2014 (7) TMI 629 - AT - Service Tax

Violation of principle of natural justice - Relied upon documents by Revenue in the order-in-original were not provided to appellants - Demand of service tax - Invocation of extended period of limitation -Held that - impugned order-in-original relies upon letters dated 28/12/2011 and 29/11/2011 which have been sent by the said M/s KEONICS to the Superintendent of service tax in Bangalore and which have been specifically relied upon in paragraphs 67 and 68 of the order-in-original dated 31/08/2012 and the said documents have been obtained and relied upon, after issue of show cause notice on 19/9/2011 and hence the applicant herein was not aware of the same and not could not submit any defence to the same - matter is required to be remanded to the original adjudicating authority. This is because, the letters obtained after issue of show-cause notice should have been provided to the appellants. Even though the appellant himself has admitted the realization of service tax from KEONICS, ongoing through the records, there is no clarity on this issue. At the same time, it cannot be said that the appellants are not liable to tax and in our opinion, at least an amount of ₹ 2 lakhs is clearly payable by the appellant and it may not be appropriate to remand the matter without putting the appellant into terms. - stay granted partly - matter remanded back.

Summary

Issues Involved:
Delay in filing appeal condonation, Classification of services for computer education, Tax liability on franchisee services, Time limitation for demands, Reliance on documents obtained after show-cause notice, Financial hardship plea, Remand to original adjudicating authority, Pre-deposit requirement, Compliance with directions.

Delay in Filing Appeal Condonation:
The appellant filed an appeal with a delay of 120 days, attributing the delay to a severe back injury suffered while demonstrating a 'Javelin Throw.' The delay was satisfactorily explained, leading to its condonation by the Tribunal.

Classification of Services for Computer Education:
The appellant argued that the services provided for computer education under the 'Mahithi Sindhu Project' for Government High School Students should not be classified as 'commercial training or coaching services.' The services included not only education but also maintenance of computers, provided on behalf of KEONICS for specific classes and syllabus approved by the Government of Karnataka. The appellant contended that the service should be exempted under Business Auxiliary Service and Notification No. 14/2004.

Tax Liability on Franchisee Services:
Regarding franchisee services under 'KEONICS YUVA.COM,' the appellant argued that the services were for computer education and not commercial training or coaching. A portion of the service tax had already been paid, and the remaining amount was disputed by the appellant.

Time Limitation for Demands:
The appellant claimed that a substantial portion of the demands made would be time-barred due to interpretational issues, which should not be considered as willful suppression to evade tax.

Reliance on Documents Obtained After Show-Cause Notice:
The appellant contested the reliance on documents obtained after the show-cause notice, emphasizing that they were not provided for defense, violating principles of natural justice.

Financial Hardship Plea:
The appellant pleaded undue financial hardship as a proprietary concern facing financial crunch, supported by bank account submissions.

Remand to Original Adjudicating Authority:
The Tribunal decided to remand the matter to the original adjudicating authority due to the need for providing letters obtained after the show-cause notice to the appellants. An amount of Rs. 2 lakhs was deemed payable by the appellant, with a requirement to deposit Rs. 3,00,000 within 12 weeks for compliance.

Pre-Deposit Requirement and Compliance:
The appellant was directed to comply with the pre-deposit requirement and report compliance by a specified date. The pre-deposit of the balance dues was waived subject to compliance with the initial deposit.

Conclusion:
The Tribunal emphasized the need for compliance with the deposit requirement and the provision of documents from KEONICS. The matter was remanded for fresh adjudication by the original authority, ensuring adherence to natural justice principles without expressing any opinion on the tax liability aspects.