2026-VIL-80-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Sections 75, 77, 78 and 80 of Finance Act, 1994 – Providing of services – Demand of tax – Appellant is engaged in providing training services and consulting engineer services, however, it did not pay service tax – Department issued show cause notice to Appellant by proposing demand of Service Tax under various categories – Commissioner confirmed demands proposed in show cause notice along with interest and penalty – Whether demand confirmed under category of commercial training or coaching services is sustainable – HELD – Appellant provided commercial coaching/training of workmen under an agreement with CIDC, which is an agency recognized by government for testing and certification of skill of labour. Fees were collected by CIDC and reimbursed to Appellant. Training imparted by Appellant does not enable trainees to seek employment. Appellant only enhanced the qualities of skills among the workers who were already employed. Appellant did not provide any certificate that it was registered with Directorate General of Employment and Training under Skill Development Initiative Scheme. Appellant being not satisfy the conditions set out in Exemption Notifications is not entitled to benefit of Notifications. Findings recorded by Commissioner on this issue do not suffer from any infirmity – Appeals partly allowed - Providing of consultancy services – Tax liability – Whether Appellant is liable to pay Service Tax on amount received from CIDC towards consultancy services – HELD – Consultancy services were provided pursuant to an agreement between CIDC and ONGC. CIDC assigned this work to Appellant and 90% of fees received by CIDC from ONGC was paid to Appellant, which were shown under head ‘consultancy fees’. CIDC may have charged full service tax from ONGC, but that would not absolve Appellant from paying service tax on amount received from CIDC towards consultancy. There is no error in finding recorded by Commissioner on this issue - Renting of immovable property – Demand of tax – Whether Commissioner is justified in confirming demand of Service Tax on renting of immovable property services – HELD –Appellant had taken premises on rent for their own use, but later on sub-let the half portion to CIDC. Contention of Appellant is that he was not the owner of property and so any income received from renting of property would not amount to renting and therefore, no service tax would be leviable. It is not material as to either Appellant was owner of property or not and so long as it received rent towards letting of property to CIDC, it was liable to pay service tax on amount of rent received. As Appellant had not paid service tax, Commissioner was justified in ordering it to be recovered with interest under Section 75 of the Act - Imposition of penalty – Whether penalties imposed upon Appellant under Sections 77 and 78 of the Act are sustainable – HELD – Commissioner had merely observed that as Appellant has contravened the provisions of the Act, it would have to pay penalty under Section 77 of the Act. Section 78 of the Act deals with penalty for failure to pay service tax for reasons of fraud or collusion of wilful mis-statement. Appellant had contended that it was under a bonafide belief that it was not liable to pay service tax because of Exemption Notifications. Appellant also specifically referred to the Notifications. Appellant would be clearly entitled to benefit of Section 80 of the Act and no penalty can be imposed upon it. Order passed by Commissioner is maintained except to extent that penalties imposed under Sections 77 and 78 of the Act are set aside.
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