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2024 (10) TMI 680 - AT - Service TaxRecovery of service tax - appellant had been filing NIL ST-3 returns and not paid service tax - development of e- learning course content and supply of tutors for online tutoring, since the consideration is received in foreign exchange - Applicability of service tax on providing training under the Sant Shiromani Ramdas High Skill Development Programme by the State of Gujarat - Leviability of service tax on other receipts - place of provision of service - export of service or not - extended period of limitation. Online Information and Database Access or Retrieval Service - Service tax on development of e- learning course content and supply of tutors for online tutoring,since the consideration is received in foreign exchange - HELD THAT - In the present case, the appellant has designed and developed the e-learning course content and supplied against consideration to their counterpart in USA who ultimately sold the same to other customers in USA. The customers in USA placed the same on websites allowing the users to access and retrieve data. Therefore, the services rendered by the appellant to M/s. Focus Care Inc, USA cannot fall within the scope of Online Information and Database Access or Retrieval Service . Consequently, it is an export of service since the recipient of the service is located in USA in view of the Rule 3 of the POPS Rules, 2012 read with Rule 6A of the Service Tax Rules, 1994. Similarly, also in the case of supply of tutors for online tutoring to M/s. Advance Tech Enterprises, UAE, the appellant merely provided tutors to M/s. Advance Tech Enterprises, UAE and the web platform is not hosted by the appellant and also does not belong to the appellant. The appellant also does not provide any access to the web platform which is provided by M/s. Advance Tech Enterprises to its students. It is not an automated web-based services which are completely automated and required minimum human intervention; but the online tutoring provided to M/s. Advance Tech Enterprises, UAE involves interaction between the tutors and the students. In view of the judgment of the Tribunal in the case of M/S DEWSOFT OVERSEAS PVT. LTD. VERSUS CST, NEW DELHI 2008 (8) TMI 50 - CESTAT NEW DELHI , the said service cannot be considered as Online Information and Database Access or Retrieval Service . Applicability of service tax on providing training under the Sant Shiromani Ramdas High Skill Development Programme by the State of Gujarat - HELD THAT - The observation of the Commissioner that skill development scheme is not connected with NCVT / MES is incorrect which is also evident from the Publication of the Government of Gujarat under Skill Development Initiative Scheme under which training is given in Modular Employable Skill (MES) leading to certification by NCVT. Thus, the finding of the Commissioner is contradictory of the publication of the Government of Gujarat; hence cannot be sustained. Leviability of service tax on other receipts - HELD THAT - The Commissioner s finding that the appellant has not provided evidences also seems to be not based on record. Besides, the appellant has also placed Chartered Accountant certificate confirming the entry in the P L Account relates to purchase and sale of fabrics during the relevant period. It is found that though the Finance Manager of the appellant had, at the very beginning of the investigation, disclosed the fact that other receipts relates to purchase and sale of fabrics, the Department did not proceed further with the investigation to ascertain the veracity of the said claim - the learned Commissioner has rejected the said contention of the appellant on the ground that sales turnover of the fabrics was not declared in their VAT returns - there are no merit in the order of the learned Commissioner confirming the demand on other receipts considering the same as rendering of services by the appellant. The impugned order is set aside - Appeal allowed.
Issues Involved:
1. Whether the services rendered by the appellant, including e-learning courses and online tutoring, are classified as "online information and database access or retrieval service" and thus not considered export of service, making them liable for service tax. 2. Whether services provided under the "Sant Shiromani Ravidas High Skill Development" program for the Government of Gujarat are subject to service tax. 3. Whether the income reflected as 'other receipts' in the appellant's balance sheet is liable for service tax. 4. Whether the extended period of limitation is applicable in confirming the demand for service tax. Issue-Wise Detailed Analysis: 1. E-learning Courses and Online Tutoring Services: The appellant provided e-learning course content to a company in the USA and tutors for an online tutoring platform in the UAE. The appellant argued that these services constitute "export of service" under Rule 6A of the Service Tax Rules, 1994, as the services were provided to recipients outside India, and payments were received in foreign exchange. The Revenue contended that these services fall under "Online Information and Database Access or Retrieval Service" as per Rule 9(b) of the Place of Provision of Service Rules, 2012, making the appellant liable for service tax since the place of provision is in India. The tribunal examined the nature of the services and concluded that the e-learning courses and online tutoring do not fit the definition of "online information and database access or retrieval service," as they involve significant human interaction and are not fully automated. Therefore, these services qualify as exports, and no service tax is payable. 2. Sant Shiromani Ravidas High Skill Development Program: The appellant acted as a project implementation agency for the Government of Gujarat under a centrally sponsored scheme. The appellant claimed exemption from service tax, arguing that the services were part of a government program and constituted an approved vocational education course under Section 66D(1) of the Finance Act, 1994. The Commissioner denied this exemption, stating that the appellant was not registered with the Directorate General of Employment and Training. However, the tribunal found that the program was indeed a modular employable course approved by the National Council of Vocational Training (NCVT) and that the appellant's role as a project implementing agency aligned with government initiatives. Consequently, the tribunal held that the services provided under this program are not liable for service tax. 3. Income Reflected as 'Other Receipts': The appellant asserted that the income categorized as 'other receipts' in their financial statements pertained to the sale of fabrics, a trading activity not subject to service tax. The tribunal noted that the appellant had provided evidence, including financial statements, purchase and sales invoices, and a Chartered Accountant's certificate, supporting their claim. The tribunal criticized the Commissioner for disregarding this evidence and concluded that the income from the sale of fabrics should not be treated as service income subject to service tax. 4. Extended Period of Limitation: The appellant contested the invocation of the extended period of limitation, arguing that there was no suppression of facts or misrepresentation, as all relevant financial details were disclosed in their records. The tribunal agreed, citing precedents that the extended period cannot be invoked without evidence of intent to evade tax. The tribunal found that the appellant acted in good faith under a bona fide belief regarding their tax liabilities, and thus, the extended period of limitation was not applicable. Conclusion: The tribunal set aside the impugned order, allowing the appeal on merit, and concluded that the services provided by the appellant were not liable for service tax. The tribunal also granted consequential relief as per law.
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