence of documentary evidence to show consideration received inclusive of Service Tax. In the instant case the Noticee have not produced any such evidence to show that the consideration was inclusive of Service Tax. In view of the settled position, the Noticee’s request for treating the consideration amount as cum tax value cannot be accepted and hence the same is liable to be rejected.

19. The Noticee further submits that they would be entitled to avail credit of duty paid on input and Service Tax paid on input services in the event if their service is considered as taxable. Payment of Service Tax and availment of Cenvat credit are two distinct and independent provisions governed by different legal provisions. Payment of tax does not automatically makes one eligible to Cenvat credit but have to follow the procedures laid down in the Cenvat Credit Rules, 2004. Hon’ble Supreme Court in the case of CCE vs. Acer India Ltd. – 2004 (172) ELT 289 (SC) had held that in a taxing Act one has to look merely at what is clearly stated. There is a no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. As per Rule 9(1)(bb) of the Cenvat Credit Rules, 2004, Cenvat credit shall be taken by the manufacturer or the provider of output service, as the case may be, on the basis of a supplementary invoice, bill or challan issued by provider of output service in terms of the provisions of Service Tax Rules, 1994, except where the additional amount of tax became recoverable from the provider of service on account of non-levy or non-payment or short-levy or short-payment by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Finance Act or the rules made thereunder with the intent to evade payment of Service Tax. As per the provisions of Rule 9(5) and 9(6) of Cenvat Credit Rules, 2004, the assessee is required to maintain proper records for the receipt, disposal. consumption and inventory of the input, capital goods and input services, in which the relevant information regarding the value, duty paid, Cenvat credit taken and utilized, the person from whom the input or capital goods or input services have been procured. The Noticee have not produced any documents to show the compliance of the provisions of Rule 9. as above. Thus they have failed to discharge the burden of proof regarding the admissibility of Cenvat credit do not find any merit in the submissions of the Noticee and hence reject the same.”

4.11 The above findings cannot be sustained for the reason that section 67 of the Finance Act, 1994 itself provides the benefit of cum tax price. It has been held by tribunal and various courts that the benefit of cum tax price cannot be denied in view of the provisions of Section 67 of Finance Act, 1994. The decision of the Amrit Agro Industries relied upon by the Commissioner in impugned order was a decision in the case of Central excise where no such provision was available at the relevant time. Further in respect of the CENVAT Credit Commissioner has held that the appellant has failed to establish the claim to CENVAT Credit. However we find that this observation has been made following the decision of Hon’ble Apex Court, which is a not applicable. Commissioner could have allowed the opportunity to the appellant to produce the documents against which they intended to claim the CENVAT Credit and then decide upon the eligibility to the same.

On Limitation

4.12 On issue of limitation Commissioner has observed as follows:

20. One more contention the Noticee has made is that the situation is revenue neutral as the Service Tax paid by them would be available as credit to their customer. Eligibility to avail credit of Service Tax paid by the recipient of service, if any, cannot give licence to the service provider to evade Service Tax payable. Besides, the allegation of evasion of Service Tax does not get mitigated by the fact that one unit is entitled to take Cenvat credit of the Service Tax paid. The Larger Bench of Hon’ble Tribunal in the case of Jay Yuhshin Ltd. vs CCE, reported in 2000 (119) ELT 718, had held that it has to be shown that the Revenue neutrality situation comes about in relation to the credit available to the assessee himself and not by way of availability of credit to the buyer. In the present case the service receivers are different entities altogether, therefore, there is no case of Revenue neutrality.

