2014 (12) TMI 414 - HC - Service Tax

Appeals Dismissed for Non-Compliance with Stay Order

M/s. STC Technologies Pvt. Ltd. Versus The Customs, Excise and Service Tax Appellate Tribunal

The High Court upheld the dismissal of appeals by the Tribunal due to non-compliance with a modified stay order, without considering the merits of the ... Waiver of pre deposit - Commercial training or coaching - Computer Training Services - Held that:- Even as per the statement originally made, the appellant is registered as commercial training and coaching service. 50% of the service tax has been discharged and for the balance, it was claimed that it relates to sale of course material, eligible for exemption. This plea was primarily declined in the order of the Tribunal in [2013 (12) TMI 215 - CESTAT CHENNAI] stating that only standard text books will be considered for exemption and the plea of the appellant was not accepted in the order. On the contrary, on verifying the sample receipts and invoices, the Tribunal came to the conclusion that the amount received from the trainees as course fee was artificially split to avoid payment of service tax. We, therefore, find no error in the order of the Tribunal. The next plea that Notification No.24/2004-ST dated 10.9.2004 provides exemption for vocational training imparted by vocational training institutes. The said Notification was amended by Notification No.19/2005-ST, which inserted a proviso and explanation, and makes it clear that Notification No.24/2004 will not apply to taxable services provided in relation to commercial training or coaching by a computer training institute. According to the Department, the appellant is a computer training institute. The Tribunal was justified in distinguishing the interlocutary order passed by the Bangalore Tribunal in the case of Rayudu Vision Media Ltd. Vs. Commissioner of Central Excise, Hyderabad reported in [2013 (12) TMI 52 - CESTAT BANGALORE], as it found that it related to a case of training in 2D and 3D animations and it was not a case of computer training, but only a vocational training conducted with the aid of computers. Nevertheless, we find no reason why the Tribunal in the present case should be bound by the interlocutary order passed by the Bangalore Tribunal in the case of Rayudu Vision Media Ltd. Vs. Commissioner of Central Excise, Hyderabad reported in [2013 (12) TMI 52 - CESTAT BANGALORE]. The order passed in the stay petition cannot have binding force. Tribunal may re-consider the discretion already exercised in Miscellaneous order based on the additional grounds raised. However, prima facie the Tribunal came to the conclusion that the proviso to Notification No.24/2004-ST dated 10.9.2004 clearly excludes the case of the appellant. At this stage, we do not find any reason to differ with the finding of the Tribunal, more so, in view of the decision of the Apex Court in the case of Commissioner of Central Excise V. Sunwin Technosolution P. Ltd. reported in [2010 (9) TMI 71 - SUPREME COURT OF INDIA]. Even on merits, we find that the appellant has not made out any prima facie case to interfere with the order of the Tribunal - Decided against assessee. Issues Involved:1. Dismissal of appeal due to non-compliance with modified stay order.2. Consideration of merits of the appeal by the Tribunal.3. Tribunal's adherence to decisions of co-ordinate Benches.4. Tribunal's refusal to modify stay order based on existing judgments.5. Applicability of exemption under Notification No.24/2004-ST for vocational training institutes.6. Tribunal's interpretation of taxable services related to commercial training or coaching by a computer training institute.Detailed Analysis:1. Dismissal of Appeal Due to Non-Compliance with Modified Stay Order:The Tribunal dismissed the appellant's appeal on 21.03.2014 solely due to non-compliance with the modified stay order dated 28.08.2013. The appellant argued that an appeal against the said order was pending before the High Court in CMA Nos.516 to 518 of 2014. However, the Tribunal did not consider this pending appeal, leading to the dismissal of the appellant's case without examining the merits.2. Consideration of Merits of the Appeal by the Tribunal:The Tribunal dismissed the appeal without considering its merits, despite having initially admitted to examine the eligibility of the appellant towards 50% of the course fee collected for course materials. The Tribunal's stay order dated 27.05.2013 indicated that the matter would be examined at the final hearing, but this was not adhered to in the final decision.3. Tribunal's Adherence to Decisions of Co-ordinate Benches:The appellant contended that the Tribunal failed to consider decisions of co-ordinate Benches in identical matters, which were in favor of the appellant. The Tribunal's decision overlooked these precedents, despite them being specifically brought to its notice.4. Tribunal's Refusal to Modify Stay Order Based on Existing Judgments:The Tribunal refused to modify its stay order, citing the Bombay High Court's decision in Baron International Ltd. vs. UOI. However, the appellant argued that the same court's subsequent judgment in Maina Khema vs. UOI allowed for modification within permissible limits. The Tribunal did not follow this more recent judgment, nor the decision of the Bangalore Bench in Rayudu Vision Media Ltd. vs. CEX, Hyderabad, which involved an identical issue.5. Applicability of Exemption Under Notification No.24/2004-ST for Vocational Training Institutes:The appellant claimed exemption under Notification No.24/2004-ST, which exempts vocational training imparted by vocational training institutes. The Tribunal, however, held that the appellant's activities related to software testing were primarily connected with computer software development, thus falling under the exclusion clause of the notification as amended by Notification No.19/2005-ST. The Tribunal distinguished this case from the Bangalore Tribunal's decision in Rayudu Vision Media Ltd., which involved training in 2D and 3D animations.6. Tribunal's Interpretation of Taxable Services Related to Commercial Training or Coaching by a Computer Training Institute:The Department argued that the appellant's course materials were not sold independently but were part of the taxable value of the training services provided. The Tribunal upheld this view, stating that the appellant's claim of 50% of the course fee being for course materials was an artificial split to avoid service tax. The Tribunal's interpretation was that the appellant's services were commercial training or coaching by a computer training institute, thus not eligible for the claimed exemption.Conclusion:The High Court found no error in the Tribunal's order and upheld the dismissal of the appeals. The Tribunal's decisions on pre-deposit and the interpretation of the exemption notification were deemed just and reasonable. Consequently, all Civil Miscellaneous Appeals were dismissed, and no substantial question of law was found to arise for consideration.