2011 (8) TMI 942 - AT - Service Tax

Demand - Notification No. 12/2003-S.T - Revenue pleads that they have made out a case against the appellant finding that the appellant had collected certain amount for supply of study material/coaching to provide the commercial coaching meaningful and no Service Tax was paid thereon - Held that coaching material has intimate connection with the commercial coaching provided by the appellant and the contents of the study material are relevant to the coaching to make the later fruitful and meaningful so that the enrolled candidates are benefited out of commercial coaching - there is no evidence to suggest that these coaching materials by any means enjoy exemption under law and not taxable - The notification relied upon by the appellant relates to works contract case whereas pure and simple commercial coaching cannot be called as works contract for the peculiar nature of the services involved being intellectual in nature - Appellant is directed to deposit Rs. 13 Lakh

Summary

Issues:
1. Applicability of exemption under Notification No. 12/2003-S.T.
2. Taxability of study material supplied along with commercial coaching.
3. Imposition of Service Tax, interest, and penalty.
4. Requirement of pre-deposit during the pendency of the appeal.

Analysis:

Issue 1: Applicability of exemption under Notification No. 12/2003-S.T.
The appellant claimed entitlement to the benefit of exemption under Notification No. 12/2003-S.T. The Appellate Authority examined this claim and held that the benefit of the Notification cannot be curtailed by a circular. It was observed that the study materials provided were integral to the coaching services, enhancing the value and effectiveness of the coaching. Therefore, the Authority imposed tax on the value of the study material supplied along with commercial coaching. The appellant's failure to bring this exemption claim to the notice of the Authorities during Service Tax returns or protests was also considered in the decision.

Issue 2: Taxability of study material supplied along with commercial coaching
The Revenue argued that the study material supplied by the appellant was an integral part of the coaching services provided, and its value should be considered taxable. The Tribunal concurred with this view, emphasizing that the study material was essential for the coaching to be meaningful and beneficial to the enrolled candidates. It was noted that there was no evidence to suggest that the study material enjoyed any exemption under the law or that it was merely sold as regular textbooks.

Issue 3: Imposition of Service Tax, interest, and penalty
The Revenue contended that the appellant had collected amounts for study material/coaching without paying the due Service Tax. The Tribunal found merit in the Revenue's case, directing the appellant to make a pre-deposit to prevent prejudice to the Revenue during the appeal's pendency. A specific amount was stipulated for pre-deposit, and compliance within the given timeline was mandated to stay the realization of the balance amount during the appeal process.

Issue 4: Requirement of pre-deposit during the pendency of the appeal
Considering the intimate connection between the coaching material and the coaching services provided, the Tribunal concluded that the Revenue would suffer prejudice if no pre-deposit was made by the appellant. Therefore, a pre-deposit amount was ordered to be paid within a specified timeframe, with the balance amount to be stayed for realization during the appeal proceedings, subject to compliance by the appellant.

This detailed analysis of the judgment highlights the key issues addressed, the arguments presented by both parties, and the Tribunal's reasoning leading to the decision regarding the applicability of the exemption, taxability of study material, imposition of Service Tax, and the requirement of a pre-deposit during the appeal process.