21. The Noticee have contended that the Show Cause Notice is time barred. The Noticee claims that they were under bonafide belief that the said colloquiums were not liable for Service Tax under the Commercial Training and Coaching services. It would not be out of place to mention that the Noticee had paid Service Tax on the impugned services rendered during the period 01.07.2004 to 09.09.2004 and from 01.03.2010 onwards. The Noticee’s contention is that the said colloquiums being in the nature of vocational training, were exempt from payment of Service Tax during the period 10.09.2004 to 28.02.2010 under Notification No. 24/2004-S.T. dated 10.09.2004. As stated above, Notification No. 24/2004-S.T. exempts the taxable services provided in relation to commercial training or coaching, provided only by a vocational training institute or a recreational training institute The Noticee is neither a Vocational training institute offering course in designated trades notified under the Apprentices Act, 1961 nor a Recreational training institute. The participants are the distributors of the prospective distributors of Amway and not the employment seeking persons. Thus, the unambiguous provisions of Notification No. 24/2004-S.T. dated 10.09.2004 clearly placed the Noticee out of the purview of the said Notification. Still the Noticee claimed the exemption, which is nothing but an deliberate act with intent to evade payment of Service Tax. There was no scope to interpret the meaning of vocational training institute in any other manner than the one provided in the said Notification No. 24/2004-S.T. However, the Noticee had drawn their own interpretation and considered their activity as vocational training, which is not in consonance to the said explanation. Therefore, the claim of bonafide belief made by the Noticee is without any basis. Nevertheless, a person giving his own interpretation of law cannot make a plea of bona fide belief and claim relief from the consequences of non-payment of Service Tax.

22. The Noticee has relied upon Hon’ble Supreme Court’s decision in the case of Tamilnadu Housing Board (supra) and Padmini Products (supra). In the case of Tamilnadu Housing the party concerned had not taken registration, only after being orally advised by the Central Excise Officers that they were not required to take the licence. The said party had made enquiries with Central Excise Officers regarding their liability to take licence a Excise duty. It was, therefore, held by Hon’ble Supreme Court that the intent to evade on the part of the party was absent. In the instant case, the Noticee has not brought on record any correspondence exchanged with the Department wherein they were even remotely advised by the Department that the colloquiums were not liable to Service Tax. Further, in the case of Padmini Products because of Trade Notices issued by the department, there was scope for believing that the goods were entitled to exemption and consequently no licence was required to be taken out. Under the circumstance, the Hon’ble Supreme Court had held that mere failure or negligence on the part of the manufacturer in taking out licence or paying duty where there was doubt, extended period of limitation was not attracted. No such Trade Notice/Instruction of the Department exists on record in this case as would have made a service provider to believe that no Service Tax is payable on the impugned services. As such, the ratio of both these decisions are not applicable to the facts of the present case.

22. It is further claimed that where the Show Cause Notice was issued long after the departmental offices were made aware of the facts, there is no suppression of facts and the inaction on the part of department would not give ground to invoke extended period. In this regard the decision of the Hon’ble Gujarat High Court in the case of CCE vs. Neminath Fabrics Pvt. Ltd. – 2010 (256) ELT 369 (Guj) is relevant. The Hon’ble High court had held that proviso to Section 11A(1) of Central Excise Act, 1944 provides for a situation whereunder provisions of sub-section (1) ibid recast by legislature extending period within which SCN issued. The proviso cannot be read to mean that because there is knowledge, suppression which stands established disappears. Concept of knowledge, by no stretch of imagination, can be read into the provisions. What has been prescribed under the statute is that upon the reasons stipulated under the proviso being satisfied, the period of limitation for service of show cause notice under sub-section (1) of Section 11A, stands extended to five years from the relevant date. The Hon’ble High Court further held that period of limitation cannot by reason of any decision of court or even by subordinate legislation be either curtailed or enhanced. The provisions of Section 11A(1) of the Central Excise Act, 1944 are pari material to the provisions of Section 73(1) of the Finance Act, 1994, as they existed during the relevant period of time. Therefore, the contention made by the Noticee is not tenable. The ratio of Tribunal’s decision in the case of Studioline Interior Systems, Dolphine Detective Agency, Raja Ram Corn Products, SRV Automations and Valsad Sahakari Khand Udyog Mandali (all supra), which are delivered before the decision of Hon’ble Gujarat High Court in the case of Neminath Fabrics (supra), therefore, cannot be applied to the present case. Besides, in respect of the other decisions of High Court/Tribunal relied by the Noticee none of the cases cited by the Noticee (supra) take their case any further as the facts involved in those cases and the facts involved in the present case, are totally distinguishable. The relevant facts and circumstances prevailing are relevant for arriving at the conclusion on any issue. Therefore, the decisions given in context of the facts and circumstances involved in those cases which are found entirely distinguishable, cannot be universally applied.

