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By Vinay Jain & Sachin Mishra, Advocate

1. Whether an institute having approval/accreditation of another institute constituted under law is excluded from the ambit of ‘Commercial Training or Coaching Services’ under Finance Act, 1994?

Facts & Pleadings: 

M/s. Bitcom Services P. Ltd. (hereinafter “appellants”) are inter alia engaged in imparting training or education to different professionals/students in various fields such as insurance, information technologies, etc. The appellant are imparting training or education essential in obtaining degree course, certificate courses and training classes of Indira Gandhi National Open University (IGNOU) and from Punjab Technical University (PTU). Appellants are a credited institute with both the universities which are recognised by law.

The Department alleged that benefit of Notification No. 10/2003 dated 26-6-2003 cannot be given to appellants as they have not reproduced any evidence to show that the fee for the said courses have been directly received by IGNOU and PTU.

Judgment: The Hon’ble CESTAT held that the said activity does not fall within the ambit of ‘Commercial Training or Coaching Services’ and hence there is no question of determining the applicability of Notification No. 10/2003 dated 26-6-2003. While setting aside the demand of service tax on income from IGNOU and PTU, the Hon’ble CESTAT distinguished the expression “recognised by law” and “Conferred by Law” or “Conferred by Statute”. It was noted that the term “recognised by law” is very wide and covers cases in which the certificate/degree/diploma/qualification is only required to be the product of a statute and not the institute per se. Institutes having approval/accreditation of an institute constituted under statute is sufficient to claim exclusion from ‘Commercial Training or Coaching Services’. Thus, the Hon’ble CESTAT held that as the appellants are accredited from IGNOU and PTU which are recognised under statute, the appellants are also excluded from the ambit of ‘Commercial Training or Coaching Services’.

M/s. Bitcom Services P. Ltd. vs. CCE, CESTAT, New Delhi decided on 05-11-2018 in Appeal No. ST/52804/2014-ST [DB].

M/s. Bitcom Services P. Ltd.

2. Whether service tax is payable on the ‘Fixed Facility Charges’ received from customer for transportation of gas within the facility of the manufacturer, when the Central Excise Duty has been paid on the same total value of gas including the said charges?

Facts & pleadings: M/s. BOC India Ltd. (hereinafter referred to as ‘appellants’) are manufacturers of various gases including oxygen, nitrogen etc. The appellants entered into an agreement for supply of oxygen with M/s. Tata Steel Ltd. (hereinafter referred to as ‘Tata’). For that specific purpose, the appellants installed a pipeline from their premises to Tata’s facility. The consideration for the same was received by them in two parts: - 1. Variable charges (based upon quantum of gas supplied) 2. Monthly Fixed Facility Charges (for transportation of gas). The appellants duly discharged excise duty on the quantity of gas ascertained through the meter installed at the boundary wall between the appellants factory and Tata’s premises.

The department alleged that the amount in regards of Fixed Facility Charges, which were being recovered by the appellants were in lieu of transportation of gas through pipeline, and the same was liable to service tax under Section 65(195)(zzz) “transport of goods though pipeline or other conduit” of the Finance Act, 1994. In this regard, the department relied upon the judgment of Kolkata Tribunal Bench in M/s. BOC India Ltd. vs. CCE, Jamshedpur (2005) to state that as the facility charges are not includible in the assessable value for payment of excise duty, the same should be subjected to service tax.

The appellants contended that the appellants were paying adequate central excise duty on the value of gas up to the point of removal i.e., the boundary wall of the facility, where meter was fixed. The said amount was inclusive of the cost of the gas as well as portion of facility charges up to the boundary wall. It was also submitted that service tax was duly paid on the supply of gas within the premises of Tata under the head of “transportation of gas through pipeline”. In this regard, the appellants relied upon the Final Order No. 57664-57665/2017 dated 1-11-2017 of the CESTAT, Delhi in respect to the appellant’s own plant in Rajasthan, where it was held that “no service tax will be payable once the facility charges are included in the assessable value for payment of Central Excise Duty.”

Judgment:  The Hon’ble CESTAT held that even though the Delhi CESTAT order was in relation to transport of gas through tankers, the ratio of the said decision is equally applicable in the present case. As per the Delhi CESTAT, the Fixed Flexible Charges form part of the transaction value for the purposes of central excise duty and the same cannot be subject to service tax. In this regard, the Hon’ble CESTAT also relied upon the clarifications issued by CBEC in respect of M/s. Inox Air Products Ltd., Bombay.

M/s. BOC India Ltd. vs. CCE, Jamshedpur CESTAT, Kolkata decided on 13-11-2018 in S.T. Appeal No. 21/08 [DB].

M/s. BOC India Ltd.

Note: The Whole decisions can be downloaded from the CTC website www.ctconline.org under Knowledge Centre.

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