2011 (8) TMI 570 - AT - Service Tax

Coaching Centres Services - Books along with Services - Books of another company - Standard Text book - Exemption under notification no. 12/2003 - Held that - The Revenue has not disputed the fact that the study materials were purchased by the appellants from M/s. Bulls Eye. Therefore there is nothing in the Notification No. 12/2003-S.T. which would help Revenue in their arguments. The Circular of CBEC quoted by the learned DR states that such exemption will be applicable only if material sold is standard text books . The question as to what is a standard text book can lead to disputes. Since the expression is not used in the notification and the fact that the books sold are of another entity namely Bulls Eye we do not find any reason to deny the benefits of the Notification No. 12/2003-S.T. Availability of cenvat credit - held that - As per Rule 3 of Cenvat Credit Rules credit could be taken only in respect of services received after 10-9-2004.

Summary

Issues:
1. Whether the value of study material supplied by appellants should be included in the gross value of services for service tax calculation.
2. Whether the appellants are eligible for exemption under Notification No. 12/2003-S.T. for the value of goods sold.
3. Denial of Cenvat credit amounting to &8377; 16,762/-.

Analysis:
1. The Department contended that the study material supplied by the appellants to students should be included in the gross value of services for service tax calculation. The Department issued a show cause notice demanding differential tax along with penalties. The Commissioner (Appeals) upheld the order, leading to the present appeal. The appellants argued that as they were not the owners of the study material and were selling books from another company, the value of the books should not be added to the value of their coaching services. They claimed exemption under Notification No. 12/2003-S.T. The Tribunal found that the appellants were providing coaching services and had purchased the study material from another company, thus ruling in favor of the appellants.

2. The appellants relied on Notification No. 12/2003-S.T. for exemption, which exempts the value of goods sold by the service provider to the recipient of service from service tax, subject to specific conditions. The Department argued that the exemption was applicable only to standard textbooks, as per a Circular issued by CBEC. The Tribunal held that since the books sold were from another entity and the term "standard text books" was not specified in the notification, the appellants were entitled to the exemption under Notification No. 12/2003-S.T.

3. Regarding the denial of Cenvat credit, the Tribunal noted that the credit was claimed for invoices received before the Cenvat Credit Rules, 2004 came into force. As per Rule 3 of the Cenvat Credit Rules, credit could only be taken for services received after a certain date. The Tribunal found no merit in the appellant's argument and upheld the denial of Cenvat credit. However, the Tribunal provided the appellant with the option to pay a reduced penalty amount, allowing the appeal partially.

In conclusion, the Tribunal ruled in favor of the appellants regarding the inclusion of study material in the gross value of services and the exemption under Notification No. 12/2003-S.T., but upheld the denial of Cenvat credit, offering a reduced penalty amount.