24. The Noticee have further argued that there was no intent to evade payment of Service Tax. The ST-3 Returns for the relevant period had subheading relating to ‘Gross amount for which bills/invoices/challans are issued relating to service provided/to be provided export of service and exempted service)’. The Noticee have admittedly not declared the amounts collected from the participants of the colloquiums upto the period 31.03.2006, which is nothing but suppression of facts. Further, in the Returns for the period from 01.04.2006 onwards they have declared the colloquiums as ‘vocational training’, which is nothing but misdeclaration. Requirement under law to file proper ST3 returns with full disclosure is not a mere procedural formality but a statutory requirement. Under the statute, the assessee was under an obligation to file ST-3 returns declaring therein the correct nature of services provided and correct value of services. Any failure to declare or mis-declare the information required to be declared in statutory returns leading to non­payment of appropriate Service Tax thereon, has to be taken as Service Tax not paid by reason of mis-declaration and suppression of facts. The Show Cause Notice has brought out the failures in respect of the impugned services provided by the Noticee, in clear terms in the Show Cause Notice. Apparently, the said mis-declaration and suppression of facts was with intent to evade payment of Service Tax on the impugned services.

25. The proviso clause to Section 73(1) of the Finance Act, 1994, provides that Service Tax which has not been paid, can be demanded, under proviso clause to Section 73(1) within five years (from the relevant date) wherever such short payment was” by reason of:

a) Fraud; or b) Collusion; or c) Willful mis-statement; or d) Suppression of facts; or e) Contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of Service Tax.

The seriatim listing of the situations mentioned against (a) to (e) under the proviso clause to Section 73(1) reveals that these are independent of each other and existence of any each of the situations specified against (a) to (e) above, is individually good enough to attract demand for extended period under the proviso clause to Section 73(1). In other words, “suppression of facts” alone is a reason sufficient enough to invoke this clause. It has been already established above that the Noticee had not only suppressed but had also misdeclared the material facts, which has eventually lead to non-payment of a substantial amount of Service Tax.

26. In view of the foregoing, I hold that the proviso to Section 73(1) of the Finance Act, 1994 is rightly invoked in this case for demanding Service Tax for the period beyond one year. Accordingly, I hold that the Service Tax demand amounting to Rs. 7,61,89,514/- (including Education Cess and Secondary & Higher Education Cess), on Commercial Training or Coaching Service classifiable under Section 65(105)(zze) read with Section 65(26) of the Finance Act, 1994, demanded in the instant Show Cause Notice dated 12.10.2010, is sustainable and the Noticee is liable to pay the same.

4.13 In the present case we find that the issue involved is purely of the interpretation of the statutory provisions and the exemption notification. In the case whereby the issue involved is purely of interpretation and admissibility of exemption notification courts and tribunal have consistently held against the invocation of extended of extended period of limitation. Further we find that in the present case the issue was constantly and thru out the period in discussion between the appellant and revenue authorities as per the table below:

