2018 (7) TMI 863 - AT - Service Tax

Valuation - Commercial coaching and training services - inclusion of value of study material - Burden to prove on Revenue - Held that - Department has stated that there were no separate records to indicate the salary received by Prof. Thomas and the cost of the study material, it is found that the SCN itself has categorically stated these amounts differently. It is for the Department to show that the cost of materials is not separately shown and that the professional charges were not towards the classes conducted by the respondent in M/s/ Chaithanya Classes; the Order-in-Original wants the respondents to prove the otherwise - having accepted that fact; the same cannot be included in the value of the taxable service in terms of the Notification No. 12/2003- Service Tax; therefore, we find that the demand on this count is not sustainable. Salary or remuneration received by the respondent - Held that - Neither the SCN nor the Order-in-Original give a categorical finding or evidence to show that the respondent s contention on this count is wrong. In fact, it was for the Department to show proof to that extent rather than going by the premise that the respondents have not shown any proof to that effect. Since the Department has made the allegations, it was for the Department to prove the same - In the absence of any proof shown by the Department, salary/remuneration earned by the respondent cannot be taxed under Service Tax. As the main demand does not survive in pursuance of the interest and penalty would also not survive as a corollary. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Service Tax liability on commercial training and coaching services provided by the respondent to another coaching center.
2. Classification of amounts received by the respondent as professional fees or salary/remuneration.
3. Justification for levying interest and penalty under relevant sections of the Finance Act, 1994.

Analysis:

Issue 1: Service Tax liability on commercial training and coaching services
The case involved the respondent, a commercial training center, providing services to another coaching center. The Department alleged that the amounts received were not included for Service Tax payment. The Order-in-Original confirmed the demands, but the Commissioner (A) allowed the appeal with consequential relief. The Tribunal noted that the amounts received were for coaching services and study material. The Department failed to prove that the study material cost should be included in the taxable service value. Therefore, the demand on this count was deemed unsustainable.

Issue 2: Classification of amounts received
The Department argued that the amounts received were professional fees and not salary/remuneration. However, the Tribunal found no evidence supporting this claim. It was noted that the Department failed to provide proof that the amounts should not be considered as salary or remuneration. As a result, the demand for Service Tax on these amounts was deemed unjustified, and the interest and penalty were also not sustainable in the absence of proof.

Issue 3: Levying of interest and penalty
The Tribunal emphasized that it was the Department's responsibility to prove the allegations made regarding the nature of the amounts received. Since no documentary evidence was provided to support the claims, the demand for Service Tax, interest, and penalty could not be upheld. Consequently, the impugned order of the Commissioner (A) was upheld, and the Department's appeal was rejected.

In conclusion, the Tribunal ruled in favor of the respondent, highlighting the importance of providing concrete evidence to support claims in tax disputes. The judgment emphasized the need for clear documentation and proof to establish tax liabilities accurately.