2017 (3) TMI 178 - AT - Service Tax

Commercial training or coaching service - deduction in respect of study materials - liability on Franchise Service - benefit of N/N. 12/2003-ST - Held that - Procurement of Various goods and materials and their cost being reflected in the balance-sheet is not a sufficient documentary proof to fulfil the condition of the Notification. - In the absence of documentary proof of sale of goods or materials, the exemption claim cannot be admitted. Franchisee Service - Held that - the periodical statutory returns filed by the appellant assessee did not disclose full taxable value. Though the appellant was registered with the department and were discharging the service tax they chose to pay service tax only on part of the value received by them. The claim for bonafide belief is not tenable in the facts and circumstances of the present case. Accordingly, no merits found in the plea of the appellant assessee on this account. Appeal allowed - decided in favor of Revenue.

Issues:
1. Service tax liability on commercial coaching services.
2. Deduction of study materials from taxable value.
3. Eligibility for exemption under Notification 12/2003-ST.
4. Service tax liability on franchise service.
5. Time bar for service tax demand.

Analysis:

1. Service tax liability on commercial coaching services:
The appellant provided commercial coaching for pre-medical test and engineering entrance, taxed under commercial training or coaching service. The dispute arose regarding tax liability on the differential amount between income shown in ST-3 Returns and balance-sheet. The appellant argued that no service tax can be levied as they provided service along with supply of material, citing a Supreme Court decision. However, the Tribunal found their argument legally unsustainable as no evidence of sale of goods to service recipients was produced. The Tribunal dismissed the appeal filed by the appellant on this issue.

2. Deduction of study materials from taxable value:
The appellant contested the impugned order for not allowing deduction of study materials from taxable value. The Tribunal noted that no documentary evidence of sale of study materials to service recipients was produced by the appellant. Despite expenses of printing and some supply evidence, the lack of documentary proof led to the dismissal of the appellant's claim for exemption under Notification 12/2003-ST.

3. Eligibility for exemption under Notification 12/2003-ST:
The Tribunal analyzed the conditions of Notification 12/2003-ST, which exempts service tax on goods sold to service recipients with specific documentary proof. The appellant failed to provide evidence of sale of goods, and the Tribunal found the reasoning adopted by the original authority legally untenable. The Tribunal set aside the findings extending the benefit of exemption under the said notification.

4. Service tax liability on franchise service:
The issue of service tax on franchise service was examined in detail by the original authority, leading to a determination of differential service tax to be paid by the appellant. The Tribunal upheld this finding, stating that the appellant's claim of bonafide belief for exclusion of costs was not tenable. The plea for extended period and penalty under Section 78 was dismissed by the Tribunal.

5. Time bar for service tax demand:
The appellant contested the service tax demand on franchise service, citing discontinuation of the business and no income during a specific period. However, the Tribunal found no merit in the appellant's plea, upholding the original authority's decision on the extended period and penalty imposition under Section 78.

In conclusion, the appeal filed by the Revenue was allowed, and the appeal filed by the appellant was dismissed by the Tribunal.

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