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2018 (8) TMI 1178
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....Original Authority vide Order dt. 30.11.2010 confirmed the following demands : (i) Confirmation of demand of service tax of Rs. 1,86,91,417/- under Franchise Service, along with applicable interest. (ii) Confirmation of demand of service tax of Rs. 1,03,87,552/- under Commercial Coaching and Training Service, along with applicable interest. (iii) Confirmation of demand of service tax of Rs. 4,96,720/- under Business Auxiliary Service, along with applicable interest. (iv) Confirmation of demand of Rs. 22,705/- under Section 73 A of the Finance Act, 1994, along with applicable interest, on the ground that to this extent service tax collected has not been paid to the Government, due to the rounding off done by the appellant. (v) Imposition of a penalty of Rs. 2,95,98,394/- under Section 78 and Rs. 5,000/- under Section 77 of the Finance Act, 1994. Aggrieved, the appellants are now before the Tribunal. 2.1 The Ld. Counsel Shri. G. Natarajan appeared and argued on behalf of the appellant. He submitted the details of the demand which is tabulated as below : I. Demand of Service Tax under Franchise Service (2003-04 to 2007-08) : ....
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.... 5012804/- 0 5012804/- These materials are sold to the students and hence no ST can be demanded 4. Examinatio n fee and other charges 8342275/- 850912/- 0 850912/- 5. Hardware training fee 380200-/ 38780/- 0 38780/- Benefit of exemption of "computer training institute" and "vocational training institute" available up to 15.06.2005 6. Service provided to Department of School Education 23023000/- 3400826/- 0 3400826/- Essential character of the service is providing computer hardware to schools on lease basis, which was taxable only from 16.05.2008 Benefit of exemption under Notification 10/2003 is admissible 7. JDC Summer Class 237604/- 24236/- 0 24236/- Benefit of exemption of "computer training institute" and "vocational training institute" available up to 15.06.2005 8. Computer rent and hire 1707530/- 195765/- 0 195765/- Essential character of the service is provid....
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....argued by him that the demand is raised invoking Rule 5 of the Service Tax (Determination of Value) Rules, 2006 and the said rules have been struck down by the Hon'ble Apex Court in the case of Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. - 2018 (10) G.S.T.L. 401 (S.C.). 2.2.5 The demand shown in Sl. No. 4 is with regard to the course materials supplied by CSC Publications and Ramiah Publications. He submitted that these concerns are different and independent entities, who are engaged in publishing the study materials and books for the courses provided by the appellant. The Department has raised the demand merely for the reason that these concerns are owned by family members of the Managing Director of the appellant. Being separate, independent entities, the value in their accounts cannot be made subject of demand of service tax on the appellant. Moreover, the values represented sale of study materials and books and no service tax can be demanded on the same. 2.3.1 The second table relates to the demand raised under Commercial Coaching or Training Services. 2.3.2 The demand in Sl. No. 1 in this table is in respect of the difference in figures c....
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.... fall under vocational training and therefore, the appellant is eligible for exemption under Notification No. 24/2004. To support this argument, he relied upon the decision in the case of C.C.E. Meerut-I Vs. Doon Institute of Information and Techno. P. Ltd.- 2014 (35) S.T.R. 711 (Uttarakhand). After 10.09.2004, the Notification No. 19/2005 dt. 07.06.2005 came into force on 16.06.2005. This Notification expressly excluded computer training from the exemption given in Notification No. 24/2004. Thus, after 16.06.2005, the exemption is not available for computer training courses. The appellant would therefore be eligible for exemption up to 16.06.2005. They have paid up the demand after the period post 16.06.2005 along with interest. 2.3.6 In regard to the demand raised in Sl. Nos. 6 and 8, the Ld. Counsel took us through the agreement entered into by the appellant with the Contractor of School Education, Madras dt. 11.01.2001 and submitted that the contract was mainly for leasing of computer hardware and software and connected accessories. Though there was also agreement for imparting Computer Education Services in Government Higher Secondary Schools, the training character of the ....
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....ed belonging to the client and thus, has demanded service tax under the category of Business Auxiliary Services. He argued that the incentive is only in the nature of quantity discount for the purchases made and, therefore, cannot be subject matter of service tax. 2.4.3 In Sl. No. 2 of the third table, the demand is raised on the amount received for sale of application forms of Tamil Nadu Open University (TNOU). The appellant is one of the recognized study centres for Tamil Nadu Open University to impart computer related courses. The prospectus and application forms for admission into TNOU courses are sold by the appellant. The forms are sold by the appellant at the same price by which they purchased; while purchase, the same is accounted as TNOU application forms and expenses. Thus, it is partly purchase and partly sale and the appellant is not at all promoting any product manufactured by TNOU or services offered by TNOU. Thus, these do not fall under Business Auxiliary Services. Further, TNOU is a unit of the Government of Tamil Nadu, providing education and is not at all a business proposition. 2.4.4 In Sl. No. 3 of the said table, a demand of Rs. 22,704/- has been raised,....
