2010 (2) TMI 327 - AT - Service Tax

Stay-Dispensation of pre-deposit- The service provided by the assessee to their students is commercial training and coaching service which became taxable for service tax w.e.f. 1-7-2003. The assessee had not paid service tax on the said amounts nor disclosed the relevant facts to the department in the relevant returns. Held that- prima facie demand for part period sustainable. Plea on limitation and suppression of facts not acceptable at interim stage. Pre deposit of Rs. 10 lakhs directed. Pre deposit of balance amount waived.

Summary

Issues:
1. Demand of service tax on fees collected from students prior to 1-7-2003 and during October 2004 to March 2006.
2. Conflict of decisions regarding the retrospective effect of Section 67 of Finance Act, 1994 and Service Tax Rules.
3. Plea of limitation raised by the appellant and alleged suppression of facts by the department.

Analysis:

Issue 1:
The case involves a demand for service tax on fees collected by the assessee from students before 1-7-2003 and between October 2004 to March 2006 for "commercial training and coaching" services. The department invoked the extended period of limitation under Section 73(1) of the Finance Act, 1994, to demand service tax and impose a penalty. The original and appellate authorities confirmed the demand and penalty, leading to the appeal seeking waiver of pre-deposit and stay of recovery.

Issue 2:
The conflict arises regarding the retrospective effect of Section 67 of the Finance Act, 1994, and the Service Tax Rules. The appellant argued that no service tax was leviable on amounts collected from students before 1-7-2003 due to the non-retrospective nature of the relevant amendments. Citing precedent, the appellant claimed that no service tax was due for amounts received before the service was rendered. In contrast, the department relied on a different decision linking service tax to the receipt of service charges, even if collected in advance.

Issue 3:
The appellant raised a plea of limitation, contending that all relevant data was submitted to the department in response to an earlier show-cause notice issued in November 2004. The appellant claimed that the department was aware of the facts through submitted annexures, refuting the allegation of suppression of facts. However, the department argued that the relevant information was only provided after the issuance of the show-cause notice in question, implying suppression of facts. The Tribunal found substance in the department's submission, directing the appellant to pre-deposit a reasonable amount of service tax for the period October 2004 to March 2006.

In conclusion, the Tribunal upheld the demand for service tax on fees collected for "commercial training and coaching" services, requiring the appellant to pre-deposit a specific amount for a certain period while addressing the conflict of retrospective effect and the plea of limitation raised during the proceedings.