S No	Date	Particulars
1	14.12.2005	A summon was issued by DGCEI, Mumbai Zonal unit asking information including the details of the amount charged to the participants during the colloquiums
2	19.12.2005	Appellant replied to the said summons. Further it had also explained the meeting the nature of colloquiums and had stated that the meeting admission revenue earned by conducting the colloquiums was expert from payment of service tax since the colloquiums were in the nature of vocational training
3	August 2006 October 2006	Investigation conducted by the Central Excise Commissionerate Jalandhar
4	31.10.2006	Britt had in its reply explained the nature of colloquiums and had also stated that it was claiming vocational training exemption in respect of the meeting admission revenue earned by conducting the colloquiums
5	July – August 2006	Investigation was again conducted by DGCEI Mumbai Zonal Unit
6	04.08.2007; 08.08.2007 and 24.08.2007	Appellant filed reply explaining the nature of the colloquiums
7	13.03.2009	Investigation in respect of the meeting admission revenue was conducted by the office of the Commissioner of Customs & Central Excise, Bhopal
8	20.03.2009 7.4.2009	Appellant furnished the details solicited by the department and had in its reply also explained the nature of colloquiums and had also stated that it was claiming vocational training exemption in respect of the meeting admission revenue earned by conducting the colloquiums

4.13 Above clearly show that the issue was throughout in the knowledge of the department and investigated by various agencies from time to time. In such a case in our opinion the extended period of limitation cannot be invoked.

On Interest and Penalty

4.14 On the issue of interest and penalty Commissioner has observed as follows:

“27. As held by the Hon’ble Supreme Court’s in the case of Commissioner of Trade Tax. Lucknow Vs Kanhai Ram Thekedar, 2005(185)ELT 3 (SC), the interest liability accrues automatically from confirmation of demand of duty/ tax as recoverable. Therefore, the Noticee is also liable to pay interest under Section 75 of the Finance Act, 1994, on the total amount Service Tax confirmed in this order.

28. Turning to penalty, as already brought out above, the Noticee had misdeclared their services as ‘vocational training’ so as to avail the exemption under Notification No. 24/2004-S.T. The Noticee had deliberately suppressed the real nature of the services provided by them, apparently with intent to evade payment of Service Tax on the same. No ambiguity, whatsoever, existed in the Notification No. 24/2004-S.T. It is on record that the Noticee were registered with Service Tax during the relevant period of time. They had indeed paid Service Tax on the impugned services prior to 10.09.2004 but suo moto stopped paying tax from 10.09.2004 onwards after introduction of Notification No. 24/2004-S.T. though the Noticee didn’t fit into the categories of institutes mentioned in the Notification. I, therefore, don’t have any hesitation in holding that the Noticee had evaded Service Tax amount of Rs. 7,61,89,514/ by resorting to suppression and mis-declaration of the material facts. Under the respective penal provisions, once the contraventions specifically mentioned therein as ones attracting penalty, are proved, the adjudicating authority has to invariably impose penalty under such provision. The adjudicating authority has no discretion not to impose any penalty even when warranted, except where specific provision exists to condone or waive penalty. In the case of Commissioner of Income Tax vs. Anjum M.H. Ghaswala and Ors – 2001 (252) ITR 1/2002 (1) SCC 633, the Constitution Bench of the Hon’ble Supreme Court reaffirmed the general rule that when the stature vests certain power in as authority to exercise in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. In view of the foregoing, I hold that the Noticee is liable for penalty under Section 78 of the Finance Act, 1994, which shall be equal to hundred percent of the amount of such Service Tax determined as payable by the Noticee. As per the amended penal provisions, penalty under Section 76 of the Finance Act, 1994 cannot be imposed simultaneously when penalty is held to be payable under Section 78 ibid.

29. Further, it is on record that the Noticee had not filed correct ST-3 Returns in respect of the said ‘Commercial Training or Coaching Services’, which is in violation to the provisions of Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994. Therefore, I hold the Noticee liable to penalty under Section 77 of the Finance Act, 1994 also.”

4.15 Since the demand itself fails on merit and limitation there cannot be demand for interest and penalties imposed cannot be sustained.

5.1 Appeal is allowed setting aside the impugned order.

(Order pronounced in the open court)