Pre-levy receipts outside service tax net; demand and penalty set aside for unverified pre-1.7.2003 collections

Service tax on commercial training and coaching services was not sustainable for receipts attributable to the pre-1.7.2003 period, because that portion fell before the levy and the department had not verified the assessee's supporting details. The receipts after 1.7.2003, on which tax had already been paid, were accepted. On that basis, the demand relating to pre-levy collections and the penalty were set aside, while the balance tax already upheld on post-levy receipts was maintained.

---

---

Issues: Whether the demand of service tax and penalty could be sustained in full when part of the receipts related to the period prior to levy of service tax and the assessee had shown payment of tax on the post-levy receipts.

Analysis: The receipts were examined against the period of levy of service tax on commercial training and coaching services from 1.7.2003. The material on record showed that an identifiable portion of the collections related to the pre-levy period and was therefore not taxable. The department had not verified the details produced by the assessee, and the demand based on the pre-1.7.2003 receipts was not sustainable. The balance receipts after 1.7.2003, on which tax had already been deposited, were accepted.

Conclusion: The demand of tax of Rs.6,507/- and the penalty were set aside, while the balance tax of Rs.13,903/- was upheld.

---