2013 (12) TMI 914 - AT - Service Tax

Commercial training or coaching services - Explanation added to Section 65(105)(zzc) of the Finance Act - Held that - According to the retrospective amendment, the said expression shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force and carrying on its activity with or without profit motive. Prima facie , the appellant gets covered within the ambit of the retrospectively amended meaning of the expression (commercial training or coaching centre). Even without considering the case on merits, the Hon ble Supreme Court, on a similar set of facts, directed the appellant to predeposit 1/3 of the amount of service tax demanded. It is pertinent to note that such direction for predeposit was ordered vis- -vis a demand confirmed against the assessee entirely for the larger period of limitation. If that be so, fortiori, the appellant is liable to predeposit in larger proportions in the instant case where the entire demand of service tax is admittedly within the normal period. Nevertheless, in a reasonable approach, we would like to restrict the predeposit to 1/3 of the total demand of service tax and education cesses. After taking into account the payment already made by the appellant and appropriated by the adjudicating authority, we direct the appellant to predeposit an amount of Rs.25 crores (Rupees twenty five crores only) within eight weeks (this much time specially prayed for by the counsel for the appellant) and report compliance to the Deputy Registrar on 26.06.2013. The Deputy Registrar to report to the Bench on 02/07/2013. Subject to due compliance, there will be waiver and stay in respect of the balance dues including penalties and interest on service tax and education cesses - Decided against assessee.

Summary

Issues:
1. Waiver of predeposit and stay of recovery sought by the appellant in relation to service tax and education cesses demanded for the period from 2007-08 to 2010-11.
2. Applicability of Circular No.B3/7/2003-TRU and previous judicial decisions in determining the case on merits.
3. Interpretation of the meaning of "commercial training or coaching center" under the Finance Act.
4. Assessment of the provisional attachment order's impact on the appellant's liability.

Analysis:

Issue 1:
The appellant sought waiver of predeposit and stay of recovery for the demanded service tax and education cesses. The demand arose from coaching services provided to students, including special coaching for entrance examinations. The Commissioner's order restricted the demand to tuition fees and study materials, resulting in a liability of over Rs.76 crores. The appellant referenced previous litigation emphasizing limitation issues. The High Court had directed predeposit, considering the expiry of the provisional attachment. The Tribunal directed the appellant to predeposit Rs.25 crores within eight weeks, with waiver and stay subject to compliance.

Issue 2:
The appellant relied on Circular No.B3/7/2003-TRU and past decisions to support their case on merits. They argued that criteria for identifying educational institutions, as established in previous cases, should apply to their coaching services for Intermediate students. The Department contended that the appellant failed to meet the criteria and should be classified as a "commercial training or coaching institute," justifying the demand for service tax.

Issue 3:
The retrospective amendment to Section 65(105)(zzc) of the Finance Act broadened the scope of "commercial training or coaching center." The appellant fell within this amended definition, requiring predeposit. The Tribunal, considering the demand within the normal period, directed the appellant to predeposit 1/3 of the total amount, acknowledging the payment already made and granting waiver and stay for the remaining dues upon compliance.

Issue 4:
The Department argued that a provisional attachment order did not fully secure the Revenue's interest against the substantial dues. They emphasized the distinction between attachment orders and predeposit requirements under the law. The Tribunal balanced the considerations, directing the appellant to predeposit a specified amount within a timeframe, with waiver and stay contingent on compliance, recognizing the impact of the provisional attachment on the case.