The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that examination fees collected from the candidates appearing for the examination being conducted by the State Examination Board (appellant) cannot be considered as consideration for the ‘supply of manpower recruitment’ and supply services to the State Government Departments.
Thus, the Tribunal held that no service tax could have been demanded from the appellant, because the consideration received against the provision of these services from the service recipient is nil, and the appellant had not collected any amounts from the state government departments for the provision of any service to them, but had only collected the fees from candidates, which in no terms can be considered as “consideration” for providing the service.
Since expenses incurred by the appellant for the conduct of the examination are recovered by the appellant while fixing the examination fees recovered from the candidates, the Tribunal clarified that no consideration has been recovered by the appellant from the state government departments for rendering these services.
The Division Bench comprising Binu Tamta (Judicial Member) and Sanjiv Srivastava (Technical Member) observed that the ingredients as spelt out by Section 65 B (44) of the Finance Act, 1994 are not satisfied, in absence of any identification of the contract for the provision of service for a consideration between the appellant and the service recipient, departments of the state government against a consideration.
The observation came after finding that the Appellant had collected the Examination Fees from the students who intended to take the examination conducted by them for recruitment towards various vacancies to be filed by those departments of the state government.
Briefly, in this case, the Appellant-Noticee, established under section 3(1) of the Madhya Pradesh Vyavasayik Pariksha Mandal Adhiniyam, 2007, is engaged in conducting examinations for recruitment of personnel for various departments and undertakings of the Madhya Pradesh Government, for which they are charging amounts from these organizations as well as from the candidates as examination fees.
During the period from March 14, 2016, to June 30, 2017, they have collected the taxable amount of Rs. 12848.04 Lacs as examination fee for “Manpower recruitment or supply agency” services. They have also collected an amount of Rs. 138.93 Lacs as “Misc. Receipts/ Recovery”, in relation to which, they have not provided any particulars as to under which service such amount has been collected. Accordingly, they were held liable to pay service tax under Section 66B of the Finance Act, 1994. Additionally, for suppression of facts, the Appellants were levied with penalties under Sections 77 and 78 of the Finance Act, 1994.
Appearances:
Advocate Monisha Handa, for the Appellant
Advocate Anand Narayan, for the Respondent
