Pre-deposit in service tax dispute over coaching study material upheld where the material was inseparable from the coaching service.

A prima facie case for waiver of pre-deposit was not made out where the study material supplied with commercial coaching had an intimate and inseparable connection with the coaching service. The Tribunal noted that the material made the coaching meaningful and fruitful for enrolled students, and that there was no evidence the books were independently sold as textbooks or otherwise exempt. The notification relied on was therefore not treated, at the stay stage, as excluding the value of study material from tax. Pre-deposit was directed, and recovery of the balance demand was stayed only on compliance.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery in respect of the service tax demand arising from the value of study material supplied along with commercial coaching.

Analysis: The Tribunal recorded a prima facie view that the coaching material had an intimate and inseparable connection with the commercial coaching service and that the study material made the coaching meaningful and fruitful for enrolled students. It noted the absence of material showing that the books were independently sold as text books or otherwise enjoyed exemption. On that basis, the notification relied upon by the appellant was not treated as excluding the value of study material from tax at the stay stage, and the Revenue was held likely to be prejudiced if no deposit was ordered.

Conclusion: The appellant was directed to make a pre-deposit of Rs. 13 lakhs within six weeks, and recovery of the balance demand was stayed on compliance.

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