2014 (12) TMI 375 - AT - Service Tax

Waiver of pre deposit - Valuation of goods - Exemption under Not. 12/2003-ST - Whether the value of study material /text books sold by the appellants is includible in the value of commercial training or coaching service - Held that - clarification in the Board Circular dated 20.06.2003 is misconceived, clearly illegal and contrary to the statutory exemption Notification dated 20.06.2003. Where the legislature has spoken or in exercise of its statutory power exemption is granted by the Central Government under Section 93 of the Act, the CBEC has no manner of power, authority or jurisdiction to deflect the course of an enactment or the exemption granted. Grant of exemption from the liability to tax is power exclusively authorized to the Central Government under Section 93 of the Act. This statutory provision accommodates no participatory role to the Board. In seeking to engraft restrictions on the generality and plenitude of the exemption granted by the Central Government, the CBEC transgressed into the domain of the Central Government under Section 93 of the Act, a course of action clearly prohibited. No notice or cognition can be taken by any authority or such unauthorized exertions by the CBEC. If this illegal and unauthorized condition, imposed on the generality of exemption granted by the Central Government vide Notification No. 12/2003-ST., dated 20.06.2003 is ignored, as it must, the assessee/appellant is clearly entitles to the benefit of the exemption. Appellants have made out a good case for waiver of pre-deposit - Stay granted.

Summary

Issues:
Whether the value of study material/text books sold by the appellants is includible in the value of commercial training or coaching service.

Analysis:
The appellants filed a stay application along with an appeal against an Order-in-Original. The main issue was the inclusion of the value of study material/text books in the assessable value for charging service tax. The appellants argued for exemption under Notification No. 12/2003-ST. The adjudicating authority referred to a Board Circular stating that the exemption applies only to the sale value of standard text books, not other study material. The authority held that the amount received for study material/text books would be included in the assessable value for service tax.

The appellants contended that the Notification No. 12/2003-ST applied to them, and Board circulars cannot alter the scope of the notification. The issue was compared to a CESTAT decision in another case where the Board Circular was deemed misconceived and contrary to the exemption notification. The decision highlighted that the value of books or course material supplied by the assesses should be included in the taxable service value, subject to specific conditions of the exemption notification.

The Tribunal analyzed the situation and found the Board Circular to be illegal and contrary to the statutory exemption notification. It emphasized that the Central Government, not the CBEC, has the power to grant exemptions from tax liability. The Tribunal concluded that the part of the clarification in the Circular imposing conditions on the exemption was unauthorized and of no effect. Therefore, the appellants were entitled to the benefit of the exemption under Notification No. 12/2003-ST. Consequently, the Tribunal waived the pre-deposit and stayed the recovery of the adjudicated liabilities during the appeal process.