2015 (1) TMI 88 - AT - Service Tax

Waiver of pre deposit - commercial coaching or training service - appellant provides various tests for evaluation of a person s English speaking understanding and writing abilities - 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. - Following decision of SUN MICROSYSTEMS (I) PVT. LTD. Versus COMMISSIONER (LTU), BANGALORE 2013 (12) TMI 867 - CESTAT BANGALORE . Management or business consultant services - Held that - there is no finding as to what exactly is the service received by the appellants for which they have made the payment. It was the appellant s claim that according to US GAAP requirements, when a company has subsidiaries elsewhere, the time spent for activities relating to subsidiaries has to be allocated and subsidiaries are also required to allocate payment for such time spent. He says, to fulfill this requirement, the appellant makes credit entry as per the requirement and simultaneously a debit entry is also made and in reality no payment is actually made. He drew our attention to the relevant ledger entries and we find this to be so even though it looks very strange that there is a credit and debit entry simultaneously at the same time for the same transaction and according to the appellants there is no payment made for the time of the company in US. Nevertheless, in our opinion this may not be very relevant in view of the fact that in the impugned order, we do not find any evidence or any basis for coming to the conclusion that appellants received management or business consultant service from the company in US. - there is absolutely no evidence relied upon to show that a taxable service has been rendered and there was a service provider and a receiver relationship. Therefore, prima facie, we find that the appellant has made out a case for waiver. - Stay granted.

Summary

Issues:
1. Classification of appellant's activities under commercial coaching or training service.
2. Classification of receipts for providing computer-based tests under Business Support Service.
3. Demand for management or business consultant services.
4. Demand for business support services.

Classification of Activities:
The appellant provided various tests for evaluating English language skills through software, paper-based tests, and self-evaluating materials. An audit initially classified the activity as online information and database access, but a show-cause notice reclassified it as commercial coaching or training service. The appellant argued that their activities did not involve direct contact between teachers and individuals, citing a precedent where similar activities were not considered commercial training or coaching. The Tribunal agreed, finding that the appellant's services did not fall under commercial training or coaching, leading to a waiver of dues.

Receipts for Computer-Based Tests:
Regarding receipts for providing computer-based tests for admission, the issue was whether the appellant provided these services on behalf of their principal abroad, making it Business Support Service. The Tribunal found no evidence to support this classification, as there was no basis for concluding that the appellant received management or business consultant services from the company in the US. Ledger entries showed no actual payment made for services received, leading to a waiver of dues.

Demand for Management or Business Consultant Services:
A demand of &8377; 17,99,314 was made for management or business consultant services. The appellant claimed that certain expenses were book entries made to fulfill US GAAP requirements, with no actual payment involved. The Tribunal found the lack of evidence showing a taxable service was rendered, and no provider-receiver relationship was established, leading to a waiver of dues.

Demand for Business Support Services:
A small demand of &8377; 2,64,904 was made for business support services. The appellant argued that the services were not provided on behalf of the principal, and the Tribunal found this to be the case. Consequently, the pre-deposit requirement was waived, and a stay against recovery was granted during the appeal's pendency.