2018 (3) TMI 638 - AT - Service Tax

Training in software and systems - Department took the view that these services provided would attract levy of service tax under the category of Commercial Training and Coaching (CTC) and Franchisee Service - Held that - the cost of the books supplied by the appellant will have to be deducted for the purposes of arriving at the net tax liability. However, neither of the show cause notice have given any separate break-up of such cost of the books. The matter is remanded to the adjudicating authority to cause verification from the balance sheets and other data that may be provided by the appellant to work out such cost and to arrive at net tax liability. Penalty - Held that - penalty not warranted and is set aside. Appeal disposed off.

Summary

Issues:
1. Applicability of service tax on training services provided by the appellants.
2. Disallowance of abatement for the cost of books supplied as study materials.
3. Validity of penalty imposed on the appellant.

Analysis:

Issue 1: Applicability of service tax on training services
The department contended that the services provided by the appellants fell under the category of Commercial Training and Coaching (CTC) and Franchisee Service, attracting service tax. Show cause notices were issued demanding substantial amounts for the specified periods. The Commissioner confirmed the tax liabilities but allowed input service credit and cum-tax benefit. The appellant, however, contested the disallowance of abatement for the cost of books supplied as course materials.

Issue 2: Disallowance of abatement for the cost of books
During the hearing, the appellant's counsel relied on a Tribunal decision and argued for granting abatement for the cost of course materials. The appellant had paid the dues, considering CENVAT credit and exemption under Notification No. 12/2003. The respondent supported the impugned order, highlighting discrepancies in the billing and the lack of a specific break-up for the cost of books. The Tribunal found that the cost of books supplied by the appellant should be deducted to determine the net tax liability. The matter was remanded for verification of the exact amount involved in the sale of books.

Issue 3: Validity of penalty
Regarding the penalty, the Tribunal noted that in a previous case involving the appellant, the penalty was set aside. Following the same rationale, the Tribunal held that no penalty should be imposed in the current case. The appeal was disposed of accordingly, with the penalty being waived.

In conclusion, the Tribunal ruled in favor of the appellant on the issue of abatement for the cost of books supplied as study materials, remanding the matter for further verification. The penalty imposed on the appellant was also waived based on the precedent set in a previous case.