2018 (5) TMI 1470 - AT - Service Tax

Reversal of Cenvat Credit - Refund claim of excess service tax paid - the tax was paid on estimated basis and also due to arithmetical error in making calculation of amount payable under Rule 6 (3) (b) - valuation of services - Held that - in terms of Section 67 (i) of the Finance Act, 1995 the value of service in case where the provision of service is for a consideration in money shall be the gross amount charged by the service provider for such service provided or to be provided by him. In the present case the services in question has been provided to the students by the Appellant. It is not the case that the students are directly remitting the fee to the IGNOU. The Appellant is collecting the fee and then remitting it to the IGNOU. The agreement between the Appellant and the IGNOU is of revenue sharing. However it does not ipso facto leads to exclusion of said amount remitted to the IGNOU from the purview of the consideration. Hence such amount is part of value of services. The whole consideration received by the Appellant is value of exempted service and the computation of 5/6% shall be made on such value - appeal dismissed - decided against appellant.

Summary

Issues:
1. Time bar in filing refund claim under Section 11B of the Central Excise Act, 1944.
2. Exclusion of IGNOU share from the value of exempted services.
3. Interpretation of Section 67 of the Finance Act, 1994 regarding the value of service provided.

Analysis:
1. The case involved a dispute regarding a refund claim for excess service tax paid by the Appellant during 2011-12. The Appellant, engaged in providing commercial training services, had paid service tax on other educational courses while exempting income related to IGNOU certificates. The claim for refund was challenged on the grounds of being time-barred under Section 11B as it was filed after one year from the payment date. The adjudicating authority rejected the claim due to alleged discrepancies in payment amounts and lack of supporting records. The Commissioner (Appeals) later considered reasons for the refund claim, including the exclusion of amounts refunded to students and the share of IGNOU in the value of services.

2. The Appellant argued that only their share of fees for IGNOU courses should be considered in the value of exempted services, as they collected IGNOU's share from students and remitted it to IGNOU based on standard terms. They cited a Tribunal order to support their stance. However, the revenue authority supported the lower authority's findings. The Tribunal analyzed Section 67 of the Finance Act, 1994, which defines the value of service based on the gross amount charged by the service provider. In this case, the services were provided by the Appellant to students, with the Appellant collecting and remitting fees to IGNOU under a revenue-sharing agreement. The Tribunal concluded that the entire amount received by the Appellant should be considered the value of the service, including the IGNOU share.

3. The Tribunal differentiated this case from the precedent cited by the Appellant, as it involved the classification of franchisee services. In the present scenario, the consideration received by the Appellant from students, even if shared with IGNOU, constituted the total value of the service. Therefore, the computation of the applicable percentage for service tax on exempted services was deemed correct by the lower authority. Consequently, the Tribunal upheld the impugned order, dismissing the appeal filed by the Appellant.

This detailed analysis of the judgment provides a comprehensive overview of the issues raised, arguments presented, and the Tribunal's reasoning leading to the final decision.