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TMI Blog2024 (5) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act. 2. The demands confirmed in the impugned order and contested by the appellant are summarized in the table below : Sl. No Particulars Amount (incl. cess)+ interest + equivalent penalty 1 Non-payment of service tax under commercial training and coaching centre services on short-term accommodation service as hostel fees 35,86,321/- 2 Non-payment of service tax under business support services on share of fees received from CMC Limited ('CMC') 25,50,658/- 3 Non-payment of service tax under commercial training and coaching centre services on the following: - Form & Prospectus - 8.58 Lacs - Newspaper - 8.7 Lacs - Magazines - 9.35 Lacs - Library subs. fine, dev. fees - 34.35 Lacs 60,97,878/- 4 Penalty u/s 77(1) of the Finance Act, 1994 for improper registration linked to issue no 2 above 10,000/- 2.1. The demands confirmed in the impugned order but accepted by the appellant are summarized in the table below : 5 Short payment due to accrual accounting 2,10,073/- 6 Miscellaneous 84,249/- 7 Reversal of CENVAT credit 1,34,713/- 8 Demand of interest for short payment of interest at the rate of 13% instead of 18% for certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of such short-term residential accommodation service provided to students opting for non-residential courses cannot be classifiable under Commercial Training or Coaching Services under section 65(zzc) of the Finance Act and the demand raised by the Ld. Principal Commissioner to this extent is baseless and deserves to be set aside. 3.2. In view of the above, the appellant submits that the stand-alone hostel charges collected for non-residential courses, have no connection with Commercial Training and Coaching services Under section 65(105) (zzc) of the Finance Act, in as much as, even if any student, who do not avail this service, would continue to avail the course offered by the Appellant and therefore, the question of payment of service tax does not arise. 3.3. To support this view, the Appellant relied upon the following decisions: i. Aditya College of Competitive Exam Vs. C.C.E., Visakhapatnam [2009 (16) S.T.R. 154 (Tri. - Bang.)] ii. I2IT Pvt Ltd Vs. Commissioner Of Central Excise, Mumbai [2014 (34) S.T.R. 214 (Tri. - Mumbai)] iii. Vikas Coaching Centre Vs. Commissioner of Cus., C. Ex. & S.T., Guntur [2011 (22) S.T.R. 650 (Tri. - Bang.)] 3.4. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed in the impugned order on this count is not sustainable. 5. Regarding the non-payment of service tax of Rs.60,97,878/- under commercial training and coaching centre services, the appellant submits that this demand has been confirmed on account of the following: (i) Sale of Newspaper - 8.7 Lacs (ii) Sale of Form and Prospectus - 8.58 Lacs (iii) Sale of Magazines - 9.35 Lacs (iv) Library subs. fine, dev. fees - 34.35 Lacs 5.1. Regarding the demand of service tax of Rs.8.7 lakhs on account of Sale of Newspaper - Jibika Dishari and Swabhumi, the appellant submits that Sale of newspaper tantamount to sale of goods which can never be subject to levy of service tax. Hence, this demand confirmed in the impugned order is not sustainable. 5.2. Regarding the demand of service tax of Rs.8.58 lakhs on the Sale of forms and prospectus, the appellant submits that this tantamount to sale of goods which can never be subject to levy of service tax. 5.3. Regarding the demand of service tax of Rs.9.34 lakhs on account of Sale of magazine namely RICE Times, the appellant submits that this tantamount to sale of goods which can never be subject to levy of service tax. 5.4. With reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN dated 15.10.2012. Thus, they submits that the demand confirmed by invoking extended period of limitation is liable to be set aside. 5.6. In view of the above submissions, the appellant contented that the demands of service tax confirmed in the impugned order along with interest and penalty is not sustainable. 6. In respect of the remaining demands confirmed in the impugned order, the appellant submits that short payment of Rs.2,10,073/- has been confirmed due to accrual accounting, which they agreed and paid along with interest before issue of the notice. They have also paid the service tax of Rs. 84,249/- along with interest confirmed on miscellaneous receipts. They have also paid the demand of interest, amounting to Rs.1,14,078/- for short payment of interest at the rate of 13% instead of 18% for certain delays. Further they have reversed the cenvat credit of 1,30,295/- held as not eligible, along with interest. They have also contested the penalty of Rs.10,000/- imposed on account of improper registration since they claim that they were not required to obtain registration under 'Business Support Services' for providing infrastructure support service to CMC (issue no 2). A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant and therefore, the question of payment of service tax does not arise. This view has been supported by the decision in the case of Aditya College of Competitive Exam Vs. C.C.E., Visakhapatnam [2009 (16) S.T.R. 154 (Tri. - Bang.)],. The relevant para of the said decision is reproduced below: "7. We have gone through the records of the case carefully The undisputed facts are the activities undertaken by the appellants came into service tax net with effect from 1-7-2003 It is seen that the appellants had collected an amount of Rs. 80,32,000/- in May and June 2003 for the services rendered by them. In terms of Section 67(3) of the Finance Act, 1994 which relates to the valuation of taxable service for charging service tax, the gross amount charged for taxable service shall include any amount received towards the taxable service before, during or after provision of such services. In fact, this provision was introduced for the first time by way of Explanation (3) of Section 67 of the Finance Act, on 13-5-2005 which reads as follows-: "For the removal of doubt it is hereby declare that the gross amount charged for taxable service shall include any amount received towards