2018 (11) TMI 1720 - AT - Service Tax

Scope of SCN - Commercial Training/Coaching Service - appellant had imparted training at study centre of the franchisee and pays service tax on 25% of the fees collected from the students - Department had contended that the appellant should also be liable to pay service tax on the balance amount of 75% received from the students - HELD THAT - The SCN had proposed to confirm the service tax demand under the taxable category of commercial training and coaching service, defined under Section 65 (25) (d) of the Finance Act, 1994. The proposals made in the show-cause notice were also confirmed in the adjudication order dated 22/03/2011, in upholding the classification of service under commercial training and coaching service. However, on perusal of the contract and other documents, the learned Commissioner (Appeals) vide paragraph 7 has held that the services provided by the appellant should merit classification under the taxable entry of Franchisee Service , as defined under Section 65 (105) (zze) of the Act. On careful consideration of the show-cause notice and the impugned order, we find that the appeal of the appellant was dismissed by the learned Commissioner (Appeals) solely on different grounds, as proposed in the show-cause notice. Thus, it is evident that the impugned order cannot be sustained, since it has travelled beyond the scope of the show-cause notice. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of taxable service under "Commercial Training/Coaching Service" or "Franchisee Service" based on show-cause notice scope.

Analysis:
The appeal was filed against the Commissioner (Appeals) order confirming service tax demand under "Franchisee Service" instead of "Commercial Training and Coaching Service" as proposed in the show-cause notice. The appellant argued that the order exceeded the show-cause notice scope, citing relevant case laws. The Revenue contended that since the notice addressed short payment related to franchise service, the order was justified. The Tribunal examined the show-cause notice, adjudication order, and the impugned order. It was observed that the show-cause notice proposed confirming service tax demand under commercial training and coaching service, which was upheld in the adjudication order. However, the Commissioner (Appeals) classified the service under "Franchisee Service" based on contract and documents. The Tribunal noted the dismissal of the appeal solely on different grounds than those proposed in the notice, indicating the order went beyond the notice's scope. Citing relevant case laws, the Tribunal concluded that demand under a different taxable head not proposed in the show-cause notice is impermissible. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant.