Public funded research institute receiving grant from government not covered under service tax purview.

PJ/Case Law/2013-14/1656

Case:- CENTRAL INSTITUTE OF PLASTIC ENGINEERING & TECHNOLOGY Versus COMMISSIONER OF C. EX., HYDERABAD

Citation:-2013 (31) S.T.R. 188 (Tri. - Bang.)

Brief facts:-This application seeks waiver and stay in respect of service tax and education cess demanded for the period from April 2004 to January 2009. Out of the total amount, some is a demand under the head "Commercial Training and Coaching Service" and the balance amount has been demanded under the head "Consulting Engineer Service". There are also penalties on the appellant.
Reasoning of Judgment:-After a perusal of the records and hearing both sides, we have found prima facie case for the appellant against the demand raised under the head 'commercial training and coaching service'. There is substance in the submission of the learned counsel that, prior to 1-5-2011, the date with effect from which the definition of 'commercial training and coaching centre' was amended, appellant was not liable to pay service tax on the amounts collected by them from trainees and students attending short term courses. Further, we have also found a point in the submission made by the learned counsel that, even otherwise, the appellant could have claimed exemption under Notification No. 24/2004-S.T., dated 10-9- 2004 as amended. It is not in dispute that the appellant was working as a 'vocational training institute' during the material period. They got affiliated with the National Council for Vocational Training in 2009. Therefore, the claim of exemption is also prima facie sustainable.

Insofar as the demand under the head 'consulting engineer service' is concerned, the submission is that they were rendering advisory assistance to industries on the directions of the State Government and were receiving financial aid from the Government. The services were rendered to both PSU and other industries. No remuneration was collected from those industries. The learned counsel has also claimed support from Board's Circular F. No. B-II/I/2000-TRU, dated 9-7-2001 and the Tribunal's decision in the case of Central Power Research Institute v. Commissioner of Central Excise, Bangalore-II [2006- TIOL-1131-CESTAT-BANG] = 2006 (3) S.T.R. 637 (Tri.-Bang.)] On this basis, it is submitted that the appellant being a public funded research institute receiving grants from the Government would not come within the ambit of service tax.

We have also heard the learned Deputy Commissioner (AR) who has reiterated the findings recorded by the adjudicating authority. After considering the submissions, we allow this application and, accordingly, there will be waiver of pre-deposit and stay of recovery in respect of the dues adjudged against them.

Decision:-Stay Application allowed.
Comment:- The essence of this case is that the consideration received in the form of grants from the government for advisory services rendered to the Public Sector Undertakings is prima facie not liable to service tax.

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PJ/Case Law/2013-14/1656

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