2018 (7) TMI 531 - AT - Service Tax

Commercial Training or Coaching Service - conducting training / coaching programme on personality development as well as English speaking course - whether the appellant is liable to pay service tax under Commercial Training or Coaching Service for the courses which include personality development course, English speaking course and human resource development course? - Held that - The Tribunal in the case of C.S. Natarajan 2018 (6) TMI 792 - CESTAT CHENNAI has considered identical facts wherein it has been held that the said courses would fall under the category of vocational training course - the demand in respect of Commercial Training or Coaching Service cannot sustain. Penalty - franchisee service - Held that - appellant had failed to discharge service tax in respect of franchisee service due to the confusion in the change of the definition of franchisee service. The period involved is 1.7.2003 to 30.9.2006 when the definition of franchisee service underwent changes for more than one time - penalty set aside by invoking section 80 - demand of tax with interest upheld. Appeal allowed in part.

Summary

Issues:
1. Liability to pay service tax under 'Commercial Training or Coaching Service'.
2. Liability to pay service tax on franchisee service and penalty imposition.

Analysis:

Issue 1: Liability to pay service tax under 'Commercial Training or Coaching Service'
The appellant, engaged in conducting training programs, was alleged to have not discharged service tax under the category of 'Commercial Training or Coaching Service'. The original authority and Commissioner (Appeals) upheld the demand, interest, and penalty under the Finance Act, 1994. The appellant contended that the courses offered, including personality development and English speaking, aimed at improving skills for employment or self-employment, falling under the exemption Notification 9/2003 for vocational courses. The appellant cited precedents to support the argument. The Tribunal, considering similar cases, held that the courses indeed fell under vocational training, setting aside the demand under 'Commercial Training or Coaching Service'.

Issue 2: Liability to pay service tax on franchisee service and penalty imposition
Regarding the liability for franchisee service, the appellant claimed confusion due to changes in the definition during the period in question. The Tribunal acknowledged the confusion caused by changes in the definition of franchisee service from 1.7.2003 to 30.9.2006. Considering the appellant's confusion and lack of deliberate intention to evade tax, the Tribunal invoked section 80 of the Finance Act, 1994, and waived the penalty imposed for franchisee service. Consequently, the impugned order was modified, setting aside the demand for 'Commercial Training or Coaching Service' and the penalty for franchisee service, while upholding the demand and interest for franchisee service. The appeal was partly allowed in favor of the appellant.