2013 (12) TMI 215 - AT - Service Tax

Stay application - Demand of service tax - Commercial Training and coaching service - Held that - The applicant has not been able to demonstrate that 50% of the course fees collected is actually cost of course of the material sold. Further the material appears to be a type which has no separate value when dissociated with the service provided which matter can be examined during the hearing of the appeal. At this stage we do not consider this a fit case for full waiver of pre-deposit for admission of appeal - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues: Stay petitions on service tax payment for training and coaching services; Interpretation of Notification 12/2003-ST regarding exemption for material sold to trainees; Appeal for waiver of pre-deposit of dues.

Analysis:
1. The applicant, engaged in 'Commercial Training and Coaching Service,' paid service tax on 50% of fees collected from trainees, arguing the remaining 50% represented the cost of books and materials sold, exempt under Notification 12/2003-ST. However, Revenue issued three show cause notices for tax short paid from Apr 05 to Mar 10.

2. After adjudication, a total tax of Rs.1,37,39,474/- was confirmed against the applicant, who claimed to have paid Rs. 32,59,467/- tax and Rs. 7,25,190 interest, though clarity was lacking. An amount of Rs. 10,37,881/- was recorded in Show Cause notice 132/2009 dated 09-04-2009.

3. The applicant appealed to the Tribunal seeking waiver of pre-deposit for admission of appeal, contending that the exemption under Notification 12/2003-ST was not limited to standard text books, citing precedents where the Tribunal excluded the value of books from taxable service. The Counsel relied on a Tribunal decision in Chate Coaching Classes Pvt Ltd Vs. CCE [2012-TOIL-714-CESTAT-MUM].

4. The Revenue argued that the study material's value was artificially fixed to evade service tax, emphasizing that the material had no independent value from the service provided. Referring to sample receipts and invoices, Revenue contended that the full course fee was received but artificially split. The Revenue relied on the decision in Soni Classes Vs. CCER-2013 (30) STR (92) (Tri-Del).

5. The Tribunal found the applicant failed to prove the 50% fees represented material costs sold separately, noting the material's inseparable nature from the service. The Tribunal ordered a further deposit of Rs.40,00,000/- within 6 weeks for admission of the appeal, waiving the balance dues' pre-deposit and staying their collection during the appeal's pendency. Compliance was required by 17/07/2003.