2018 (7) TMI 1758 - AT - Service Tax

Commercial Training & Coaching Services - case of the Revenue is that the appellant themselves are engaged in providing IT Education through the up front companies i.e. M/s APLL - Held that - The case are not in dispute that the coaching centers are registered coaching center and provide services to their students. The coaching centers are also private limited companies and having separate identity known by the Registrar of Companies - appellant is engaged in only selling of study material to the students of these coaching centers and paying VAT on sale of these study material. It cannot be said that these coaching centers or up front companies of the appellant and the appellant is liable to pay service tax on the payment of sale of study material - demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax under 'Commercial Training & Coaching Services' against the appellant.
2. Allegation of providing IT Education services through companies and demand of service tax on sale of study material.
3. Nexus between the appellant and coaching institutes selling study material.
4. Applicability of service tax on sale of study material.
5. Interpretation of the relationship between coaching centers and the appellant.

Analysis:
1. The appellant appealed against an order demanding service tax under 'Commercial Training & Coaching Services' for the period from April 1, 2009, to March 31, 2014, along with interest and penalties imposed through a show cause notice dated October 21, 2014.

2. The Revenue alleged that the appellant was engaged in providing IT Education services through companies and selling study material to avoid service tax. The Revenue claimed that the study material sold by the appellant was part of providing educational services through these companies. The demand of service tax was confirmed by the adjudicating authority, leading to the appeal.

3. The appellant contended that they were only selling study material independently for students enrolled with coaching institutes and had no direct association with the coaching centers providing services. The appellant argued that they were not providing any service to the students or the coaching institutes and, therefore, should not be liable to pay service tax.

4. The appellant clarified that they sold study material, and in cases where students returned the material, the appellant deducted an amount, which they believed was not subject to service tax. They also highlighted that the coaching centers were paying service tax on the fees collected directly from students, indicating that the coaching centers were independent entities, not front companies of the appellant.

5. Upon detailed consideration, the Tribunal found that the coaching centers were separate entities providing coaching services to students, and the appellant was solely engaged in selling study material to these centers. The Tribunal referred to a previous case and held that the amount collected by the appellant from selling study material was not taxable under the Finance Act, 1944. The Tribunal rejected the Revenue's claim that the coaching centers were front companies of the appellant, emphasizing that the coaching centers operated independently and paid service tax on the fees collected from students.

6. Consequently, the Tribunal concluded that the Revenue's case lacked a valid basis. The impugned order demanding service tax was set aside, and the appeal was allowed in favor of the appellant, granting any consequential relief deemed necessary.

7. The judgment was delivered by the Tribunal, comprising Mr. Ashok Jindal, Member (Judicial), and Mr. Anil G. Shakkarwar, Member (Technical), providing a detailed analysis of the issues raised and ultimately ruling in favor of the appellant, dismissing the demand for service tax.