2012 (11) TMI 368 - AT - Service Tax

Institute in banking sector granted waiver of service tax pre-deposit pending appeal process

The Tribunal granted the waiver of pre-deposit of the entire service tax amount and interest to the renowned institute in the banking and finance sector, ... Waiver of pre-deposit - extended period of limitation - departmental clarification - Commercial Training and Coaching ServicesExtended period of limitation - departmental clarification - Extended period of limitation invoked for confirmation of service tax demand is not invokable in view of prior departmental/Board clarifications. - HELD THAT: - The Tribunal noted that the applicant had obtained a departmental letter dated 07.12.2006 stating that the banking training provided by the National Institute of Bank Management did not fall within the scope of 'Commercial Training' for levy of service tax, and that a Board clarification was already issued in 2005. Given that the activity was therefore within the knowledge of the department, the Tribunal held that invocation of the extended period of limitation for the demand could not be sustained. The decision rests on the presence of prior official clarifications which placed the character of the service before the department, defeating the basis for invoking extended limitation.Invocation of the extended period of limitation was held not invokable.Waiver of pre-deposit - Commercial Training and Coaching Services - Waiver of the entire pre-deposit of service tax and interest during pendency of appeal was granted. - HELD THAT: - Having found that the extended period of limitation could not be invoked in view of the prior departmental and Board clarifications, the Tribunal concluded that the applicant had made out a prima facie case for relief. On that basis the Tribunal exercised its discretion to waive the requirement of pre-deposit of the service tax and interest confirmed under the impugned order in respect of the services characterised as 'Commercial Training and Coaching Services' for the periods under dispute.Pre-deposit of the entire amount of service tax and interest was waived during the pendency of the appeal.Final Conclusion: The Tribunal held that earlier departmental/Board clarifications placed the nature of the services within the knowledge of the department, rendering the extended period of limitation inapplicable, and on that basis granted waiver of the entire pre-deposit of service tax and interest during the pendency of the appeal. Issues:Waiver of pre-deposit of service tax under the category of 'Commercial Training and Coaching Services'.Analysis:The case involved the applicants, a renowned institute in the banking and finance sector, seeking waiver of pre-deposit of service tax amounting to Rs.3,58,38,984/- along with interest confirmed against them for providing services categorized as 'Commercial Training and Coaching Services'. The institute, established by the Reserve Bank of India, engaged in research, training, consultancy, and publication activities, received a show-cause notice for service tax demand covering the period from 1.10.2003 to 30.09.2008. The institute had sought clarification from the department regarding the applicability of service tax on their activities, and based on the department's response, they believed they were not liable for service tax under the category of 'Commercial Training.' However, the department contended that the institute's activities fell under taxable services and invoked the extended period for demand based on a clarification from the Board in 2005.Upon considering the submissions from both sides and examining the records, the Tribunal noted that the demand for the specified period had been confirmed by invoking the extended period of limitation. However, a crucial letter from the Commissioner of Central Excise in 2006 had stated that the institute's activities did not fall under the scope of 'Commercial Training' for service tax levy, as the fees charged were lower compared to similar programs offered by other institutions not liable for service tax. Additionally, the institute had also sought clarification from the Board in 2005, indicating that the department was aware of the nature of the institute's activities. Consequently, the Tribunal held that the extended period of limitation was not applicable in this case, and the institute had a prima facie case for waiver of the pre-deposit of the entire service tax amount and interest during the appeal's pendency.Therefore, the Tribunal granted the waiver of pre-deposit of the entire service tax amount and interest, providing relief to the institute pending the appeal process.