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2012 (4) TMI 581 - AT - Central Excise
Issues involved: Determination of service tax liability on coaching classes and franchise services, interpretation of Notification 12/2003-ST exemption, adequacy of pre-deposit for appeal.
Coaching Classes Service Tax Liability: The appellants provided coaching classes for medical and engineering entrance exams, also running schools. Revenue alleged non-payment of service tax on full amounts received from students. After adjudication, demand was reduced to Rs. 47,16,921, confirmed with interest and penalties. Appellants claimed exemption u/s Notification 12/2003-ST for study material sold, arguing it should not be considered as part of service value. Franchise Services Tax Liability: Appellants authorized others to conduct coaching classes as franchisees, not paying service tax on royalty amounts received. They contested the demand of Rs. 8,50,302, stating that tax should be payable only on actual receipts, not accrual basis. The impugned order was criticized for not addressing core issues raised by the appellants. Interpretation of Notification 12/2003-ST: Revenue argued that exemption under Notification 12/2003-ST for goods sold in the course of providing services applied only to standard textbooks, not study material prepared for coaching classes. They relied on a CBEC circular to support their stance. Appellants countered that the scope of the notification should be understood from the notification itself, not from subsequent clarifications. Judgment: The Tribunal accepted the appellants' argument that the exemption under Notification 12/2003-ST should not be restricted by clarifications. They found merit in the appellants' contention regarding the value of study material sold not being part of the service value. The reconciliation of actual receipts for franchise services was deemed necessary for the final hearing. Considering the deposited amount of Rs. 8,98,512 as adequate, the Tribunal granted waiver of pre-deposit for the balance dues and stayed recovery during the appeal process.
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