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2018 (8) TMI 624 - AT - Service TaxExtended period of limitation - Classification of Services - Smt Sneh Piplani, Proprietor of M/s ACE Institute for Education & Language, Jaipur under an agreement with M/s ACE Institute for Education & Language, started coaching services - modification of exemption w.e.f. 27.02.2010 defining Vocational Training Institute‟ - whether the said services would be classified under the head Commercial Training & Coaching Services or otherwise? - penalties. Held that - In the facts and circumstances of the case, no case for suppression and/or malafide conduct is made out against the Appellants. Accordingly, the demand for the extended period is not sustainable and also that the Appellant is not liable to pay Service Tax for the period prior to 27.02.2010 - penalty u/s 78 also set aside. As far as penalty imposed under Section 76 is concerned, the matter remanded to the adjudicating authority to recalculate the demand for the period after 27.02.2010 and also to recalculate the penalty under Section 76 - the penalty imposed under Section 77 is reduced to ₹ 5,000/-. Appeal allowed in aprt.
Issues:
1. Classification of service under "Commercial Training or Coaching." 2. Applicability of Service Tax and penalties for the period 31.08.2007 to 31.03.2011. 3. Interpretation of exemption Notification No. 09/2003-ST and subsequent amendments. 4. Allegations of suppression and malafide conduct by the Appellants. 5. Validity of penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. Analysis: 1. The Appellant appealed against the Commissioner (Appeals) order confirming duty and penalties for providing services classified as "Commercial Training or Coaching." The Revenue alleged liability for Service Tax under Section 65(105)(zzc) of the Finance Act, 1994. The Appellants contested the show cause notice, arguing they mainly provided English language training, exempt under Notification No. 09/2003-ST. 2. The Appellants' counsel cited a Tribunal ruling stating that English language skills improve employability and should be exempt. They also highlighted an exemption amendment post-2010, making Service Tax applicable. The Appellants claimed a lack of malafide intent, believing they were exempt from Service Tax. The Revenue argued the Appellants should have paid Service Tax post-2010 exemption modifications. 3. The Tribunal found no evidence of suppression or malafide conduct by the Appellants. They ruled the demand for the extended period was unsustainable, and the Appellants were not liable to pay Service Tax pre-27.02.2010. The penalty under Section 78 was set aside. The matter of penalty under Section 76 was remanded for recalculation post-27.02.2010, and the penalty under Section 77 was reduced to Rs. 5,000. 4. The Tribunal partially allowed the appeal, concluding that no suppression or malafide conduct was proven. They set aside the penalty under Section 78, remanded the penalty under Section 76 for recalculation, and reduced the penalty under Section 77 to Rs. 5,000. The Appellants were found not liable for Service Tax pre-27.02.2010, based on the exemption provisions. 5. The judgment clarified the Appellants' liability for Service Tax and penalties, considering the exemption notifications and the absence of malafide intent. The penalties under different sections of the Finance Act were reviewed and adjusted accordingly, resulting in a partial allowance of the appeal in favor of the Appellants.
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