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2013 (10) TMI 1344 - AT - Service TaxShort payment of tax - coaching in English language - advance fees - fees received prior to 1-7-2003 for which services were rendered before as well as after 1-7-2003 - penalty - Held that - As per C.B.E. & C. Circular No. 65/14/2003-S.T., dated 5-11-2003 w.e.f. 1-7-2003 Service Tax liability was created on Coaching Services. The fees collected and services rendered by the appellant up to 1-7-2003, does not attract Service Tax on coaching of English classes. For the period from 1-7-2003 there was full exemption to a Vocational Training Institute as per the N/N. 9/2003-S.T., dated 20-6-2003 which was to remain in force up to 29-2-2004 - a Coaching in English language can impart necessary skill in a trainee to enable him to seek employment or undertake self-employment. There is no mention of coaching in any foreign language or Indian language in this notification. Appellant was thus eligible to exemption under N/N. 9/2003-S.T., dated 20-6-2003 to the period after 1-7-2003. There is no evidence on record that coaching in English language was imparted after 29-2-2004 - appeal allowed - decided in favor of appellant.
Issues: Appeal against OIA confirming demand and penalty under Sections 76 and 78 of the Finance Act, 1994 for short payment of Service Tax on advance fees collected for coaching services before and after 1-7-2003.
Analysis: 1. The appellant filed an appeal against OIA No. 522/2006/440(RAJ)/COMMR(A)/RP/RAJ, where the Commissioner (Appeals) upheld the demand of &8377; 7,082/- and penalty of &8377; 14,000/- under Section 78 but set aside the penalty of &8377; 7,000/- under Section 76 of the Finance Act, 1994. The issue involved was the short payment of Service Tax on advance fees collected for coaching services both before and after 1-7-2003, totaling &8377; 85,525/-. 2. The appellant did not appear in person but submitted written arguments citing departmental Circular No. 59/08/2003, dated 20-6-2003, claiming no Service Tax was leviable for providing Coaching of English Language. The submission was received by CESTAT registry on 1-10-2013. 3. The respondent's representative argued that Notification No. 9/2003-S.T., dated 20-6-2003, became effective from 1-7-2003 and defended the order passed by the first appellate authority. 4. The case records were examined, and it was determined that the issue revolved around the chargeability of Service Tax on the amount collected for coaching in English language before 1-7-2003. The Circular No. 65/14/2003-S.T., dated 5-11-2003, imposed Service Tax liability on Coaching Services effective from 1-7-2003. However, a full exemption was granted to a "Vocational Training Institute" under Notification No. 9/2003-S.T., dated 20-6-2003, until 29-2-2004. The definition of a vocational training institute included centers providing coaching to impart skills for employment or self-employment directly after training. 5. It was established that coaching in English language could equip trainees with skills for seeking employment or self-employment, making the appellant eligible for exemption under Notification No. 9/2003-S.T. The notification did not specify any restriction on coaching in foreign or Indian languages. Since there was no evidence of coaching in English language post 29-2-2004, the appellant's appeal was allowed by setting aside the OIA dated 18-9-2006.
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