CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE REGIONAL BENCH - COURT NO. 2 Service Tax Appeal No. 21130 of 2014 [Arising out of Order-in-Original No. 27/2013 dated 22.11.2013 passed by the Commissioner of Service Tax, Bangalore]

M/s. Karnataka State Electronics Development Corporation Ltd. Appellant(s)

2^nd Floor, TTMC ‘A’ Block, BMTC Complex Shanthinagar, K.H. Road Bangalore – 560 027 VERSUS Commissioner of Service Tax Bangalore Service Tax - I Respondent(s)

1^st to 5^th Floor, TTMC Building Above BMTC Bus Stand Domlur Bangalore – 560 071 -

APPEARANCE:

Mr. Pradyumna G.H., Advocate for the Appellant Mr. M.A. Jithendra, Assistant Commissioner (AR) for the Respondent CORAM: HON'BLE MR. P.A. AUGUSTIAN, MEMBER (JUDICIAL)

HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL)

Final Order No. 20027 / 2026 DATE OF HEARING: 26.11.2025 DATE OF DECISION: 07.01.2026 PER : P.A. AUGUSTIAN Issue in the present appeal is regarding demand of service tax under ‘Commercial Training or Coaching Services’ during the period from April, 2009 to March, 2012 in respect of computer training imparted under ‘Extended Mahathi Sindhu Project’ in terms of agreement entered with the State Government. Alleging that the Appellant failed to pay service tax as applicable on the above activity, show cause notice was issued on 19.02.2013 for the above period and Adjudication Authority as per the Order-in-Original dated 22.11.2013 confirmed the demand and also appropriated the amount already paid by the appellant against the above demand and also imposed penalty of Rs. 10,000/. Aggrieved by said order, present appeal is filed.

2. When the appeal came up for hearing, the learned Counsel for the appellant submits that the activity carried out by the appellant is providing computer training to students studying in Government Schools under ‘Mahithi Sindhu Projects’ besides undertaking maintenance of computers and peripherals etc. in terms of agreement entered with Commissioner of Public Instruction (CPI), Karnataka. The appellant provided such training to the students for which they received charges from the CPI out of ‘grant-in-aid’ provided to the latter by the Government. The activity is provided to the student free of cost. The learned Counsel further submits that the demand from August, 2009 to March, 2012 is beyond the show cause notice and there is no reason or justification to invoke the extended period of limitation. In this regard, the learned Counsel submits that the appellant had filed refund claim for Rs. 48,64,868/- for the year 2008-09 vide letter dated 19.02.2010 i.e. three years before issue of show cause notice. It was clear that the appellant had challenged the levy in the first place - a fact about which the Department cannot feign ignorance. The issuance of show cause notice at a belated stage to sustain demand for a larger period is not tenable. Further the consideration and the taxable value are not adapted through a descriptive inquiry by the Department but were furnished by the appellant themselves.

3. In this regard the Learned Counsel submits that the issue was considered by Hon’ble Supreme Court in the matter of Collector of Central Excise Versus Chemphar Drugs & Liniments [1989 (40) E.L.T. 276 (S.C)] where it is held that “extended period of five years is applicable only when something positive other than mere inaction or failure on the part of manufacturer is proved. Further in the matter of Tamil Nadu Housing Board Vs Collector of Central Excise [1994 (74) E.L.T. 9 (S.C)], Hon’ble Supreme Court held that when the law requires an intention to evade payment of duty then it is not mere failure to pay duty. It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word ‘evade’ in the context means defeating the provision of law of paying duty which is made more stringent by use of the word ‘intent’.

4. The learned Counsel further submits that the appellant only assisted