Govt Examination Board Not Liable To Pay Service Tax On Examination Fees Collected From Candidates: CESTAT

Binu Tamta (Judicial Member) and Sanjiv Srivastava (Technical Member) stated that the examination fees collected from the candidates appearing for the examination being conducted by the appellant/assessee cannot be considered as consideration for the supply of manpower recruitment and supply services to the state government departments.

The assessee/Appellant has been established by the Government of Madhya Pradesh under section 3(1) of the Madhya Pradesh Vyavasayik Pariksha Mandal Adhiniyam, 2007.

The assessee is engaged in conducting examinations for the recruitment of personnel for various departments and undertakings of the Madhya Pradesh Government, for which they are charging amounts from these organisations as well as from the candidates as examination fees.

As per the department, they have collected the taxable amount of Rs. 12848.04 Lacs as examination fee as against "Manpower recruitment or supply agency" services, which appears to be covered under the category "service` as defined under Section 65B (44) [erstwhile Section 65(105)k] of the Finance Act, 1994.

The assessee submitted that the Appellant is deemed as the state Government. Board is not “Manpower Recruitment or Supply Agency as defined under Section 65 (68) of the Finance Act, 1994. Neither the Service Provider nor the service recipient are person under Section 65 (105) (k) of the Finance Act, 1994.

It was further argued that there is no flow of consideration from the service recipient to the service provider. The services were rendered by the appellant to the State Government and hence are exempt under S No 39 of the Exemption Notification No 25/2012-ST dated 20.06.2012.

The bench held that the service tax could not have been demanded from the appellant as the consideration received against the provision of these services from the service recipient is nil.

In respect of the demands made against the receipts in the other two categories, the bench observed that the appellant has not contested the demand, either before the adjudicating authority or in the submissions made before the bench.

The Tribunal upheld the demand of service tax (inclusive of cess) along with the interest and penalties (Section 78) imposed in respect of these categories of receipts.

In view of the above, the Tribunal partly allowed the appeal.

Case Title: M/s Professional Examination Board v. Commissioner of Customs, Central Excise & Service Tax, Bhopal

Case Number: Service Tax Appeal No.52205 of 2019

Counsel for Appellant/ Assessee: Ms Monisha Handa

Counsel for Respondent/ Department: Shri Anand Narayan

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