2011 (9) TMI 91 - AT - Service Tax

Service tax demand - Service of commercial training and coaching - The dispute relates to the fees collected from the students during the period of April May and June 2003 - The period involved in the present appeal is the initial period of introduction of coaching services to the service tax and created a lot of confusion - Even in respect of the fee collected prior to the introduction of the services the Board s circular was issued only on 5.11.2003 laying down that service tax has to be calculated on pro rata basis - Also note that there was audit on 2004 and a lot of correspondence was exchanged between the appellant and the Revenue in spite of that Show Cause Notice was issued only on 20.7.2006 - Thus fully agree with the finding of the authorities that the demand is barred by limitation - Accordingly appeal filed by the Revenue is rejected on the above ground itself.

Summary

Issues:
1. Dispute over service tax on fees collected for coaching services.
2. Interpretation of law regarding the levy of service tax on coaching services.
3. Limitation period for raising demand of service tax.

Analysis:
1. The case involved a dispute regarding the service tax demand on fees collected for coaching services provided by the respondent. The original adjudicating authority confirmed the service tax demand, while the Commissioner (Appeals) accepted the respondent's argument that the service tax on coaching services came into force from 1.7.2003. The Commissioner held that the fees collected before this date were not leviable to service tax.

2. The Commissioner (Appeals) also considered the issue of limitation, noting that the Show Cause Notice was issued on 20.7.2006 for the period of April 2003 to September 2003. The Commissioner observed that there was no specific allegation of suppression in the notice and that the non-disclosure of value received before 1.7.2003 was due to a genuine interpretation of the law by the appellant. Referring to various legal precedents and circulars, the Commissioner held that the demand raised in 2006 was barred by limitation.

3. The Revenue challenged the Commissioner's order before the Tribunal, arguing that the fees collected for coaching services extended beyond 1.7.2003 were liable to service tax on a pro rata basis. The Revenue also contended that the longer period of limitation should apply due to the appellant's failure to file ST-3 returns or disclose fee collections. However, the Tribunal, while acknowledging the Revenue's arguments on the merits of the case, found that the appeal could be disposed of on the point of limitation.

4. The Tribunal agreed that the case involved an interpretation of law, and penalties were not warranted. Considering the confusion surrounding the introduction of coaching services to the service tax regime and the delayed issuance of the Show Cause Notice, the Tribunal held that the demand for service tax was indeed barred by limitation. Consequently, the appeal filed by the Revenue was rejected on the grounds of limitation.

In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision regarding the non-leviability of service tax on fees collected before 1.7.2003 and further determined that the demand for service tax was time-barred, leading to the rejection of the Revenue's appeal.