Tribunal decision: Service tax upheld on deposits, issues remanded for fresh consideration. Penalties set aside.

The tribunal upheld the demand for service tax on caution deposits but remanded the issue of differences in ST-3 returns and P&L accounts for fresh consideration. Demands set aside included those related to administrative materials, course materials by independent entities, sale of course materials to students, and sale of TNOU forms. Penalties under Sections 77 and 78 of the Finance Act, 1994, were set aside. The tribunal allowed the Department's Miscellaneous Application for a change in the cause title due to the introduction of GST.

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Issues Involved:
1. Demand of service tax under Franchise Service.
2. Demand of service tax under Commercial Coaching and Training Service.
3. Demand of service tax under Business Auxiliary Service (BAS) and due to rounding off.
4. Imposition of penalties under Section 78 and Section 77 of the Finance Act, 1994.

Detailed Analysis:

I. Demand of Service Tax under Franchise Service (2003-04 to 2007-08):

1. Caution Deposit:
- The appellant has discharged the service tax liability on the caution deposit collected. The tribunal upheld the demand as the appellant provided evidence of payment.

2. Difference in Figures in Profit and Loss Account and ST-3 Returns:
- The appellant claimed the difference was due to service tax being payable on a realization basis while the P&L account was on an accrual basis. The tribunal found no such plea before the adjudicating authority and remanded the issue for verification.

3. Administrative and Promotion Materials:
- The demand was for materials sold to franchisees, which the tribunal held as a sale transaction not liable for service tax. The tribunal set aside this demand.

4. Course Materials by CSC Publications and Ramiah Publications:
- These materials were supplied by independent entities, and the tribunal held that their value could not be included in the appellant's taxable value. The demand was set aside.

II. Demand of Service Tax under Commercial Coaching or Training Service (2003-04 to 2007-08):

1. Difference in Figures in Profit and Loss Account and ST-3 Returns:
- Similar to the franchise service issue, this was remanded for fresh consideration by the adjudicating authority.

2. Training to Government Staff and Private Companies:
- The tribunal upheld the demand post 30.06.2004, as the appellant conceded liability after this date. The demand prior to this date was set aside due to applicable exemptions.

3. Sale of Course Materials to Students:
- The tribunal set aside the demand, holding that no service tax can be levied on the sale of study materials.

4. Computer Training to Schools (Sl. Nos. 4, 5, 6, and 8):
- The tribunal held that up to 16.06.2005, the appellant was eligible for exemption under Notification No. 24/2004. Post this date, the appellant was liable to pay service tax. The tribunal also found the appellant eligible for exemption under Notification No. 10/2003 for training forming part of the school curriculum. Demands for the period up to 16.06.2005 were set aside, and the appellant was held liable post this date.

5. JDC Summer Classes:
- The appellant did not contest this demand and had paid the amount. The tribunal upheld the demand.

III. Demand of Service Tax under Business Auxiliary Service & Demand Due to Rounding Off (2003-4 to 2007-08):

1. Incentives from Tally:
- The tribunal upheld the demand, following precedents that incentives for the use of software are subject to service tax under BAS.

2. Sale of TNOU Forms:
- The tribunal set aside the demand, holding that the sale of forms did not constitute a taxable service under BAS.

3. Rounding Off:
- The appellant did not contest this demand, and the tribunal upheld the same.

IV. Imposition of Penalties:

- The tribunal found that the issues were mostly interpretational and involved quantification disputes. Therefore, penalties under Sections 77 and 78 of the Finance Act, 1994, were set aside.

Conclusion:

- The tribunal remanded the issue of differences in ST-3 returns and P&L accounts for fresh consideration.
- Demands set aside included those related to administrative materials, course materials by independent entities, sale of course materials to students, and sale of TNOU forms.
- Penalties were set aside in toto.
- The tribunal allowed the Department's Miscellaneous Application for a change in the cause title due to the introduction of GST.

Pronouncement:
- The judgment was pronounced in open court on 17.08.2018.

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