Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
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Date of decision: 28 February, 2020
+ SERTA 21/2019
THE INDIAN INSTITUTE OF
PLANNING MANAGEMANT ..... Appellant
Through: Mr. Sumit Wadhwa, Adv.
versus
THE COMMISSINER OF
SERVICE TAX, DELHI ..... Respondent
Through: Mr. Amit Bansal, SSC with Mr. Aman
Rewaria and Ms. Vipasha Mishra,
Advs.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE C. HARI SHANKAR
JUDGMENT
% 28.02.2020
1. This appeal has been preferred by the Indian Institute of Planning and
Management, under section 83 of the Finance Act, 1994 read with section
35G of the Central Excise Act, 1944, against the dismissal of its application
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on 8 March, 2019, by the Customs, Central Excise and Service Tax
Appellate Tribunal, New Delhi (CESTAT), preferred for rectification of
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mistake in the Final order and judgement dated 20 March, 2018, whereby,
the benefit of the extended period was denied on the ground that the
Appellant had not invoked the plea, or that it was a registered as a not-profit
organization under the Societies Registration Act, 1860.
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2. The appellant-assessee is a society situated in Chhatarpur pahadi, New
Delhi and is registered under the Societies Registration Act, 1860, who
conducts various management courses.
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3. On 10 February, 2006, the Directorate General Central Excise
Intelligence issued a Show Cause Notice to the appellant alleging that the
appellant was evading the payment of Service Tax on the fees collected for
the various academic and training courses under the category of
„Commercial Training and Coaching Services‟.
4. The Show Cause Notice was finally adjudicated by the respondent
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vide Order-in-Original dated 24 January, 2012, by Commissioner, Service
Tax Commissionerate, New Delhi, confirming the demand of Service Tax,
along with interest and penalties to the extent of Rs. 8,08,000/-.
5. Consequently, post the order of review preferred by the appellant-
assessee, the Respondent preferred an appeal before the CESTAT, while the
appellant-assessee filed its cross-objections against the confirmation of
demand.
6. It is averred that during the course of arguments before the CESTAT,
the revenue and the appellant-assessee submitted their written statements on
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8 and 12 March, 2018 respectively, and on the 20 March, 2018 the
appeal by the revenue was allowed by the CESTAT, to the extent of the
dropped Service Tax demand along with the interest and penalties.
7. The relevant portion of the final order of the CESTAT is reproduced
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hereinbelow:
“14. The next issue for consideration is whether extended period of time
could be invoked in the present case for confirmation of Service Tax
demand. Revenue has relied on the Tribunal decision in the case of
Unitech Southcity Educational Charitable Trust and others. In the said
decision the appellant in that case was held to be liable for payment of
Service Tax under the category of "Commercial Training or Coaching
Centre" for the reason that the courses being run lead to a Degree by the
Foreign University but the demand was restricted to normal time limit. The
reason cited in the order for such restriction is the retrospective
amendment carried out by the Finance Act, 2010 in the definition of
Section 65 (27) wherein an "Explanation" was inserted w.e.f. 01/07/2003.
The Explanation is relevant only in respect of a "Commercial Training or
Coaching Centre" which is registered as an Organization carrying out
activity without profit motive. In the facts of the present case this aspect of
IIPM is not in debate. This plea has neither been taken before the
Adjudicating Authority nor before us. Consequently, we are of the view
that the case of M/s Unitech Southcity Educational Charitable Trust and
others is distinguishable to this extent from the facts of the present case.
15. It is on record that IIPM neither took registration nor registered
themselves with Department up to 22/07/2005. On the said day the
registration was taken only at Bangalore even though IIPM has Institutes
in many other places. They also did not pay any Service Tax or file ST-3
Returns even though the tax on Commercial Training or Coaching Centre
was levied w.e.f. 01/07/2003. Since they have failed to obtain registration
or file returns or even intimate the Department of the activities undertaken,
the Department is fully justified in issuing show cause notice to demand of
Service Tax along with interest by invoking the extended period of time.
16. In view of the above discussions we find that Adjudicating
Authority has erred in dropping the demand of the Service Tax by
considering the activities as falling outside the scope of Commercial
Training or Coaching Centre. For the reasons set out above we conclude
that the impugned order is not sustainable. We set aside the impugned
order to the extent of dropping of Service Tax demand and uphold the
entire demand of Service Tax raised in the show cause notice dated
10/02/2006. Such demand will be payable along with interest under
Section 75. IIPM will also be liable to pay penalty equal to the Service Tax
demanded under Section 78 as well as under Section 77 of the Finance
Act, 1994. Since penalty under Section 78 is upheld, we do not impose
penalty under Section 76.”