the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand is also hit by time bar. In view of the above findings, we do not find any merit in the impugned order The demand is not sustainable. Once the demand is not sustainable, the imposition of penalty/demand of interest also cannot be upheld. Hence the impugned order is set aside and the appeal is allowed with consequential relief if any. 9.3. Thus, by relying on the decision cited supra, we hold that the demand of service tax of Rs.35,86,321/- confirmed in the impugned order on account of non-payment of service tax under commercial training and coaching services on hostel fees received for non-residential courses, is not sustainable and hence we set aside the same. 10. Regarding non-payment of service tax of Rs.25,50,658/- confirmed in the impugned order under business support services on share of fees received from CMC Limited ('CMC'). We observe that they have entered into an Education and Training Service Franchise Agreement with CMC whereby CMC and the Appellant will collaborate to provide career development courses directly to the students and no economic benefit is derived between the Appellant and CMC. In terms of the said arrangement, the appellant will be undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erce of the service receiver in other words the principal activity is to be undertaken by the client while assistance or support is provided by the taxable service provider in the instant case the theatre owner screens/exhibits a movie that has been provided by the distributor Such an exhibition is not a support or assistance activity but is an activity on its own accord That being the case such an activity cannot fall under Business Support Service 3. In the light of above it is clarified that screening of a movie is not a taxable service except where the distributor leases out the theater and the theater owner get a fixed rent in such case, the service provided by the theater owner would be categorized as 'Renting of immovable property for furtherance of business or commerce and the theater owner would be liable to pay tax on the rent received from the distributor. The facts of each case and the terms of contract must be examined before a view is taken. 4. All pending cases may be disposed of accordingly In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned." (Emphasis supplied) 20. The subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly shows that it is a Revenue Sharing agreement entered on principal to principal basis. The relevant part of the said circular is reproduced below: ....."..... 2.2. Another type of arrangement is where the contract between the theatre owner and the distributor is on revenue sharing basis i.e. a fixed and pre-determined portion i.e. percentage of revenue earned from selling the tickets goes to the theater owner and the balance goes to the distributor. In this case, the two contracting parties act on principal-to-principal basis and one does not provide service to another. Hence, in such an arrangement the activities are not covered under service tax. 2.5. The matter has been examined. By definition 'Business Support Service' is a generic service of providing 'support to the business or commerce of the service receiver'. In other words, the principal activity is to be undertaken by the client while assistance or support is provided by the taxable service provider. In the instant case the theatre owner screens/exhibits a movie that has been provided by the distributor. Such an exhibition is not a support or assistance activity but is an activity on its own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Forms and Prospectus and service tax of Rs. 9.35 lakhs has been confirmed on sale of Magazines. We observe that Sale of Newspaper - Jibika Dishari and Swabhumi, Sale of magazine namely RICE Times and Sale of forms and prospectus of the appellant, are all tantamount to sale of goods which is not leviable to service tax. Thus, the demands confirmed in the impugned goods on account of the above said sale goods is liable to be set aside and accordingly, we set aside the same. 11.1. With regard to the amount received towards Library subscription, fine, library development charges. We observe that the availment of library service is completely optional and has no connection with the course conducted by the Appellant. We observe that the library facility is akin to any standalone libraries offering membership to readers. For the said facility, we find that separate invoice is being raised by the Appellant towards library membership service, library development charges and no service tax has been charged by them. 11.2. We observe that Section 65(26) of the Finance Act, 1994 defines commercial training or coaching services as any training or coaching provided by a commercial training ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or willful misstatement or suppression of facts or intentful evasion of payment of tax is proved beyond reasonable doubt, the extended period of limitation cannot be invoked to demand service tax. In this case, the appellant has acted on a bonafide belief that they are not liable to service tax on the basis of various judicial pronouncements available on these issues. Accordingly, we observe that proceeding if any, can be instituted only for a period of 12 months. In the Appellant's case, demand for only 2011-12 could have been raised vide SCN dated 15.10.2012. Thus, we hold that the demand confirmed by invoking extended period of limitation is liable to be set aside. However, we observe that the demand is respect of the three major issues disputed by the appellant are liable to be set aside on merit itself. Hence, we hold that the demands confirmed in the impugned order does not survive. 14. In view of the above findings, we pass the following order: (i) The demand of service tax of Rs.35,86,321/- confirmed in the impugned order on account of nonpayment of service tax under commercial training and coaching services on hostel fees received for non-residential courses is set as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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