TMI Blog2024 (4) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... had been paid during the period 01.4.2007 to 31.01.2009. As the appellant did not cooperate, it is seen that the Asst Commissioner of Service Tax, Division 1, issued a show cause notice dated 05.3.2009 under Section 77 of the Finance Act, 1994 for non-furnishing of information. Following the receipt of this notice, the appellant filed their letter dated 17.3.2009 and supplied certain information. The Department took a view that the information supplied by the appellant prima-facie was incorrect and grossly undervalued. Having two sets of annual financial statement showing different figures clearly establishes the malafide intent of the appellant to mislead the investigations. Further, it is noted that the details as submitted by the appellant vide their letter dated 17.3.2009 was incorrect and the allegation of suppression of the taxable value is substantiated by the adjudicating authority in the impugned order. The Supreme Court s explained suppression of facts in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT ], wherein the Apex Court examined whether the Department was justified in initiating proceedings for short levy after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also noted that the appellant did not have any authorised training centres as well. Consequently, the demand under Franchise service confirmed in respect of the demand notice dated 17.10.2011 does not survive. The demand confirmed in respect of the show cause notice dated 21.4.2010 for the period 2007-08 and 2008-09 along with interest, and equal penalty imposed under section 78 is upheld - the issue relating to quantification of the demand taking into consideration the contentions regarding cum-duty tax is remanded to the adjudicating authority for recalculation of demand and consequently the amount of penalty under Section 78 of the Finance Act, 1994 - the demand confirmed under the remaining 5 show cause notices set aside - appeal is allowed partially by way of remand. - DR. RACHNA GUPTA, MEMBER (JUDICIAL) AND MRS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri B. L. Narsimhan, Ms. Shagun Arora, Advocates for the Appellant Shri Mihir Ranjan, Special Counsel for the Respondent ORDER The present appeal is directed against the Order-in-Original No. 20-25/AKJ/CST/2014 dated 30.06.2014 passed by the Commissioner of Service Tax Delhi wherein the demand of Rs.57,87,68,057/- interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Adjudication Order dated 9.3.2009, and thereafter also upheld by the Tribunal vide Final Order No. ST/A/53952/2015 dated 29.10.2015. 2.2 The present proceedings pertain to six (6) subsequent show cause notices ('impugned SCNs') issued to the appellant for the period 2007-08 to 2012-13. Each of these SCNs alleged that the Appellant was rendering commercial training or coaching services on which service tax was not discharged it properly. Further, to the extent of courses rendered through authorized service centres, the Appellant had not discharged service tax under the category of franchise service. The demands in respect of all SCNs were confirmed. 2.3 Being aggrieved, the appellant filed the present appeal. 3. Learned Counsel for the appellant submitted that the SCNs as well as the impugned Order-In-Original have not justified as to how services were being provided. No investigation was carried out and service tax demand has been confirmed without examining the transactions. The learned Counsel further stated that the adjudicating authority did not discuss a single transaction to say as to how the same is covered under 'Commercial Training or Coaching Service'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the world, promotional activities, free subscribers and on account of e-wallet services. For the period 2008 to 2011, the figures were taken from details provided by the Appellant as shown in the Balance Sheets of the Appellant. For the period 2010-2011, the Department has taken an additional value of Rs. 1,03,518/- from the server.The Learned Counsel submitted that the value of Rs. 1,03,518/- taken by the Department from the server is not sustainable. Further, he submitted that the subscription fee shown by the Appellant in the Balance Sheets, includes the subscription income from outside India which is not liable to service tax. No justification has been given in the impugned order as to how such income is chargeable to service tax under 'Commercial Training or Coaching Service'. For the period 2011-2012 (SCN dated 19.10.2012), the figures were taken on the basis of best judgment assessment under Section 72 of the Finance Act, 1994 which has been confirmed. While confirming the service tax demand, the adjudicating authority did not consider the correct figures submitted by the appellant in the reply dated 21.05.2014, wherein the actual amount received for the period 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged for other components like website leasing, online software lease are essential component for providing services by the Appellant and therefore the same are taxable under 'Commercial Training or Coaching Service', is not sustainable, merely because of the fact that these are part of a single package which also includes online education as one of the component. Learned Counsel further submitted that that the main transaction is not service as very small amount (Rs. 890/-) is charged for online education as compared to amount charged for online software lease (Rs. 2,800/-) and website lease (Rs. 2,800/-). Further the website and the software are used by these Channel Partners/ Associates to promote their business online independently, who can use the secondary DNS address as mentioned on the Invoice or buy domain name and point it to the web-space. It is completely independent of the online education. Therefore, this component cannot be categorized under 'Commercial Training or Coaching Service'. 3.4. The Learned Counsel contended that service tax is not leviable under 'Commercial Coaching or Training Service' as the Appellant is selling self-use packages a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding these two Show Cause notices, and could have submitted a written objection after the hearing on 21.05.2014. Since the Appellant was allowed a personal hearing and had attended the same, it tantamount to substantial compliance with the principles of Natural justice. 