2015 (11) TMI 612 - AT - Service Tax

Commercial Coaching and Training Centre - Imposition of penalty - Held that - Apex Court has set aside the judgment of the Tribunal in the case of Sunwin Technosolution Pvt. Ltd. 2010 (9) TMI 71 - SUPREME COURT OF INDIA as to fact that the services of the appellant in imparting computer training to the students will be liable to service tax under Commercial Coaching and Training Centre Service - issue of liability to tax on the education imparted under computer training was disputed and the dispute had to be settled by the apex Court in the recent judgment in view the same the respondent could be entertaining a bona fide belief that the tax liability would not arise. Further we also find that the issue is of interpretation of a Notification. Since the issue is of interpretation and the Notification has also being contested before the apex Court we are of the view that the penalties imposed on the appellant by the adjudicating authority are unsustainable. Penalties as sought to be imposed by the Departmental Representative are unacceptable and we hold that no penalty needs to be imposed on the respondent-assessee.

Summary

Issues involved:
Taxability of services rendered by the respondent-assessee under the category of "Commercial Coaching and Training Centre", reversal of decision by the first appellate authority based on a Tribunal judgment, applicability of a Supreme Court judgment reversing the Tribunal decision, imposition of penalties by the adjudicating authority, interpretation of a Notification regarding tax liability on education imparted under computer training.

Analysis:
The appeal before the Appellate Tribunal CESTAT Mumbai pertains to the taxability of services provided by the respondent-assessee categorized as "Commercial Coaching and Training Centre." The adjudicating authority initially deemed the software training offered by the respondent as falling under the "Commercial Training or Coaching Service." However, the first appellate authority overturned this decision, citing a Tribunal judgment in a different case. The Departmental Representative argued that the Tribunal's judgment had been reversed by the Supreme Court in an appeal filed by the Revenue, indicating that the computer training provided by the respondent should indeed be taxable. The counsel for the respondent acknowledged the Supreme Court's ruling but requested the penalties imposed by the adjudicating authority to be set aside, as the issue was in favor of the appellant as per the Tribunal's order.

Upon reviewing the submissions and records, the Tribunal noted that the Supreme Court had indeed overturned the Tribunal's decision regarding the taxability of computer training services under "Commercial Coaching and Training Centre Service." However, concerning the penalties imposed, the Tribunal found that the issue of tax liability on education imparted through computer training was a subject of dispute and needed resolution by the Supreme Court, indicating a genuine belief on the part of the respondent regarding the non-liability for tax. The Tribunal also observed that the issue involved the interpretation of a Notification, which was contested before the Supreme Court, leading to the conclusion that the penalties imposed by the adjudicating authority were not justified. Therefore, the Tribunal rejected the appeal seeking to impose penalties on the respondent-assessee, ruling that no penalties should be enforced.

In conclusion, the appeal was disposed of with the decision to uphold the tax liability on the services provided by the respondent under the category of "Commercial Coaching and Training Centre" as per the Supreme Court's judgment. However, the imposition of penalties on the respondent was deemed unsustainable due to the genuine belief held by the respondent and the interpretational nature of the issue, leading to the rejection of the appeal seeking penalties.