2013 (12) TMI 867 - AT - Service Tax

Service Tax demand - CD Roms sold which contained a kind of live virtual class - Equivalent penalty under Section 78 - Commercial Training or Coaching Services - Held that - unlike in a regular coaching, there is no institute, there is no contact whatsoever alleged between the students and the teacher. Prima facie, we are of the view that these activities may not fall under the category of Commercial Training and Coaching and therefore, we deem it appropriate to waive the pre-deposit of dues as per the impugned order and stay recovery thereof till disposal of the appeal - Stay granted.

Summary

Issues:
Service Tax demand on CD Roms and online learning services under 'Commercial Training or Coaching Services' category.

Analysis:
The Appellate Tribunal CESTAT Bangalore addressed the issue of a Service Tax demand amounting to Rs. 30,43,531/- along with interest and penalty under Section 78 for the period 1-4-2004 to 31-3-2009 related to the sale of CD Roms and online learning services. The demand was based on the provision of a "live virtual class" through CD Roms and online courses to enhance skills and impart knowledge to buyers. The appellant argued that the CD Roms were for self-learning without any teacher-student interaction, and the online courses were similar to the CD content. The Commissioner contended that the activities were akin to postal coaching, falling under taxable services as per a Board's clarification.

Upon reviewing the submissions and examining a typical CD's contents, the Tribunal observed that there was no institute or direct contact between teachers and students, distinguishing it from regular coaching services. The Tribunal opined that the activities might not fit under the 'Commercial Training and Coaching' category. Consequently, the Tribunal decided to waive the pre-deposit of dues as per the impugned order and stay the recovery pending the appeal's disposal. The judgment emphasized the lack of direct interaction between teachers and students in the appellant's services, leading to the decision to grant relief from immediate payment obligations.