4.1 The Learned Special Counsel also submitted that the appellant had alleged that the SCNs and OIO have not justified how they have provided Commercial Training or Coaching Services. The allegation, however, is not true, as the Adjudicating Authority has discussed in para 4.11 and 4.17 of the impugned order dated 30.06.2014, in detail to conclude that the Appellant had provided commercial training and coaching . The adjudicating authority did not find any merit in the appellant s argument that they were imparting online education and were not providing training or coaching. The Appellant had attempted to make a distinction between education and training or coaching by way of quoting some authoritative textbooks and references, emphasising thereby that the training or coaching involved the personal attention of the trainer or coach so that the student may acquire the skill or proficiency. The Appellant had furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l mentioned that it was pertinent the Appellant was also one of the parties in the Great Lakes Institute of Management Ltd case, and consequently, both these 2 decisions are binding on the Appellant.The main activity of the appellants, however, is online computer education through the Internet, i.e., through an interactive website. Initially, the main point of dispute was whether the activity of providing online computer training is classified as commercial training or coaching under section 65(27) of the Finance Act 1994, which has already been decided by the Principal Bench and held that it is a commercial training and coaching service. But it gave the benefit of exemption from payment of service tax because they were a computer coaching centre. Strangely, after the withdrawal of the exemption to the Computer Centre, they changed their stand and said that they are not a Commercial training or coaching service but were an education institute using online mediums. The Tribunal, however, ruled that they provided Commercial Training or coaching service, and distinctions as claimed by the Appellant do not exist. In the present appeal, the Appellant has taken a stand that they are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the burden to prove that the appellant was entitled to exclude the value appertain to the website lease and software lease was upon the appellant, which they had failed to prove. Further, the appellant at no point in time had referred or claimed the value of goods in any statutory returns submitted to the department or anywhere else to the department, which can be excluded from the taxable value. Hence, the appellant's contentions that the appellant's activity amount to sale is liable to be rejected. 4.4 The Learned Special Counsel further submitted that contentions of the appellant regarding the availability of Cenvat Credit on Inputs/Input service to the appellant, it was stated that the eligibility of the Cenvat Credit to a taxpayer is governed by Rule 4(1) of the Cenvat Credit Rules, 2004, as amended, according to which Cenvat Credit is eligible within 6 months of the date of issue of any documents as prescribed in Rule 9 of the CCR, 2004 which the appellant had failed to do. Further, it was also pertinent to mention that the Cenvat Credit has to be claimed in statutory returns, i.e. ST-3 returns for the respective period the taxpayer has failed to do. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Training Coaching service April 2010- March 2011 6,989,79,359/- Franchise Service 60561/- 5 19.10.2012 Commercial Training Coaching service 2011-12 12,18,20,782/- 6 21.04.2014 Commercial Training Coaching service 2012-13 4,63,84,314/- At the outset, we observe that the learned counsel for the appellant has indicated that their business model was changed with effect from April 2009 whereby the appellant supplied content in the form of e-books, CDs, DVDs, PowerPoint presentations etc, and no training was rendered through authorized training centres. In view of the changed business model, we initially take up for consideration the arguments with respect to the show cause notice indicated at sl no. 1 of the table above, and thereafter we will consider the remaining notices. 6. The learned counsel for the appellant has submitted that the show cause notice dated 21.04.2010 has incorrectly invoked the extended period of limitation. It has been argued that the earlier final orders dated 25.8.2008 and 29.10.2015 were issued on the taxability of the same transaction, which is, provision of online education to the customers of the appellant. Consequently, extended period of limitation coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers and clients from whom such payments had been collected. It is seen that the appellant did not reply to the letter nor did they supply the requisite information. This was followed up with letter dated 23.02.2009 requesting the appellant to furnish the details on the gross amount collected and the amount on which service tax had been paid during the period 01.4.2007 to 31.01.2009. As the appellant did not cooperate, it is seen that the Asst Commissioner of Service Tax, Division 1, issued a show cause notice dated 05.3.2009 under Section 77 of the Finance Act, 1994 for non-furnishing of information. Following the receipt of this notice, the appellant filed their letter dated 17.3.2009 and supplied certain information. The Department took a view that the information supplied by the appellant prima-facie was incorrect and grossly undervalued. A search was conducted on 25.3.2009 to extract the correct factual information. Records/documents relevant to the enquiry were resumed under panchnama and statements of concerned persons were recorded under Section 14 of the Central Excise Act, 1944, as made applicable to like matters in service tax by section 83 of the Finance Act, 1994. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 401 (SC)], wherein the Apex Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The observations are as follows; 4 . Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was based on the statement of Mr. Manoj Kumar Satyawali who is not a technical expert to generate such figures from the server, is not acceptable as the employee was working as Technical Support Executive-Customer Care and was incharge of the in-house server. In his statement, he has stated that he can only extract data, but did not have the power to amend or change the data. Therefore, we hold the demand confirmed for by the instant show cause notice is liable to be upheld. However, we take note of the plea for extending cum tax benefit made by the learned counsel, and allow the same. 7. We now take up the remaining five show cause notices for consideration. It has been argued before us by the learned counsel that the appellant had change the business model and had stopped providing any off-line or online courses to its customers. Instead, the appellant supplied only content in the form of e-books, CDs DVDs, PowerPoint, presentations, et cetera. The ld counsel went on to submit that the user agreement clearly stipulated that the customer/subscriber would only be given content, and no in-depth training would be provided by the appellant. We have gone through the relevant extracts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t been considered in the impugned order. It has also been brought to our notice that the subsequent show cause notices for the period 2013 14 and 2014 15 have been decided in the appellant s favour. It is also been pleaded before us that these orders have not been challenged by the department and have hence attained finality. It is also noted that the appellant did not have any authorised training centres as well. Consequently, the demand under Franchise service confirmed in respect of the demand notice dated 17.10.2011 does not survive. In the light of the above discussions, we are of the considered opinion that the demand confirmed in the subsequent show cause notices requires to be set aside, in view of the changed business model. 8. Accordingly, we uphold the demand confirmed in respect of the show cause notice dated 21.4.2010 for the period 2007-08 and 2008-09 along with interest, and equal penalty imposed under section 78. However, the issue relating to quantification of the demand taking into consideration the contentions regarding cum-duty tax is remanded to the adjudicating authority for recalculation of demand and consequently the amount of penalty under Section 78 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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