(Emphasis supplied)
8. Aggrieved by the observation of the CESTAT in the final order dated
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20 March, 2018 that the plea invoking the extension of time period had not
be taken since it was neither contended before the adjudicating authority nor
the CESTAT, the appellant-assessee preferred a rectification of mistake
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application, under Section 35C of the Central Excise Act, 1944, on 13
September, 2018.
9. This rectification of mistake application was dismissed by the
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CESTAT vide the impugned order dated 8 March, 2019, while holding that
the scope of rectification of mistake was limited. The findings of the
CESTAT merit reproduction as under:
“7. By means of this ROM, the appellant has advanced detailed
arguments against the final order. It has been submitted that the appellant
is not conducting training programmes leading to MBN BBA degree of the
international Management Institute, Europe. The words appearing in para
2 of the order does not lead to such finding. Hence we find no need for
carrying out any correction.
8. The appellant appears to be aggrieved by the findings of the
Tribunal not restricting the demand, to the normal time limit which was
extended in the decision in the case of M/s Unitech South City. It has also
been submitted in this case that the appellant was a Society registered
under the Society Registration Act, 1860 and were availing the exemption
under Section 10(23c) of the Income Tax Act.
We have considered the arguments advanced by both sides on this
issue. The decision of the Tribunal not to extend the benefit of bonafide
belief in the lines of the decision in case of M/s Unitech has been taken
after due deliberation and consideration of the entire record of the case. If
the appellant is aggrieved with such finding, the right course of action
would to be to challenge the order in the appropriate appellate forum.
9. We note that the scope of the rectification of the mistakes
application is very limited. Only mistakes which are apparent on the face
of the record and which do not require long drawn process of arguments
by both sides, may be rectified. It is well settled law that applicant cannot
seek review of the order in the guise of rectification of mistakes. This view
finds support in the decision of Hon'ble Supreme Court in case of
Commissioner of Central Excise Kolkata vs. ASCU Ltd. reported in
[2003(151) ELT (481) (SC)]. Further, such views are to be found in the
decision of the Apex Court in case of Commissioner of Central Excise, vs
RDC Concrete: India Pvt. Ltd. reported in [20 11(270) ELT 625(SC)], as
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also in case of Honda Power Products vs. Commissioner of Income Tax,
Delhi [2008(221)ELT(11) (SC)].”
(Emphasis supplied)
10. Aggrieved thereagainst, present appeal has been preferred.
11. The following substantial questions of law thus arise:
i. Whether the Final order by the CESTAT, dated
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20 March, 2018, suffers from any error apparent on face
of record?
ii. Whether, therefore, the CESTAT has wrongly
dismissed the rectification of mistake application?
12. We have heard, Mr. Sumit Wadhwa, learned counsel for the
appellants and Mr. Amit Bansal, Senior Standing counsel for the respondent.
13. Mr. Sumit Wadhwa, learned counsel for the appellants has made a
pointed submission, detailing the numerous instances where the appellant
has raised the contention of extended period of limitation at the various
stages of adjudication. The appellants have summarized the instances in their
pleadings as follows:
Nature of
document
Rel
eva
nt
par
a
no.
Relev
ant
page
no.
(inter
nal)
Extract of the relevant portion
“ S.
No.
1. Show cause
notice
1 1 M/s. THE INDIAN INSTITUTE OF
PLANNING & MANAGEMENT, a society
registered under the Societies' Registration Act,
1860, having institute/branch at IIPM
TOWERS, 145, RUKMANI,
LAKSHMIPATHY SAL AI (MARSHALL'S
ROAD), EGMORE, CHENNAI- 600008 and
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Head Office and Institute at IIPM towers, B- 27,
Qutub International Area, NEW DELHI-
110016.
2. Show cause
notice
3.4 2 3.4 M/s. IIPM vide their Letter dated
05/09/2005,addressed to the Assistant Director,
DGCEI, Chennai stated, inter alia, that they
furnished a copy of Letter dt.25/7/2005 of M/s.
