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2024 (4) TMI 905 - AT - Service TaxInvocation of Extended period of Limitation - Suppression of facts or not - Classification of services - real time courses provided by the Appellant - Online information and data base access and/or retrieved service (OIDAR service) or commercial training or coaching service? - HELD THAT - On perusal of the facts in the instant case, we note that the appellant was asked to submit copies of their Balance Sheet for the period 2007 2008, along with the details of the payments collected from clients/members on account of each of the services provided by them from 1.4.2007 to Sept 2008 and list of members and clients from whom such payments had been collected. It is seen that the appellant did not reply to the letter nor did they supply the requisite information. This was followed up with letter dated 23.02.2009 requesting the appellant to furnish the details on the gross amount collected and the amount on which service tax had been paid during the period 01.4.2007 to 31.01.2009. As the appellant did not cooperate, it is seen that the Asst Commissioner of Service Tax, Division 1, issued a show cause notice dated 05.3.2009 under Section 77 of the Finance Act, 1994 for non-furnishing of information. Following the receipt of this notice, the appellant filed their letter dated 17.3.2009 and supplied certain information. The Department took a view that the information supplied by the appellant prima-facie was incorrect and grossly undervalued. Having two sets of annual financial statement showing different figures clearly establishes the malafide intent of the appellant to mislead the investigations. Further, it is noted that the details as submitted by the appellant vide their letter dated 17.3.2009 was incorrect and the allegation of suppression of the taxable value is substantiated by the adjudicating authority in the impugned order. The Supreme Court s explained suppression of facts in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT , wherein the Apex Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The intention of the appellant to deliberately escape payment of tax is corroborated by the fact that two sets of Balance Sheets for the same year showing different figures of income were found during the search operations. The contention that the department had relied on the data which was based on the statement of Mr. Manoj Kumar Satyawali who is not a technical expert to generate such figures from the server, is not acceptable as the employee was working as Technical Support Executive-Customer Care and was incharge of the in-house server. In his statement, he has stated that he can only extract data, but did not have the power to amend or change the data. Therefore, the demand confirmed for by the instant show cause notice is liable to be upheld. The activity undertaken by the appellant from April 2009 was that of basic learning programs which were pre-recorded on a CD/DVD. The customers/subscribers may use such CD/DVD for their learning nothing more than this is being undertaken. From the above, it is noted that the activity being undertaken by the appellant is a sale and did not involve any service. For the period till 30.6.2012, vide Not No. 12/2003 ST, the value of goods, if any, was to be deducted for the levy of service tax. It is also noted that service tax and VAT are mutually exclusive taxes, and therefore levy of one would exclude the other - It has also been brought to notice that the subsequent show cause notices for the period 2013 14 and 2014 15 have been decided in the appellant s favour. It is also been pleaded that these orders have not been challenged by the department and have hence attained finality. It is also noted that the appellant did not have any authorised training centres as well. Consequently, the demand under Franchise service confirmed in respect of the demand notice dated 17.10.2011 does not survive. The demand confirmed in respect of the show cause notice dated 21.4.2010 for the period 2007-08 and 2008-09 along with interest, and equal penalty imposed under section 78 is upheld - the issue relating to quantification of the demand taking into consideration the contentions regarding cum-duty tax is remanded to the adjudicating authority for recalculation of demand and consequently the amount of penalty under Section 78 of the Finance Act, 1994 - the demand confirmed under the remaining 5 show cause notices set aside - appeal is allowed partially by way of remand.
Issues Involved:
1. Invocation of extended period of limitation. 2. Classification of services provided by the appellant. 3. Correctness of the taxable value and figures used. 4. Applicability of service tax on the sale of self-use packages. 5. Availability of Cenvat Credit. 6. Imposition of interest and penalties. Summary: 1. Invocation of Extended Period of Limitation: The appellant argued that the extended period of limitation was incorrectly invoked as the taxability of the same transaction had been previously adjudicated. The Tribunal noted that the appellant did not cooperate with the Department's requests for information and had provided incorrect data, leading to a search operation. The Tribunal upheld the invocation of the extended period, citing the Supreme Court's interpretation of "suppression of facts" as deliberate and with intent to evade tax. 2. Classification of Services Provided by the Appellant: The Tribunal referred to previous decisions, including the Principal Bench's ruling in the appellant's own case, which classified the appellant's activities as "commercial training or coaching service." The Tribunal rejected the appellant's argument that they were providing online education and not training or coaching. It was held that the appellant's services fell under the taxable service of "commercial training or coaching" as defined in Section 65(105)(zzc) of the Finance Act, 1994. 3. Correctness of the Taxable Value and Figures Used: The appellant contended that the service tax demand was confirmed on incorrect figures. The Tribunal found that the data retrieved from the appellant's server by an employee during a search operation was correct and untampered. The Tribunal upheld the demand based on this data, rejecting the appellant's argument that the figures were generated by a non-technical person. 4. Applicability of Service Tax on the Sale of Self-Use Packages: For the period from April 2009, the appellant argued that they were only supplying content in the form of e-books, CDs, DVDs, etc., and not providing any training or coaching. The Tribunal noted that the appellant's user agreement indicated that the packages were for self-use without any monitoring or technical support. The Tribunal held that the activity undertaken by the appellant was a sale and did not involve any service. Consequently, the demand for service tax on the sale of self-use packages was set aside. 5. Availability of Cenvat Credit: The Tribunal did not find merit in the appellant's claim for Cenvat Credit as the appellant had failed to claim it within the prescribed period and had not included it in their statutory returns. 6. Imposition of Interest and Penalties: The Tribunal upheld the imposition of interest and penalties, noting that the appellant had intentionally not disclosed the correct taxable value and had suppressed facts from the Department. The Tribunal held that the appellant was liable to pay interest under Section 75 and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. Conclusion: The Tribunal upheld the demand for the period 2007-2008 to 2008-2009, along with interest and penalties, and directed the adjudicating authority to requantify the demand considering cum-tax benefit. The demand for the period 2009-2010 to 2012-2013 was set aside due to the changed business model. The order-in-original was modified accordingly, and the appeal was partially allowed by way of remand.
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