The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that post graduate programmes in management provided by the Indian Institute of Management are liable to pay service tax.
The Appellant Indian Institute of Management providing taxable services viz. Management or Business Consultancy Service, Manpower Recruitment or Supply Agency Services, Event Management Service, Commercial Training or Coaching Service and Renting of Immovable Property Service and registered with the department.
During the course of audit of their records, it revealed that they are providing four long term management programmes and though fees are collected for the said courses no service tax was paid on the same.
It was observed that the said courses provided by the appellant are taxable services in view of statutory provisions viz., Commercial Training or Coaching Centre services as defined under the provisions of Section 65(26), Section 65(27) read with Section 65(105)(zzc) of the Finance Act, 1994 for the period up to 30.06.2012.
Accordingly a show cause notice was issued to the appellant demanding Service Tax of Rs.39,00,85,171/- for the period 2010-2011 to 2014-2015. The said show-cause notice was adjudicated and the demand was reduced to Rs.12,67,13,569/- with interest and equivalent penalty.
Aggrieved by the order the appellant filed appeal before the tribunal.
Satish Chandrasekaran, Counsel for appellant submitted that the demand with regard to Post Graduate Programme in Management (PGP) exempted vide Notification No.9/2016-ST dated 1.3.2016 which was also made applicable to past period as clarified by Board Circular No.334/8/2016-TRU dated 29.02.2016.
Other three long duration Postgraduate Programmes are indeed “Post Graduate Diploma in Management” which have been duly recognized by the Government of India, Ministry of Education and Social Welfare .
Asper the letters by the Secretary, MHRD by Circular dated 29.02.2016 clarified that Post Graduate Programs in Management are exempted in line with Sl. No.9B of the Notification No.25/2012-ST and the said exemption being clarificatory in nature, the liability to pay service tax in respect of said programs for the past period will also become infructuous.
Harendra Singh Pal, Counsel for the department argued that show-cause notices were initially issued demanding service tax on 4 programmes viz. Further analyzing the course content retrieved from the website of the appellant, it is clear that these programmes are to impart training and further enhancement of experienced executives and not any nature of curriculum making the students eligible to receive employment on the basis of the certificate / diploma issued by the appellant
It was observed by the tribunal that the appellant failed to provide evidence to support their argument that these courses are recognized by any law; and certificates issued on completion of these courses/programmes can be used in seeking employment.
Further the bench point out that the “claim of the appellant that Indian Institute of Management Act, 2017 since acknowledges such institute as an Institution of national importance and therefore, all the courses offered by the institute should be exempted, in our opinion, also cannot be acceptable as no such provision has been brought to our notice mentioned in the said Act”. Therefore the Two-Member Bench comprising Dr. D.M. Misra( Judicial Member) and R. Bhagya Devi,(Technical Member) confirmed the demand and held that the Post Graduate Programme in Management provided by the Indian Institute of Management is liable to Service Tax
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