Amarchand & Mangaldas & Suresh Shroff &
CO., counsel for IIPM, addressed to the
Superintendent, Commissionerate of the service
tax, Bangalore, wherein they stated that IIPM is
a non-profit making Educational Institute
registered under the Societies' Registration Act,
1860 to impart training and research on Techno-
Economic and Socio- Economic Planningand
Management; that IIPM teaches Planning and
entrepreneurship course for self employment
though the students accept employment in other
organizations through campus interview
organizedby IIPM and thus IIPM claimed that
their courses are vocational courses. In that
Letter IIPM further stated that IIPM have been
granted necessary exemption under Sec. 10 (23)
(c) of the Income Tax Act, 1961;·that IIPM is
neither a commercial training center nor a
commercial coaching center; that IIPM not
assessable under Service Tax; that IIPM enjoys
a national as well as International reputation and
is widely regarded as one of the foremost
educational institutes in the country as on date;
that the issues whether IIPM is liable to pay
Service Tax is yet to be adjudicated upon. In
their letter dt. 05/09/2005, IIPM categorically
stated that they do not have any course
affirmation with any Universities/ approval
form AICTE.
3. Show cause
notice
7.5 16 Moreover in the letter dt. 25/7/2005 of M/s
AMARCHAND MANGALDAS& SURESH
SHROFF & CO, COUNSEL for IIPM,
(enclosed along with IIPM letter dt. 05/9/2005 -
stated that IIPM is a non-profit making
educational institute registered under Societies
Registration Act, 1860 to impart training and
research self-employment.
4. Show cause
notice
7.7 16 From the foregoing, it appeared that IIPM is
conducting commercial training and conducting
commercial training or coaching service is
taxable. They are claiming that they are non-
profit oriented Society Registered under the
Societies Act , 1860 and enjoying exemption
under the Income Tax Act,1961. Enjoyment of
exemption under the Income Tax Act, is no way
concerned with the services rendered by IIPM
on COMMERCIAL basis, as the income tax and
service tax are two different taxes governed by
different statutes providing different conditions
and exemption. Exemptions under one statute
SERTA 21/2019 Page 6 of 10
ipso facto dose not lead to exemption under
different statute providing different conditions
and exemption. Exemptions under one statute
ipso facto dose not lead to exemption under
different statute.
5. Show cause
notice
8.1 17 The investigation carried out has appeared to
reveal the following:
(a) IIPM, is a society registered under the
Societies Registration Act, 1860, are engaged in
conducting various academic educational
courses
6. Order-in-
Original dt.
24.01.2012
4 M/s. THE INDIAN INSTITUTE OF
PLANNING & MANAGEMENT, a society
registered under the Societies' Registration Act,
1860, ·having institute/branch at IIPM
TOWERS, 145, RUKMANI,
LAKSHMIPATHY SAL AI (MARSHALL'S
ROAD), EGMORE, CHENNAI – 600008 and
Head Office and Institute at IIPM towers, B- 27,
Qutub International Area, NEW DELHI-
110016.
7. Order-in-
Original dt.
24.01.2012
3.4 5 3.4 :M/s. IIPM vide their Letter dated
05/09/2005,addressed to the Assistant Director,
DGCEI, Chennai stated, inter alia, that they
furnished a copy of Letter dt.25/7/2005 of
M/s.Amarchand & Mangaldas & Suresh Shroff
& CO., counsel for IIPM, addressed to the
Superintendent,Commissionerate of the service
tax, Bangalore, wherein they stated that IIPM is
a non-profit making Educational Institute
registered Under the Societies' Registration Act,
1860 to impart training and research on Techno
Economic and Socio-Economic Planning and
Management;that IIPM teaches Planning and
entrepreneurship course for selfemployment,
though the students accept employment in other
Organizations through campus interview
organized by IIPM and thus IIPM claimed that
their courses are vocational courses. In that
Letter IIPM further stated that IIPM have been
granted necessaryexemption under Sec. 10 (23)
(c) of the Income Tax Act, 1961 ; that IIPM is
neither a commercial training center nor a
commercial coaching center; that IIPM not
assessable under Service Tax; that IIPM enjoys
a national as well as international reputation and
is widely regarded as one of the foremost
educational institutes in the country as on date;
that the issues whether IIPM is liable to pay
Service Tax is yet to be adjudicated upon. In
their letter dt. 05/09/2005, IIPM categorically
stated that they do not have any course
affirmation with any Universities/ approval
form AICTE.
8. Order-in-
Original dt.
24.01.2012
7.4 17 Moreover in the letter dt. 25/7/2005 of M/s
AMARCHAND MANGALDAS& SURESH
SHROFF & CO, COUNSEL for IIPM,
SERTA 21/2019 Page 7 of 10
(enclosed along with IIPM letter dt. 05/9/2005 -
stated that IIPM is a non-profit making
educational institute registered under Societies
Registration Act, 1860 to impart training and
research self-employment.
