2012 (10) TMI 182 - AT - Service Tax

Condonation of delay of 16 days - Granted as main appeal filed in time. - Delay condoned. Service Tax Liability on coaching centers- Pre- schooling coaching- sale of text books- conducting of mock test series- Held that - sale of text books,conducting of mock test series and coaching classes was not an independent activity, Service Tax paid has to be treated as as cum duty price and rate of duty has to be determined. The appellants has to make further deposit of Rs. 20,00,000/- (Rupees Twenty lakhs only) within a period of 8 weeks from today, subject to which pre-deposit of balance amount of duty and entire amount of penalty shall stand waived.

Issues:
1. Condonation of delay in filing the appeal.
2. Demand of Service Tax against the applicant.
3. Dispute regarding the nature of services provided by the applicant.
4. Imposition of penalties by the Commissioner.
5. Lack of evidence provided by the applicant.
6. Financial hardship claimed by the appellant.
7. Interpretation of tax laws and rates applicable.
8. Decision on the appeal and stay petition.

Condonation of Delay:
The Tribunal condoned the delay of 16 days in filing the appeal, considering that the main appeal was filed within the time limit, and the present appeal was only by the Managing Director. The delay was condoned, and the COD application was allowed.

Demand of Service Tax:
The Tribunal noted that a demand of Service Tax of Rs.98,93,491/- was confirmed against the applicant, along with penalties under sections 77 and 78 of the Finance Act. Additionally, a penalty was imposed on the Managing Director. The case involved the provision of coaching classes liable to Service Tax from June 2003 onwards.

Nature of Services Dispute:
The dispute centered around the services provided by the applicant, including pre-school coaching, sale of textbooks, and mock test series. The Revenue contended that certain activities were integral to coaching and should be included in the taxable value. The appellant argued that pre-school coaching was exempt from Service Tax and that the sale of study material was an independent activity.

Penalties Imposed:
The Commissioner confirmed the demand and imposed penalties, leading to the appeal and stay petition. The Tribunal observed that the adjudicating authority found the appellant unable to substantiate their claims regarding pre-school coaching and separate sale of books, leading to the confirmation of the demand.

Lack of Evidence:
The Tribunal noted the lack of evidence provided by the appellant, such as names of students, separate receipts for book sales, and disclosure in ST 3 returns. The appellant failed to produce any ST-3 return to support their claims.

Financial Hardship Claim:
The appellant claimed financial hardship, citing a provisional balance sheet. However, the Revenue argued against this claim, pointing out reserve and surplus in the balance sheet. The Tribunal found that the balance sheet did not reflect serious financial difficulty.

Interpretation of Tax Laws:
Arguments were made regarding the treatment of Service Tax as cum duty price, applicable tax rates, and the timing of tax calculations. The appellant was directed to make a further deposit based on these considerations.

Decision on Appeal:
Considering the evidence presented and the financial position of the appellant, the Tribunal directed the appellant to make a further deposit, subject to which the pre-deposit balance and penalty would be waived and recovery stayed during the appeal's pendency. Compliance was set for a future date, and the COD application was disposed of.

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