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....ts as per the agreement entered into with the Education Department. There is no evidence to show that this training was part of the course or curriculum of such schools, leading to issuance of any certificate or diploma recognized by law. For this reason, the contention of the appellants (eligible for exemption as per Notification 10/2003) cannot be accepted. 3.7 In regard to the demand of service tax in Sl. No. 1 under Business Auxiliary Services on the incentive received from Tally, the Ld. AR submitted that the appellants are using the said software and are being paid discounts based on the purchases made. This is nothing but promotion of their software packages and programmes and, therefore, is taxable under Business Auxiliary Services. It is also argued by him that the amount received for sale of forms of TNOU would also be covered under the activity of promotion of sales of the University and therefore, is taxable under BAS. 4. Heard both sides. 5.1 Let us consider each as per the tables furnished above. I. Demand of Service Tax under Franchise Service (2003-04 to 2007-08) 5.2.1 In Sl. No. 1 of the table relating to Franchise Service, the demand is in respect o....
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....ceived by CSC Publications and Ramiah Publications, who are independent entities, cannot be included in the taxable value of the appellant. In any case, it is settled law that study materials supplied cannot be included in the taxable value for levy of service tax. Thus, the demand raised on the ground of amount received by CSC Publications and Ramiah Publications for supply of study materials to the Franchisee cannot sustain and requires to be set aside which we hereby do. II. Demand of S.T. under Commercial Coaching or Training Service (2003-04 to 2007-08) 5.3.1 In Sl. No. 1 in the above table relating to Commercial Coaching and Training Service, the demand is based on the difference in the figures shown in ST-3 returns and Profit and Loss Account. Considering the arguments put forward by the Ld. AR on the same issue with regard to Franchisee Service, we are of the opinion that this issue also requires to be remanded to the adjudicating authority. 5.3.2 In Sl. No. 2, the demand is raised for the amount received for imparting training to government staff and private companies. The Ld. Counsel for appellant has been fair enough to submit that as per Notification No. 09/200....
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....ion is reproduced as under : "3. On 10th September, 2004, when the original Notification No. 24/2004- Service Tax was notified, thereby, vocational training institutes and recreational training institutes were accorded exemption, but not the computer training institutes. Computer training institutes, therefore, could not be covered by the exemption accorded by the Notification dated 10th September, 2004. 10^th September, 2004 Notification is an independent Notification. The same did not refer to any earlier Notification. Therefore, in the matter of interpreting the Notification dated 10th September, 2004, one has to read only the words used in that Notification and cannot borrow any words from any other Notification. By this Notification, there is no dispute that exemption was accorded to vocational training institutes. Vocational training institutes had been defined by the Notification. It said that a vocational training institute shall mean a commercial training or coaching center, which provides vocational training or coaching that imparts skill to enable the trainee to seek employment or undertake self- employment directly after such training or coaching. In absence of....
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....powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services provided by a commercial training or coaching centre, in relation to commercial training or coaching, which form an essential part of a course or curriculum of any other institute or establishment, leading to issuance of any certificate or diploma or degree or educational qualification recognised by law for the time being in force, to any person, from the whole of the service tax leviable thereon under sub- section (2) of section 66 of the said Act : Provided that this exemption shall not be applicable if the charges for such services are paid by the person undergoing such course or curriculum directly to the commercial training or coaching centre. 2. This notification shall come into force on the 1st day of July, 2003." 5.3.8 It is seen from the agreement that basic computer education has been made compulsory for the Government schools by the Government of Tamil Nadu and the appellant has been awarded the contract to provide the hardware, software as well as for i....
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....he Ld. Counsel for the appellant, the benefit of exemption under Notification No. 10/2003 would be applicable to the appellant and the case law as discussed above would squarely cover the said issue. For these reasons, we hold that the demand in respect of Sl. No. 8 cannot sustain and requires to be set aside, which we hereby do. III. Demand of Service Tax under BAS & Demand due to rounding off (2003-4 to 2007-08) 5.4.1 In Sl. No. 1, with respect to the demand raised under Business Auxiliary Services, the incentives received from M/s. Tally has been subject to levy of service tax. We find that the said issue as to whether the incentives received for the use of software would be subject to levy of service tax, has been decided in the case of D. Pauls Consumer Benefit Ltd. Vs. C.C.E. (New Delhi) - 2017 (52) S.T.R. 429 (Tri. - Del.). Following the same we are of the view that the demand on this count is legal and proper and we uphold the same. 5.4.2 In Sl. No. 2 of this table, the demand is raised on sale of forms of Tamil Nadu Open University. In the Show Cause Notice as well as the impugned order, it is seen that the appellant has purchased and sold the forms at the actual ....