2015 (7) TMI 272 - AT - Service Tax

Waiver of pre deposit - Disallowance of CENVAT Credit - service tax was not paid on the amount of scholarships / fee discounts / fee concessions - Held that - Appellant has paid service tax on the entire amount received for providing commercial training or coaching service. The so-called scholarship was nothing but a fee discount granted to certain students. In other words, it collected discounted fee from certain students and so in relation to those students the gross amount charged for providing commercial training or coaching service was the discounted fee. Thus what is called scholarship in the present case is not any amount that was paid to the students from whom fee at full rate was collected; it was just a fee discount. It is well settled that for legal analyst what is relevant is the actual nature of the transaction and not the name given to it (i.e. transaction) - appellant has been able to make out a strong prima facie case in its favour. Therefore we grant full waiver of pre-deposit and stay recovery of the impugned liability during pendency of the appeal - Stay granted.

Summary

Issues:
- Confirmation of service tax demands along with interest and penalties
- Disallowance of Cenvat credit
- Contesting impugned demands related to scholarships/fee discounts/fee concessions
- Nature of scholarships as fee discounts
- Invocation of extended period for raising demand

Confirmation of Service Tax Demands:
The appeals filed by M/s Resonance Eduventures Pvt. Ltd. and Shri R. K. Verma were accompanied by stay applications due to the confirmation of service tax demands, interest, penalties, and disallowance of Cenvat credit. While the appellant reversed the disallowed Cenvat credit amount of Rs. 8,24,031, the remaining impugned demands were contested on the basis that service tax was not paid on amounts related to scholarships, fee discounts, and fee concessions. These amounts were deemed non-deductible from the assessable value as they were provided to students as scholarships.

Nature of Scholarships as Fee Discounts:
The appellant argued that they had already paid service tax on the total amount received for providing commercial training or coaching services, and the so-called scholarships were actually fee concessions or discounts given to students. They maintained that there was no willful misstatement or suppression of facts, thus challenging the invocation of the extended period for raising the demand. On the contrary, the respondent contended that scholarships constituted amounts given to students and should not be deducted from the full fee required from students.

Judgment and Conclusion:
After considering both parties' contentions, the tribunal found that the appellant had indeed paid service tax on the entire amount received for their services. The scholarships were identified as fee discounts granted to specific students, resulting in the collection of discounted fees from those students. The tribunal emphasized that the actual nature of the transaction, not just the name given to it, was crucial. As the scholarships were essentially fee discounts, the tribunal granted a full waiver of pre-deposit and stayed the recovery of the impugned liability during the appeal's pendency. Additionally, a miscellaneous application for early hearing of the stay application was also disposed of.