2009 (11) TMI 432 - AT - Service Tax

Stay- Valuation- The impugned demand relates only to the hostel and mess charges collected from the students during the material period. Impugned order treating hostel and mess charges not includible in taxable value. Held that- in the light of the decision of Aditya College of Competitive Exams vs. CCE, 2009 -TMI - 34639 - CESTAT, BANGALORE, mess charges not includible in taxable value.

Summary

Issues:
Waiver of pre-deposit of service tax, interest, and penalties under the finance act, 1994. Interpretation of taxable value regarding hostel and mess charges. Bar on limitation for demand of service tax.

Analysis:
The appellant sought waiver of pre-deposit of service tax, interest, and penalties totaling Rs.52,39,960 under the finance act, 1994, including a penalty of Rs.75 lacs under section 78 of the Act. The appellant, a provider of Commercial coaching and training service, did not file ST3 returns for the period 1/7/2003 to 31/3/2007 and did not pay service tax on a significant portion of the value collected. The impugned order confirmed the demand of service tax and imposed penalties. The appellant argued that the demand related only to hostel and mess charges, relying on precedents where such charges were not included in taxable value. The Department contended that the appellants evaded service tax by shifting taxable value to hostel and mess charges. The Commissioner found the hostel and mess charges as part of the gross value exigible to service tax, which was deemed incorrect by the Tribunal. The Tribunal referenced previous cases to support the exclusion of mess charges from taxable value and noted that the demand was hit by limitation. Consequently, the Tribunal ordered waiver of pre-deposit and stay on recovery pending appeal decision.

This judgment involved the interpretation of taxable value concerning hostel and mess charges in the context of service tax. The Tribunal analyzed the appellant's argument regarding the exclusion of mess charges from taxable value, citing precedents to support their decision. The Tribunal found the Commissioner's treatment of hostel and mess charges as part of the gross value exigible to service tax to be incorrect. By referencing previous cases, the Tribunal established that mess charges paid by students receiving coaching could not be considered part of the taxable value under commercial coaching and training. Additionally, the Tribunal noted that the demand was hit by limitation based on relevant information and the issuance of the show cause notice. As a result, the Tribunal granted the appellant's request for waiver of pre-deposit and stay on recovery pending the appeal decision.

The issue of limitation for the demand of service tax was also addressed in this judgment. The Tribunal considered the timeline of events, including the completion of investigations and the issuance of the show cause notice. By referencing a previous case, the Tribunal established that the demand was hit by limitation, further supporting the appellant's argument. This aspect of the judgment highlighted the importance of adhering to statutory limitations in tax-related matters. The Tribunal's decision to grant waiver of pre-deposit and stay on recovery pending appeal was influenced by the finding that the demand was hit by limitation, emphasizing the significance of procedural compliance in such cases.