9. Order-in-
Original dt.
24.01.2012
7.6 18 From the foregoing, it appeared that IIPM is
conducting commercial training 2 and
conducting commercial training or coaching
service is taxable. They are claiming that they
are non-profit oriented Society Registered under
the Societies Act , 1860 and enjoying exemption
under the Income Tax Act,1961. Enjoyment of
exemption under the Income Tax Act, is no way
concerned with the services rendered by IIPM
on COMMERCIAL basis, as the income tax and
service tax are two different taxes governed by
different statutes providing different conditions
and exemption. Exemptions under one statute
ipso facto dose not lead to exemption under
different statute.
10. Order-in-
Original dt.
24.01.2012
V 12 IIPM is not a commercial organization i.e.
training or coaching centre but a non- profit
organization. In order to levy tax in the
category of commercial training or coaching
services, it is not sufficient that the institution is
providing coaching or training. It Is incumbent
on the Department to prove that the institution is
providing commercial training or coaching,
which means that the coaching or training to
provided as a business, activity i.e.for the
purpose of making profit. The evidence on
record fails not only to prove that IIPM are not
engaged in providing coaching or training, it
also fails to show the activities of IIPM are
directed towards profit making. It is on record
that IIPM is a society Registered under Section
10 (23C) of the Income Tax Act. Under Section
10 (23 C) exemption is available to educational
institutions existing solely for education
purposes and not for the purpose of profit.
11. Order-in-
Original dt.
24.01.2012
17.
8
65 The admitted facts on record by both the
department and the Noticee are as follows:-
The Noticee is a society registered under the
Societies Registration Act, 1860 having branch
offices at several locations and Head Office in
New Delhi.
12. Order-in-
Original dt.
24.01.2012
Vii
i
66 That the Noticee is a society registered under
the Societies Registration Act, 1860 and is
conducting private courses. The notice was
established in 1973 as non-profit making
educational institute under the said Act.
”
14. Arguing per contra , Mr. Amit Bansal, learned Senior Standing
counsel for the respondent, vehemently contends that the scope of
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rectification of mistake application is limited, and thus, the impugned order
is not erroneous.
15. What falls before us, for our consideration is whether the CESTAT
suffered from any error apparent on face of record in light of the contention
of the appellant that it had on numerous instances invoked the plea of the
extended period, as enumerated above.
16. At this juncture, the judgment of the Honorable Supreme Court in,
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Commissioner of Central Excise, Mumbai v. Bharat Bijlee Ltd. is relavnet,
wherein the Honorable Supreme Court has held that:
“6. …Failure to take into considerations the material evidence, which is
present on the record, would certainly amount to mistake apparent on the
face of record and the tribunal under the circumstances would have the
jurisdiction to correct the said mistake in exercise of its powers under
Section 35C(2) of the Act”
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17. In light of Bharat Bijlee Ltd. , it is amply clear that the failure to
consider material evidence on record, would amount to mistake apparent on
the face of record, and hence, the failure of the CESTAT to take into
consideration the plea of the appellant regarding extended time period, at
numerous instances as delineated above, amounts to mistake apparent on the
face of record. We, therefore, hold that the first substantial question of law is
answered in affirmative.
18. The CESTAT, while dismissing the application for rectification of
mistake, has gravely erred in failing to take note of the same, despite making
a note of the argument by the counsel for the applicant therein, that the plea
1
2006 (198) E.L.T. 489 (SC)
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invoking extended period has been iterated more than once in the order of
the Adjudicating Authority. In such a circumstance, we can not uphold the
impugned order and thus, the impugned order is set aside.
19. In view of the aforesaid facts, reasons and judicial pronouncements,
both the substantial questions of law are answered in favour of the appellant
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and the order passed by the CESTAT dated 8 March, 2019 (Annexure R/1)
in the application for rectification of mistake is hereby quashed and set aside
and the matter is remanded back to the CESTAT, New Delhi for a fresh
consideration of the application seeking rectification of mistake, preferred by
the appellant in accordance with law.
20. In view of the above observation, this appeal is allowed and disposed
of.
CM APPL. No. 43873/2019 (stay)
In view of the order passed in the appeal, this application is disposed of.
CHIEF JUSTICE
C.HARI SHANKAR, J.
FEBRUARY 28, 2020
r.bararia
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