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2011 (7) TMI 506 - AT - Service TaxDemand - As regards the amount received for franchisee services - Franchisee services rendered by the appellants, they are liable to pay service tax and they are also not disputing their tax liability - As such, we confirm the demand of ₹ 19,78,820/- relating to the franchisee services and order that the amount already paid be adjusted against the demand confirmed by us - As regards the penalty, considering the fact that only ₹ 3.5 lakhs was paid after a delay, we reduce the penalty imposed on the appellants to ₹ 3.5 lakhs under Section 78 of the Finance Act, 1994, setting aside the balance amount. As regards Abacus training imparted to the students - Assessee submitted that such training has been held to be recreational training by the Bangalore Bench of the Tribunal in Fast Arithmetic Vs. Asst. Commr. of C.Ex & S.T. 2009 (5) TMI 70 - CESTAT, Bangalore - As per this decision, no service tax is payable for imparting Abacus training since recreational training is covered under the Notification No. 9/2003-ST dated 20.06.2003 and Notification No. 24/2004-ST dated 10.09.2004. As regards the Abacus training imparted to the teachers - find that such training enables such teachers to either get employment in a franchisee imparting similar training or to open their own training centres and thereby get self-employed - Either way, the training received by them prepares them to get employment/self-employment and such training, therefore, would come under vocational training - Since vocational training comes under the exempted category of services, the demand confirmed in respect of Abacus training to teachers is also set aside along with the penalty imposed in respect of the same.
Issues:
1. Tax liability on franchisee services 2. Tax liability on Abacus training for students 3. Tax liability on training for teachers 4. Penalty reduction for delayed payment Analysis: 1. Tax liability on franchisee services: The appellant, a training company, was engaged in imparting training through a course called "Mental Arithmetic" using the Abacus tool. The Tribunal confirmed the tax liability on franchisee services, amounting to Rs. 19,78,820. The appellant had paid Rs. 19,58,953, with a delayed payment of Rs. 3.5 lakhs. The penalty imposed was reduced to Rs. 3.5 lakhs under Section 78 of the Finance Act, 1994. 2. Tax liability on Abacus training for students: The department sought to tax the amount received for Abacus training under "Commercial Training or Coaching Services." However, citing a decision by the Bangalore Bench of the Tribunal, it was held that Abacus training is recreational and falls under exempted services. Consequently, the demand and penalty related to this training were set aside. 3. Tax liability on training for teachers: The training provided to teachers, enabling them to either work in a franchisee or open their own centers, was considered vocational training. Vocational training falls under exempted services, leading to the demand and penalty for this training being set aside as well. 4. Penalty reduction for delayed payment: The penalty imposed on the appellant for delayed payment was reduced to Rs. 3.5 lakhs, considering that only this amount was paid after a delay. The Tribunal confirmed the tax liability on franchisee services but allowed the appeals related to Abacus training for students and training for teachers, setting aside the demands and penalties for these categories. In conclusion, the Tribunal partially allowed one appeal and fully allowed another, confirming the tax liability on franchisee services while exempting the Abacus training for students and training for teachers from taxation. The penalty for delayed payment was reduced accordingly.
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