2018 (3) TMI 638 - AT - Service Tax

Tribunal remands case for book cost verification, waives penalty based on precedent

The Tribunal ruled in favor of the appellant, remanding the matter for further verification regarding the abatement for the cost of books supplied as ... Course-materials abatement - Commercial Training and Coaching service valuation - abatement of cost of books - Applicability of Tribunal precedent over Board Circular - Remand for verification of book cost - Penalty relief - Consistency with earlier Tribunal orderCourse-materials abatement - Commercial Training and Coaching service valuation - abatement of cost of books - Applicability of Tribunal precedent over Board Circular - Remand for verification of book cost - Cost of books supplied as course materials is deductible for determining net service-tax liability; quantification remanded for verification. - HELD THAT: - The Tribunal applied the ratio in Cerebral Learning Solutions Pvt. Ltd. holding that the Board Circular dated 20.6.2003 is misconceived and that the value of course materials supplied to students must be allowed as an abatement while computing taxable value of Commercial Training and Coaching and related services. The show cause notices in the present case did not contain a separate break-up of the cost of books, although the appellant later produced profit and loss account entries indicating cost of books and materials. In view of the absence of a specific breakup in the show cause notices but the existence of accounting data, the matter is remanded to the adjudicating authority to verify the balance sheets and other material furnished by the appellant and to work out the exact cost attributable to books so as to arrive at the net tax liability. [Paras 5]Abatement of the cost of books allowed in principle; matter remanded to adjudicating authority for quantification and verification from accounts and other data.Penalty relief - Consistency with earlier Tribunal order - Penalty imposed by the adjudicating authority is set aside. - HELD THAT: - The Tribunal found merit in the appellant's contention on penalty since, in the appellant's own earlier period, this Tribunal had set aside penalty (Final Order No. 40491/2017 dated 13.1.2017). Applying the same ratio, the Tribunal held that penalty cannot be imposed in the present appeal and directed that no penalty be levied. [Paras 6]Penalty set aside following the Tribunal's earlier order in the appellant's own case.Final Conclusion: The appeal is disposed by allowing in principle deduction of the cost of books supplied as course materials (remanding quantification to the adjudicating authority) and by setting aside the penalty; miscellaneous application for change of cause title is allowed. Issues:1. Applicability of service tax on training services provided by the appellants.2. Disallowance of abatement for the cost of books supplied as study materials.3. Validity of penalty imposed on the appellant.Analysis:Issue 1: Applicability of service tax on training servicesThe department contended that the services provided by the appellants fell under the category of Commercial Training and Coaching (CTC) and Franchisee Service, attracting service tax. Show cause notices were issued demanding substantial amounts for the specified periods. The Commissioner confirmed the tax liabilities but allowed input service credit and cum-tax benefit. The appellant, however, contested the disallowance of abatement for the cost of books supplied as course materials.Issue 2: Disallowance of abatement for the cost of booksDuring the hearing, the appellant's counsel relied on a Tribunal decision and argued for granting abatement for the cost of course materials. The appellant had paid the dues, considering CENVAT credit and exemption under Notification No. 12/2003. The respondent supported the impugned order, highlighting discrepancies in the billing and the lack of a specific break-up for the cost of books. The Tribunal found that the cost of books supplied by the appellant should be deducted to determine the net tax liability. The matter was remanded for verification of the exact amount involved in the sale of books.Issue 3: Validity of penaltyRegarding the penalty, the Tribunal noted that in a previous case involving the appellant, the penalty was set aside. Following the same rationale, the Tribunal held that no penalty should be imposed in the current case. The appeal was disposed of accordingly, with the penalty being waived.In conclusion, the Tribunal ruled in favor of the appellant on the issue of abatement for the cost of books supplied as study materials, remanding the matter for further verification. The penalty imposed on the appellant was also waived based on the precedent set in a previous case.