2015 (10) TMI 855 - AT - Service Tax

Demand of service tax on amount received in advance prior to introduction of levy - commercial training and coaching service - Remission of service tax - tax on admission fee - Held that - The principle is well established and is constitutionally enshrined, that levy and collection of tax requires legislative authority (Article 265). The legislation should clearly express and identify the taxable event, the rate of tax and the person on whom the liability falls. Admittedly, Commercial Coaching or Training was enacted to be a taxable service with effect from 1.7.2003. Admission fee, remitted prior to the date of introduction of the taxable service cannot therefore be considered as receipt of a consideration for rendition of Commercial Coaching or Training. - Decided in favour of assessee.

Summary

Issues: Appeal against order dropping penalties under Sections 76 and 78 of the Finance Act, 1994 and confirming balance of service tax demand and penalties.

Analysis:
1. The appellant appealed against an order passed by the Commissioner (Appeals), Customs and Central Excise, Kanpur, dropping penalties under Sections 76 and 78 of the Finance Act, 1994, and confirming the balance of the demand of service tax and penalties.

2. The proceedings were initiated based on the appellant's failure to remit service tax on admission fees collected prior to 1.7.2003, despite providing commercial training and coaching services from 1.7.2003 onwards.

3. The Appellate Commissioner upheld the levy based on the premise that admission fees collected before the introduction of taxable services should be apportioned on a monthly/quarterly basis and taxed accordingly. This approach was supported by previous Tribunal rulings in similar cases.

4. However, the Tribunal disagreed with the concurrent findings, emphasizing that the legislative authority is essential for the levy and collection of tax. The taxable event was the rendition of services on or after 1.7.2003, when Commercial Coaching or Training was enacted as a taxable service, with the liability falling on the service provider.

5. The Tribunal clarified that admission fees collected before 1.7.2003 were not consideration for Commercial Coaching or Training services. Admission fees were deemed to ensure reciprocal obligations between the appellant and students for course enrollment, distinct from term fees collected for imparting courses of instruction.

6. The Tribunal distinguished cases involving term fees from admission fees, noting that admission fees collected in advance did not constitute consideration for taxable services. Therefore, the Tribunal allowed the appeal, quashing the impugned order without any costs.