2013 (10) TMI 250 - AT - Service Tax

Waiver of pre deposit - Coaching for spoken English - Held that - Prima facie, we find merit in the argument of Ld. Advocate that when there was a clarification issued by the Board, it is not proper to invoke extended period of limitation for demanding service tax. The Tribunal also, in cases cited above have gone by such clarification. But the issue of taxability for the period subsequent to the issue of circular dated 28-01-09 has to be decided afresh. - stay granted partly.

Summary

Issues:
1. Taxability of coaching services under entry 65 (105) (zzo) of the Finance Act, 1994.
2. Eligibility for exemption under notifications 9/03-ST and 24/04-ST.
3. Validity of invoking the extended period of 5 years for demanding service tax.
4. Classification of the institute as a foreign language institute.
5. Consideration of predeposit and waiver of balance dues during appeal.

Analysis:

Issue 1: Taxability of coaching services
The applicant operated a coaching center for Spoken English named 'Speak English,' which the Revenue deemed taxable under entry 65 (105) (zzo) of the Finance Act, 1994. The applicant initially paid service tax for the period 2006-07 but ceased payment later. A show cause notice was issued for non-payment of tax for subsequent periods, resulting in a confirmed amount of Rs.3,65,193/- against the applicant for the period 1-04-04 to 30-06-09. The Commissioner (Appeals) upheld this decision, leading the applicant to appeal before the Tribunal.

Issue 2: Eligibility for exemption under notifications
The applicant argued for exemption under notifications 9/03-ST and 24/04-ST, stating that the coaching provided helped trainees in securing employment. The advocate referred to circulars by the Tax Research Unit supporting the eligibility of foreign language institutes for exemption under notification 9/03-ST. The applicant also cited previous stay orders granted by the Tribunal in similar cases.

Issue 3: Validity of invoking extended period
The advocate contended that the show cause notice invoking the extended period of 5 years for demanding service tax was unwarranted due to the Board's clarification. The Revenue argued against this, emphasizing that the institute did not provide qualifications leading to employment, as per Board circulars.

Issue 4: Classification of the institute
The Revenue disputed the classification of the applicant's institute as a foreign language institute, citing Board circulars that emphasized the institute's role in improving exam success chances rather than providing qualifications for employment.

Issue 5: Predeposit and waiver of balance dues
The Tribunal found merit in the advocate's argument regarding the Board's clarification, stating that the extended period of limitation for demanding service tax might not be appropriate. However, the issue of taxability for the period post the circular dated 28-01-09 needed further examination. A predeposit of Rs.69,000/- was ordered, with compliance due by a specified date. The Tribunal waived the balance dues pending the appeal upon compliance with the predeposit directive.