THE INDIAN INSTITUTE OF EMERGENCY MEDICAL SERVICES V. THE JOINT COMMISSIONER

WP(C)/28167/2017

AI Insights

The case involves the Indian Institute of Emergency Medical Services, represented by its trustee Jacob Mammen, challenging an order by the Joint Commissioner of Central Excise, Customs & Service Tax, Cochin. The order confirmed a demand for service tax and penalty under the Finance Act, 1994, for services allegedly rendered by the petitioner. The petitioner argued that the services were exempt from tax and that the demand was barred by limitation. The court found that the respondent had not properly considered the petitioner's arguments in the Ext.P8 order and directed a re-evaluation.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 726951 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 13-10-2017
• Assessment Year: misc
• Laws Referred To: Finance Act, 1994, Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: SREELAL WARRIER
• Assessee Lawyers: JOSEPH PRABAKAR; BIJOY CHANDRAN; RAJESH NAIR
• Keywords: Charitable Activities; Coaching Services; Commercial Training; Exemption; Penalty; Service tax
• Section: 12AA; 65

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAY ASANKARAN NAMBIAR FRIDAY , THE 13TH DAY OF OCTOBER 2017/21ST ASWINA, 1939 WP(C).No. 28167 of 2017 (U) ---------------------------- PETITIONER(S): ------------------------ THE INDIAN INSTITUTE OF EMERGENCY MEDICAL SERVICES, 1ST FLOOR, NOYA PLAZA, KALATHIPADY, VADAVATHOOR P.O., KOTTAY AM-686010, REPRESENTED BY ITS TRUSTEE JACOB MAMMEN. BY ADVS.SRI.JOSEPH PRABAKAR SRI.BIJOY CHANDRAN SRI.RAJESH NAIR RESPONDENT(S): ------------------------- THE JOINT COMMISSIONER, O/O. THE PRINCIPAL COMMISSIONER, CENTRAL EXCISE, CUSTOMS & SERVICE TAX, COCHIN, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI-682018. BY SREELAL N. WARRIER, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: TS WP(C).No. 28167 of 2017 (U) ---------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS ------------------------------------- EXHIBIT P1 STATEMENT OF SHRI JACOB MAMMEN, TRUSTEE OF THE PETITIONER DATED 08-05-2014. EXHIBIT P2 STATEMENT OF DR.GEORGE ABRAHAM, TRUSTEE OF THE PETITIONER DATED 07-04-2015. EXHIBIT P3 SHOW CAUSE NOTICE ISSUED BY THE RESPONDENT DATED 05-10-2015. EXHIBIT P4 REPLY TO SHOW CAUSE NOTICE DATED 20-10-2015. EXHIBIT P5 FIRST CORRIGENDUM TO SHOW CAUSE NOTICE DATED 07-10-2016. EXHIBIT P6 SECOND CORRIGENDUM TO SHOW CAUSE NOTICE DATED 13-01-2017. EXHIBIT P7 THIRD CORRIGENDUM TO SHOW CAUSE NOTICE DATED 23-01-2017. EXHIBIT P8 ORDER IN ORIGINAL NO.85/2017-ST OF THE RESPONDENT (IMPUGNED ORDER) DATED 30-05-2017. EXHIBIT P9 EXEMPTION NOTIFICATION NO.25/2012 DATED 20-06-2012. EXHIBIT P10 LETTER OF APPRECIATION ISSUED BY THE CHIEF COMMISSIONER DATED 07-06-2017. EXHIBIT P11 ADDITIONAL SUBMISSION FILED BEFORE THE RESPONDENT, ON BEHALF OF THE PETITIONER (EXCLUDING THE ANNEXURES) DATED 18-04-2017. RESPONDENT(S)' EXHIBITS - NIL ------------------------------------------------ /TRUE COPY/ PS TO JUDGE TS A.K.JAYASANKARAN NAMBIAR, J. ............................................................. W.P.(C).No.28167 Of 2017 ............................................................. Dated this the 13th day of October, 2017 J U D G M E N T The petitioner has approached this Court aggrieved by Ext.P8 order of the respondent confirming a demand of service tax and penalty on the petitioner under the provisions of the Finance Act, 1994 as amended, governing the levy of service tax. The grievance of the petitioner in the writ petition, in its challenge against Ext.P8 order, is essentially that, while the show cause notice issued to the petitioner had asked the petitioner to show cause as to why service tax and penalty should not be levied/imposed on him for non- payment of service tax in respect of an alleged training and coaching service that was conducted by him, and the petitioner had, by Ext.P11 reply to the show cause notice, given a detailed submission as to why the provisions of the Act would not be applicable to him, and further, for the period subsequent to 2012, the services rendered by him would qualify for the exemption under Ext.P9 Notification dated 20.06.2012, the respondent, while passing Ext.P8 order, did not specifically advert to the contentions 2 W.P.(C).No.28167 Of 2017 of the petitioner with regard to his non-liability to tax but mechanically proceeded to confirm the demand against the petitioner. It is, therefore, contended that Ext.P8 order is vitiated by a non-application of mind by the respondent. 2. I have heard the learned counsel appearing for the petitioner and also the learned Standing counsel appearing for the respondent. 3. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I find from a perusal of Ext.P3 show cause notice issued to the petitioner that, the case of the Department is essentially that the petitioner had been engaged in rendering commercial training or coaching services for the period from April 2010 to June 2012, and that for the subsequent period from April 2012 to March 2015, the activities of the petitioner were liable to service tax since the services rendered by petitioner would not qualify for the exemption contemplated under Ext.P9 Notification. In reply to the said show cause notice, the petitioner preferred a detailed reply, which is produced as Ext.P11 in the writ petition, wherein the case 3 W.P.(C).No.28167 Of 2017 of the petitioner is essentially that the services rendered by him being in the nature of commercial training/coaching services leading to a qualification recognised by law, will not come within the ambit of the levy of service tax for the period prior to 01.07.2012. It was also pointed out in the said reply that, for the period subsequent to 01.07.2012, and upto March 2015, the training services rendered by the petitioner would qualify for the exemption under Ext.P9 Notification under the head of “services by an entity registered under Section 12AA of the Income Tax Act, that conducts activities that answer to the description of charitable activities as defined under Clause 2 K of the said Notification. The petitioner also contended that, inasmuch as the law with regard to the services that would be covered under the head Commercial training or coaching services was in a state of flux during the period till 01.07.2012, the show cause notice, which was issued only on 05.10.2015 was a belated one when it came to the demand of service tax from the petitioner for the period from April 2010 to 30.06.2012. The respondent adjudicating authority while passing Ext.P8 order, although referred to the contentions urged by the petitioner in the reply to the show cause notice, did not deal specifically with the said contentions while arriving at his findings 4 W.P.