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TMI Blog2018 (8) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed 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) : Sl. No. Details of demand Value (in Rs.) ST Payable (in Rs.) ST Paid (in Rs.) ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly 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 providing charges, including TNOU courses computer hardware to schools on lease basis, which was taxable only from 16.05.2008 Benefit of exemption under Notification 10/2003 is admissible 12932678/- 2545126/- 10387552/- III. Demand of Service Tax under Business Auxiliary Service & Demand due to rounding off (2003-4 to 2007-08) : Sl. No. Details of demand Value (in Rs.) ST Payable (in Rs.) Defence 1. Incentive Tally from 4036848/- 474982/- It Is in the nature of quantity discount for the purchases made 2. Sale of Forms TNOU 183236/- 21739/- No BAS involved 3. Demand due to roundin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contained in the ST-3 returns and the Profit and Loss Account. The argument in respect of Franchise Service was reiterated by the appellant for this demand also. 2.3.3 In Sl. No. 2, the demand is raised with regard to the training provided to government staff and private companies. The Ld. Counsel adverted to the various exemption Notifications which were in force during the disputed period and argued that Computer Training Institute was exempted by Notification No. 09/2003-ST dt. 20.06.2003 and further, vide Notification No. 01/2004-ST dt. 04.02.2004. Thus, the training provided to government staff and private companies would be eligible for exemption up to 30.06.2004. The Ld. Counsel, however, fairly conceded that for the period after 30.06.2004, the exemption Notification 24/2004 dt. 10.09.2004 did not expressly exempt Computer Training Institutes. But the Notification exempts Vocational Training Institutes. Since the training was imparted to government staff and private companies, the exemption available to Vocational Training Institute would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also agreement for imparting Computer Education Services in Government Higher Secondary Schools, the training character of the agreement was for providing computer hardware to schools on lease basis. This would fall under the category of "Supply of Tangible Goods" and would not fall under "Computer Training Services". The Ld. Counsel submitted that the appellant is also entitled for exemption from payment of service tax on the said activity in terms of Notification No. 10/2003-ST dt. 20.06.2003. The said Notification exempts the taxable services provided by a commercial training or coaching centre in relation to commercial training or coaching which forms an essential part of a course or curriculum. Computer training which was imparted by the appellants as per the agreement, was part of the course/curriculum of these schools and therefore, the exemption under Notification No. 10/2003 would squarely cover the activity. That therefore the appellant is not liable to pay service tax for the demand raised in Sl. No. 6 in the above table. 2.3.7 In regard to the demand for Junior Diploma Course (JDC) Summer Classes in Sl. No. 7, the Ld. Counsel submitted that the appellant is not cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, alleging that the appellant has short paid the duty due to rounding of the figures. The Ld. Counsel was fair enough to submit that the appellant is not contesting this liability and has paid up the same. 3.1 The Ld. AR Shri. K. Veerabhadra Reddy supported the findings in the impugned order. 3.2 With regard to the demand raised in Sl. No. 1 in the table relating to Franchise Service, the Ld. AR submitted that admittedly, there is a difference in the figures mentioned in the ST-3 returns as well as the Profit and Loss Account. Though the appellant explains that it is due to the reason that service tax is payable on realization basis and the figures shown in Profit and Loss Account is on accrual basis, no such plea has been put forward before the adjudicating authority. Therefore, the said contention cannot be accepted without verification. 3.3 With regard to the demands raised in Sl. Nos. 3 and 4 in the said table relating to Franchise Service, the Ld. AR reiterated the findings in the impugned order. 3.4 In respect of the demand raised in Sl. No. 2 relating to C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-08) 5.2.1 In Sl. No. 1 of the table relating to Franchise Service, the demand is in respect of the Caution Deposit collected by the appellants. The Ld. Counsel has submitted that they have discharged the service tax liability on this count. In page number 187 to 188 of the appeal paper book, the appellant has enclosed the challans in respect of the service tax paid on this count. We are, therefore, convinced that the appellant has discharged the service tax and the demand is upheld. 