1. Heard Shri Kaushik Dasgupta, Chartered Accountant and Shri R.Roychowdhury, F.C.A. on behalf of the appellants, M/s. Indian Institute of Management Calcutta (IIM) and Shri N.C. Chowdhury, learned J.D.R.for the Department.
2. Shri Dasgupta states that IIM Calcutta is a premier institute for teaching management in the country and that it was unaware of the implication of the Service Tax Law and its tax-liability thereunder.
According to him, this was the reason why IIM Calcutta did not take out a Service Tax Registration and did not pay the impugned tax amount of Rs. 34,31,513.00 (Rupees thirty-four lakhs thirty-one thousand five hundred and thirteen) for the period from October, 1999 to November, 2004. He states that IIM Calcutta is willing to pay Service Tax amounting to Rs. 17.98 lakhs (Rupees seventeen lakhs ninety-eight thousand) and he prays that pre-deposit of the balance amount of tax, interest and the penalties imposed should be waived. On a query from the Bench, he states that though IIM Calcutta is admitting tax-liability to the extent of Rs. 17.98 lakhs (Rupees seventeen lakhs ninety-eight thousand), the said amount has not been paid so far. While pleading that IIM Calcutta is a pre-eminent institution for management education, he is pleading waiver of the penalties on the ground of ignorance of the implications of law in the country. Shri Roychowdhury, learned FCA accompanying Shri Dasgupta states in addition that IIM Calcutta is exempt from paying income-tax and hence, the management of the Institute presumed that it will also be exempt from payment of Service Tax and that there was no mala fide intention in not paying the tax.
3. On a query from the Bench, both of them state that they are not pleading the ground of financial hardship while seeking waiver of the pre-deposit. Both them also have no satisfactory explanation as to why IIM Calcutta has filed a Stay Petition for the entire amount of tax while nearly 50% of the tax-liability is being admitted and why the admitted tax amount has not already been paid by the Institute setting an example in tax compliance for the industry and the service-providers.
4. Heard Shri N.C. Chowdhury, learned J.D.R. who supports the impugned Order and states that the Institute should be asked to pre-deposit the entire amount of tax, interest and the penalties imposed.
5. We find that the Adjudicating Commissioner has passed a detailed Order running into 16 pages. He has held that the appellants are liable to pay Service Tax amounting to Rs. 34,31,513.00 (Rupees thirty-four lakhs thirty-one thousand five hundred and thirteen) and Education Cess of Rs. 8,860.00 (Rupees eight thousand eight hundred and sixty) leviable on Management Consultancy Service. He has also directed IIM Calcutta to pay interest at the rate prescribed under Section 75 of the Finance Act, 1994. As regards penalty, it is the finding of the Commissioner that IIM Calcutta did not have any bona fide belief for not paying the Service Tax and for not submitting the tax returns. He has also averred to the non-cooperation of IIM Calcutta in quantification of the tax amount. As such, he has imposed a penalty of Rs. 500.00 (Rupees five hundred) on IIM Calcutta for failing to apply for registration under Section 75A of the Finance Act, 1944 (sic)(1994). He has further imposed a penalty of Rs. 1,000.00 (Rupees one thousand) for each failure to submit half-yearly returns under Section 77 of the said Act. He has held that IIM Calcutta is also liable to pay penalty @ Rs. 100.00 (Rupees one hundred) for each day's failure to pay Service Tax under Section 76 of the said Act, apart from imposing a penalty of Rs. 34,40,373.00 (Rupees thirty-four lakhs forty thousand three hundred and seventy-three) equal to the tax amount under Section 78 of the Finance Act, 1994 for suppression of the value of taxable service and evading payment of Service Tax.
6. After considering the arguments from both sides and perusal of case records, we are of the prima facie view that the appellants do not have a case for total waiver of the pre-deposit in their favour. Firstly, the appellants are themselves admitting tax-liability of Rs. 17.98 lakhs (Rupees seventeen lakhs ninety-eight thousand) and there is no satisfactory reason as to why they have not pre-deposited even this amount and why they are asking for waiver of this amount. Secondly, we note that IIM Calcutta is not pleading any financial hardship for making the pre-deposit required under the law, nor they have submitted any documentary evidence showing any financial difficulty. Thirdly, it is a contradictory stand on the part of IIM Calcutta to plead on the one hand that they are a premier institute for teaching management including financial management and plead on the other hand that they were ignorant regarding the liability to pay Service Tax under the Service Tax Law.
7. It is also ridiculous on the part of such a premier institution to argue that since they are exempt from income-tax, they were under the impression that they are automatically exempt from payment of Service Tax. No arguments have also been advanced on behalf of the Institute to counter the finding of the Adjudicating Commissioner that the Institute has suppressed material facts under the provisions of Service Tax Law with intent to evade payment of tax. In any case, the penalty under Section 76 of the Finance Act, 1994 is mandatory in every case of delay in payment of Service Tax and is not dependent on intention to evade tax.
8. Keeping in view our finding as above, we direct IIM Calcutta to pre-deposit 50% of the tax amount along with 50% of the interest due on the total tax amount and 50% of the penalties imposed on it. As prayed for by the learned CA appearing for IIM Calcutta, four weeks time from today is allowed for making the pre-deposits, as directed. The compliance is to be reported on 12-2-2008. Subject to compliance with the above direction, pre-deposit of the balance amount of tax, interest and the penalties imposed shall remain waived during pendency of the Appeal.
9. Before parting with this case, we find that the authorisation of Shri Kaushik Dasgupta, learned Chartered Accountant to appear before the Tribunal on behalf of IIM Calcutta, has been signed by an Assistant Finance & Accounts Officer of IIM Calcutta. At the time of next hearing of the case, the appellants are directed to provide proof that the Assistant Finance & Accounts Officer is the competent authority to authorise a person to appear on behalf of IIM Calcutta before this Tribunal and other courts.