Successful appeal on Service Tax demand & penalty for coaching services; exemption granted under Notification No. 9/2003-S.T.

The appellant successfully appealed against the Order-in-Appeal confirming a demand and penalty under Sections 76 and 78 of the Finance Act, 1994 for short payment of Service Tax on advance fees collected for coaching services. The Commissioner (Appeals) upheld the demand and penalty under Section 78 but set aside the penalty under Section 76. The issue centered on the chargeability of Service Tax on coaching services in English language before 1-7-2003. The appellant, eligible for exemption under Notification No. 9/2003-S.T., was granted relief as coaching in English language could impart skills for employment or self-employment.

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Issues: Appeal against OIA confirming demand and penalty under Sections 76 and 78 of the Finance Act, 1994 for short payment of Service Tax on advance fees collected for coaching services before and after 1-7-2003.

Analysis:
1. The appellant filed an appeal against OIA No. 522/2006/440(RAJ)/COMMR(A)/RP/RAJ, where the Commissioner (Appeals) upheld the demand of &8377; 7,082/- and penalty of &8377; 14,000/- under Section 78 but set aside the penalty of &8377; 7,000/- under Section 76 of the Finance Act, 1994. The issue involved was the short payment of Service Tax on advance fees collected for coaching services both before and after 1-7-2003, totaling &8377; 85,525/-.

2. The appellant did not appear in person but submitted written arguments citing departmental Circular No. 59/08/2003, dated 20-6-2003, claiming no Service Tax was leviable for providing Coaching of English Language. The submission was received by CESTAT registry on 1-10-2013.

3. The respondent's representative argued that Notification No. 9/2003-S.T., dated 20-6-2003, became effective from 1-7-2003 and defended the order passed by the first appellate authority.

4. The case records were examined, and it was determined that the issue revolved around the chargeability of Service Tax on the amount collected for coaching in English language before 1-7-2003. The Circular No. 65/14/2003-S.T., dated 5-11-2003, imposed Service Tax liability on Coaching Services effective from 1-7-2003. However, a full exemption was granted to a "Vocational Training Institute" under Notification No. 9/2003-S.T., dated 20-6-2003, until 29-2-2004. The definition of a vocational training institute included centers providing coaching to impart skills for employment or self-employment directly after training.

5. It was established that coaching in English language could equip trainees with skills for seeking employment or self-employment, making the appellant eligible for exemption under Notification No. 9/2003-S.T. The notification did not specify any restriction on coaching in foreign or Indian languages. Since there was no evidence of coaching in English language post 29-2-2004, the appellant's appeal was allowed by setting aside the OIA dated 18-9-2006.

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