2013 (11) TMI 713 - AT - Service Tax

Tribunal grants waiver of pre-deposit for coaching class materials

CADD Centre Training Services (P) Ltd. Versus Commissioner of Central Excise, Chennai-IV

CADD Centre Training Services (P) Ltd. Versus Commissioner of Central Excise, Chennai-IV - 2014 (35) S.T.R. 842 (Tri. - Chennai) Issues:- Whether the consideration received for the sale of training material should be included in the value of services rendered by the applicantRs.- Whether the exemption under Notification 12/03-ST is applicable to the sale of training materials by the applicantRs.- Whether the applicant is liable to pay service tax on the materials sold directly to trainees or franchiseesRs.- Whether the VAT rate on text books is relevant in determining the diversion of value of services to the value of text booksRs.Analysis:1. The applicant provided commercial coaching and training services in various fields through their centers and franchisees. They sold text books to trainees and franchisees as part of the training process. The Revenue argued that the consideration received for the sale of training material should be part of the services' value, leading to a show cause notice for recovery of unpaid service tax.2. The Revenue contended that the exemption under Notification 12/03-ST for goods sold during service provision applied only to standard text books, not custom-made ones. The applicant had not paid service tax on materials sold directly to trainees or franchisees. An amount of Rs. 2,33,49,899/- was confirmed against the applicant after adjudication.3. The applicant's counsel argued that the exemption under Notification 12/03-ST should apply to all materials sold, not limited to standard text books. They claimed to have sold text books to interested parties beyond service recipients. They cited a similar case for precedent where waiver of dues was granted.4. The Revenue maintained that the text books sold were specific to the training classes provided by the applicant and franchisees. They argued that the low VAT rate on text books indicated a diversion of service value to the value of books. They referenced legal decisions supporting their position.5. The Tribunal considered both arguments and noted that previous cases had differing outcomes regarding the sale of study materials by coaching classes. They found merit in adopting the reasoning of a specific case and granted a waiver of pre-deposit of dues pending appeal, staying the collection of the dues during the appeal process.This comprehensive analysis outlines the key legal issues, arguments presented by both parties, relevant legal provisions, and the Tribunal's decision in the judgment.