2017 (5) TMI 52 - AT - Service Tax

Commercial Coaching and Training Service - rendering of technical education on the computer subject - appellant was rendering of technical education on the computer subject. He provided services to the Government of India through the nodal agency M/s. Small Industries Services Institute, Chennai, who were the beneficiary of the fees received from the trainees, through the appellant - Held that - It is necessity of the law that there should not be arbitrary taxation. The subject of the State can only be taxed under express provision of law without any intendment. Therefore, appellant is entitled to a fair opportunity of hearing for determination of the nature and character of receipt of the concerned period and to determine taxability thereof - the appeal is remanded to the adjudicating authority to reach to a judicious consideration of taxability of services provided - appeal allowed by way of remand.

Summary

Issues:
1. Taxability of services provided by the appellant under different categories.
2. Allegations of multiple taxation on the same receipt.
3. Nature of franchise arrangement between the appellant and franchisees.
4. Lack of opportunity for the appellant to explain the nature of receipts.
5. Benefit of relevant notifications for exemption.
6. Fair opportunity of hearing and avoidance of arbitrary taxation.

Analysis:

Issue 1 - Taxability of services provided by the appellant under different categories:
The appellant argued that the services provided were related to technical education in the field of computers, facilitated through a nodal agency. The revenue sought to tax the receipts under Commercial Coaching and Training Service and Business Auxiliary Service. The appellant contended that the same receipt cannot be taxed under two different categories. The franchise arrangement with franchisees was also a point of contention in determining the taxability of the services.

Issue 2 - Allegations of multiple taxation on the same receipt:
The appellant raised concerns about overlapping demands due to the multiplicity of taxation on the same receipt. It was argued that there should not be double taxation, and the appellant should be classified under one category of taxable services to avoid such issues.

Issue 3 - Nature of franchise arrangement between the appellant and franchisees:
The franchise arrangement between the appellant and franchisees, where 30% of the realization from coaching was payable to the appellant, was a subject of taxation under the category of Commercial Coaching and Training. The appellant did not dispute the demand on this count.

Issue 4 - Lack of opportunity for the appellant to explain the nature of receipts:
The appellant contended that the impugned order was passed without granting them an opportunity to explain the proper nature and character of the receipts. This lack of opportunity led to a miscarriage of justice and arbitrary demands being raised.

Issue 5 - Benefit of relevant notifications for exemption:
The appellant claimed entitlement to the benefit of Notification No.10/2003-ST and No.14/2004-ST. They argued that these notifications should be considered in determining the taxability of the services provided.

Issue 6 - Fair opportunity of hearing and avoidance of arbitrary taxation:
The judgment emphasized the necessity of avoiding arbitrary taxation and ensuring a fair opportunity of hearing for the appellant. It was directed that the appellant should have the chance to argue on the benefit of relevant notifications and that there should not be double taxation. The appeal was remanded to the adjudicating authority for a judicious consideration of the taxability of services provided.

In conclusion, the judgment highlighted the importance of fair procedures, avoidance of double taxation, and the need for a thorough examination of the nature of services provided by the appellant to ensure proper tax treatment.