By TIOL News Service

NEW DELHI, JAN 10, 2013: THE Appellants were registered with service tax authorities and paying Service Tax under the head for Commercial Coaching and Training. But it was found by Revenue that they were not paying service tax on the full amounts received from students but were paying tax on part of the amounts received. Revenue took the total receipts as per their Profit and Loss account and demanded service tax of Rs.1,58,99,518/- on the receipts for which service tax was not paid. The adjudicating authority gave relief on account of many items like value of school fees, kit, blazers, bags etc sold to students, fee deposits which were returned, franchisee deposits returned etc. and confirmed the demand of Rs.47,16,921/- along with interest and penalties. Aggrieved by the above order, the appellants filed appeal.

The Appellants interalia contented that –

++ The main component of the demand is on account of value of study material sold and they are eligible for exemption for goods sold in the course of providing services as per notification 12/2003-ST and that they relied the decision of Tribunal in the case of Chate Coaching Classes Pvt. Ltd - (2007-TIOL-1714-CESTAT-MUM).

++ The material sold by them are priced publications with MRP printed on it and the books are available for the public for purchase at the MRP price from some of the book-shops.

++ In respect of franchise services, the department has not taken into account the fact that the amount of Rs.57,40,011/- shown in the profit and loss accounts was actually not received and service tax is payable only on receipts of value and not on the basis of accrual.

++ The Revenue Representative pleaded that exemption under Notf. 12/2003-ST could be availed only if standard text books on any subject were sold. What was sold was study material prepared giving the problems to be solved during the coaching classes and relied the clarification issued by CBEC vide Circular No. 59/8/2003 dated 20-06-03.

The Tribunal observed as –

At this prima facie stage we are accepting the argument that the scope of the exemption under Notification 12/2003-ST cannot be whittled down by clarification. The Appellants seems to be having proof enough to contest that the value of services was not transferred to cost of books sold. This matter can be looked into during final hearing. The value actually received during the impugned period for franchisee service also requires clear reconciliation taking into account amounts outstanding to be paid. This also can be done only during final hearing. On an overall appreciation of the facts we are of the view that the amount of Rs.8,98,512/- already deposited in this case is adequate to admit the appeal.

The Tribunal finally granted waiver of pre-deposit of balance dues and stayed recovery thereof during the pendency of the appeal.

(See 2013-TIOL-64-CESTAT-DEL)