2014 (8) TMI 626 - AT - Service Tax

Demand of service tax - Online examination - Business Auxiliary Service - Commercial Coaching and Training - Held that - The prospective candidates do not, prima facie, have a relationship of student-teacher in the programme leading to issue of certificates by Sun, USA. The learning/training, if any, is taken from other sources and the appellants are enabling conduct of examination and evaluation. The claim that appellants are selling e-vouchers may not deserve to be accepted. Their activities are, prima facie, in relation to conduct of online examination and evaluation by Prometric in relation to certifying professional competence of the aspiring candidates in various spheres of software skills. - Further, in view of the audit visits in 2005 leading to discussion on the very same activities in 2009 by the Commissioner, the issue of show-cause notice for the period from October 2004 to March 2009 invoking extended period of limitation may not be justified - No financial harship pleaded - stay granted partly.

Issues: Service tax liability on sale of vouchers for online examinations, eligibility for exemption under Notification No. 14/2004-S.T., time-barred demand, nature of activities as business auxiliary service, financial hardship plea.

Analysis:

1. Service Tax Liability on Sale of Vouchers:
The appellant, a subsidiary of Sun, USA, sells vouchers for online examinations conducted by M/s. Prometric, USA. The Commissioner held that these activities amount to rendering 'Business Auxiliary Service,' leading to a service tax demand of &8377; 8,50,98,796/- for the period from October 2004 to September 2008. The appellant argued that they are solely engaged in the sale of vouchers and not providing any service. Additionally, they claimed exemption under Notification No. 14/2004-S.T., dated 10-9-2004, stating that if considered a service, it should be seen as related to education.

2. Time-Barred Demand and Change in View:
The appellant highlighted that the department initially proposed a service tax levy under 'Commercial Coaching and Training' during an audit in 2005, but later issued a show-cause notice in 2010 under 'Business Auxiliary Service' for the period from October 2004 to March 2009. The appellant argued that a substantial part of the demand is time-barred, with only about &8377; 1,26,96,335/- falling within the normal period of limitation.

3. Nature of Activities and Eligibility for Exemption:
The Commissioner (AR) contended that the appellant's activities do not qualify as sales or educational training, as they do not provide coaching or training related to the educational program. The Tribunal observed that the relationship between the appellant and candidates is not that of a student-teacher. The activities primarily involve facilitating online examinations and evaluation by Prometric to certify professional competence in software skills. The claim for exemption under Notification No. 14/2004 was raised for the first time before the Tribunal and not before the Commissioner, necessitating further examination during the final hearing.

4. Financial Hardship and Stay Order:
The Tribunal noted that no plea of financial hardship was presented. Considering the arguments and evidence, the Tribunal directed the appellant to deposit &8377; 1 crore within six weeks and report to the Assistant Registrar. Upon compliance, the pre-deposit of the balance of dues as per the impugned order would be waived, and recovery stayed until the appeal's disposal.

In conclusion, the Tribunal's judgment addressed the service tax liability, exemption claim, time-barred demand, nature of activities, and financial considerations, providing a detailed analysis of each aspect and issuing a directive for the appellant's compliance and further proceedings.

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