(C).No.28167 Of 2017 at paragraphs 41 and 42 of his order. Paragraph 41 and 42 read as follows: “41. The trust has provided services in connection with 'emergency medical services and trauma care' which do not come under as an exempted service as detailed below. The training of skills, technique etc. in health care developed by the trust and imparting of practical knowledge as stated by them are not recognised by law as envisaged in Section 65 of the Act. It is also not a part of the curriculum for obtaining a qualification recognised by any law. Various courses conducted by the trust, designed for life support as claimed by them are not recognised by any university or any statutory authority. Further as submitted by the trust, for the training/courses conducted by them the certificates were issued by them only and the trust has not furnished any document to substantiate their claim as the said certificates issued by them are accepted as one recognised by law. Also the services rendered by the trust are not included in the negative list of services. The trust argued that they have conducted courses as a part of a curriculum recognised by the American Heart Association and they are not to be considered as an institute which issue certificate recognised by any law in India for the time being in force. They also argued that the definition of 'Commercial Training and Coaching 5 W.P.(C).No.28167 Of 2017 Centre' got amended with effect from 01.07.2012 amending 'recognised by law' by 'recognised by any law' and their course being recognised by the American Health Association, they are not liable to tax. Since, the course/training conducted by them in the field of emergency medical care, trauma care etc. are neither a part of curriculum for obtaining a qualification recognised by any Indian law nor covered under any approved vocational education course, I find that they are liable to pay service tax on the services rendered by them. 42. The trust argued that being a charitable trust registered under Section 12AA of the Income Tax Act, 1961 by way of charitable activities, the services rendered by them are exempt from the whole of service and eligible for exemption under Notification No. 25/2012-ST dated 20.06.2012. The trust submitted that they have collected fees for the training/courses conducted by them for emergency medical services, trauma care and basis life support services. The activities of the trust by way of conducting various courses/training are of commercial in nature. As per Sl.No.4 of Notification NO.25/2012-ST dated 20.06.2012, the services by an entity registered under Section 12AA of the Income Tax Act, 1961 by way of charitable activities are exempted from payment of Service Tax and the “charitable activities” relating to, (a) 6 W.P.(C).No.28167 Of 2017 abandoned, orphaned or homeless children; (b) physically or mentally abused and traumatized persons; (c) prisoners; or (d) persons over the age of 65 years residing in a rural area are exempted. The services rendered by the trust do not come under any of the above 'charitable activities' mentioned above and the services provided by them are of commercial in nature, I hold that the trust is not eligible for exemption under Notification No.25/2012-ST dated 20.06.2012.” 4. On a perusal of Ext.P8 order, and in particular, the portion extracted above,I find that the specific contention of the petitioner that, for the period prior to 01.07.2012, the demand for tax in respect of the services rendered by him would be hit by limitation, and the further contention of the petitioner that for the services rendered by him for the period subsequent to 01.07.2012 and till March 2015, he would qualify for the exemption under Ext.P9 Notification, were not dealt with by the respondent, who merely proceeded to record the contentions of the petitioner, and then hold that the services rendered by the trust would not come under the charitable activities mentioned in the Notification, and further, that the services rendered by the trust were of commercial nature. In my view, when the petitioner had taken a specific 7 W.P.(C).No.28167 Of 2017 contention with regard to the particular head of service under which he qualified for exemption as per Ext.P9 Notification, it was incumbent upon the respondent adjudicating authority to consider the contention of the petitioner and give reasons for rejecting the said contention of the petitioner. In Ext.P8 order, I do not find such an exercise as having been done by the respondent, as there is no reason stated as to why the contention of the petitioner regarding exemption available to the services rendered by him could not be accepted. That apart, I also find that the petitioner's contention with regard to limitation in respect of the demand for the period prior to 2012 has also not been analysed in the proper manner. I, therefore, find that relegating the petitioner to his alternative remedy of an appeal against Ext.P8 order would be an exercise in futility since Ext.P8 order does not inform the petitioner of the reasons that found favour with the respondent while finding against the petitioner on the issue of exemption, and confirming the demand of service tax and penalty on him. I, therefore, quash Ext.P8 order and direct the respondent to pass a fresh order in lieu of Ext.P8 after considering Ext.P11 reply of the petitioner and after hearing him in the matter. To enable the respondent to do so, I direct the petitioner to appear before the respondent at his office 8 W.P.(C).No.28167 Of 2017 at 11 am on 06.11.2017. The respondent shall pass fresh orders as directed within a month thereafter. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE mns/13.10.17 "