5.2.2 The demand in Sl. No. 2 in this table is with respect to the difference in the figures in the Profit and Loss Account as well as the ST-3 returns. The Ld. AR has adverted to para 6.4 of the Order-in- Original. Though the Ld. Counsel for the appellant contends that the difference in figures is due to the fact that service tax is payable on realization basis whereas the figures in the Profit and Loss Account is mentioned on accrual basis, we do not find any such plea taken before the adjudicating authority. As pointed out by the Ld. Counsel, the appellant admits that there is some difference in the figures. The fact as to what is the reason for the difference has to be verified by the adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for appellant has been fair enough to submit that as per Notification No. 09/2003 and 01/2004 Computer Training Institutes were exempt from service tax only till 30.06.2004 and therefore, after 30.06.2004 they are liable to pay the service tax. We find the said contention to be legally correct and we hold that the demand prior to 30.06.2004 cannot sustain and requires to be set aside, which we hereby do. We make it clear that the appellant is liable to pay service tax after 30.06.2004 on this count, and uphold the same. 5.3.3 In Sl. No. 3, the demand is made in respect of amount received by the appellant for sale of course materials to students. In para 7.4 of the impugned order, the adjudicating authority has confirmed the demand stating that it is clarified that the textbooks supplied are standard textbooks and therefore, the study materials cannot be out of the levy of service tax. It is settled law that the study materials supplied cannot be subject to levy of service tax. Further, as per the Show Cause Notice itself, the amount is collected by sale of study materials to the students. No service tax can be levied on the transaction of sale and, therefore, the demand raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf- employment directly after such training or coaching. In absence of statutory definition, we have to proceed on the basis of the ordinary meaning of the word "vocational", which means "relating to an occupation or employment; directed at a particular occupation and its skills". It cannot be questioned that skill pertaining to computer software and hardware is required to be acquired and, at the same time, it cannot be disputed that once such a skill is acquired, it throws open the door of an occupation relating to computer software and hardware, which entails employment or self-employment. Inasmuch as nothing was mentioned in the Notification dated 10th September, 2004 as regards computer training institutes, it cannot be said that the 10th September, 2004 Notification made any distinction in between a vocational training institute and a computer training institute, as was made on 20th June, 2003. In that background, we find that the Tribunal cannot be said to have erred by holding out that the respondent assessee was a vocational training institute, but we make it clear that it was so in terms of the Notification dated 10th September, 2004 until 16th June, 2005, i.e. when the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the hardware, software as well as for imparting training to the students. It is very much clear that the training imparted by the appellants is according to the syllabus, as approved by the Government of Tamil Nadu. Such training does form part of the course/curriculum of school education and we are of the considered opinion that the appellant is eligible for exemption under Notification No. 10/2003. We have perused the scope of the contract enclosed in page 211 of the appeal paper book. Clause (c) to (g) of the said contract reads as under : " ... (c) Teach (10+2) Computer Science syllabus as approved by Government of Tamil Nadu for Plus 1 and Plus 2 students. The prescribed text book available should be used. For practical class one system is to be provided for two students. (d) Teach 9th and 10th standard students Computer Science syllabus as approved by Government of Tamil Nadu twice a week consisting of 2 periods of 45 minutes each. (e) Teach basic computer literacy to 11th and 12th students who have not opted for computer science as an optional subject during the extended period after the close of regular class periods. For this purpose, the tenderer must extend t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find any ingredients attracting the levy of service tax under Business Auxiliary Services in this activity. We, therefore, hold that the demand raised on this count cannot sustain and requires to be set aside, which we hereby do. 5.4.3 In Sl. No. 3, a demand of Rs. 22,704/- has been raised, being the short paid tax by the appellant due to rounding off. The Ld. Counsel has submitted that the appellant is not contesting the said demand. The same is upheld. 6. The issues involved in all the three services are mostly interpretational, especially with regard to the exemption Notification as to whether Computer Training Institute would be eligible for exemption as also with regard to the exemption under Notification No. 10/2003. Further, there were issues with quantification. Being interpretational issues, we are of the considered opinion that the penalties on the demands upheld by us as above cannot sustain and require to be set aside, which we hereby do. 7. To sum up : - (i) The demand raised on account of the difference in ST-3 returns and P & L Account in respect of both Franchise Service and Commercial Coaching or Training Service is remanded to the adjudicating authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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