Service Tax on study materials provided by Commercial training or coaching service provider

CESTAT, NEW DELHI BENCH

FIITJEE Ltd.

v/s.

Commissioner of Service Tax, Delhi 

STAY ORDER NO. ST/482 of 2011

application no. st/stay/2873 OF 2010

APPEAL NO. ST/1355 OF 2010

AUGUST 2, 2011

ORDER

D.N. Panda, Judicial Member – Moving the stay Application against Service Tax demand of Rs. 42,24,217/- followed by interest and penalty under different provisions of law. Ld. Counsel submits as under:

(a)  Appellant are entitled for the benefit of exemption under Notification No. 12/2003-ST,

(b)  The price differs according to the preference of the student,

(c)  The sale value of the books is Rs. 6000/- for one year course, Rs. 11,000/- for two years course and Rs. 5000/- for crash course.

(d)  The study material is not an integral part of the coaching provided.

(e)  It is known to the students that what they are paying for the study material and what for the coaching.

(f)  Separate receipt is issued for the study material, therefore, the price of the study material is available.

(g)  The exemption granted by a notification cannot be curtailed by a circular.

(h)  The Appellant was under the bona fide belief that the benefit under exemption notification is available hence neither the extended period is invokable nor penalty is imposable.

2. Revenue pleads that they have made out a case against the Appellant finding that the Appellant had collected certain amount for supply of study material/coaching to provide the commercial coaching meaningful and no Service Tax was paid thereon. Ld. DR further submits that the Appellant has issued study materials to the students enrolled for commercial coaching and bifurcation of the coaching material from the coaching services was made to evade Service Tax payable on the former. While coaching is provided enrolled candidates are required to make reference to the study material/coaching material for appreciation of the value of the coaching so as to gain out of that. The consideration received towards such coaching material/study material being integral part of the service of coaching shall necessarily form part of the taxable service of commercial coaching being inseparably connected. The Tribunal has already directed to make payment of pre-deposit in similar case in the case of Cerebral Learning Solutions (P.) Ltd. v. CCE [Stay Order No. ST/58/2009 (PB), dated 10-2-2009]. Therefore the Appellant is required to make pre-deposit in this case also.

3. Heard both sides and perused the records.

4. The Appellate Authority examined the case before him in various paragraphs of his order beginning from para 4 thereof. He examined the applicability of Notification No. 12/2003-ST dated 28th June 2003 and he was of the view that benefit of the Notification cannot be curtailed by circular. He examined the issue in para 4.2 of the order and unambiguously stated that the study materials are integral part of the coaching and coaching becomes meaningful and fruitful with the aid of the study material. Accordingly, he imposed tax on the value of the study material supplied by the Appellant to the candidates enrolled for commercial coaching. He also examined the limitation aspect in para 4.4 of the order and viewed that when the Appellant claimed exemption did not brought that to the notice of the Authorities filing Service Tax returns or making a protest.

5. Having given patient hearing to both sides, we are prima facie of the view that coaching material has intimate connection with the commercial coaching provided by the Appellant and the contents of the study material are relevant to the coaching to make the later fruitful and meaningful so that the enrolled candidates are benefited out of commercial coaching. There was no evidence brought to our notice that these coaching materials are sold as text books by book sellers and no way useful to the enrolled students. So also there is no evidence to suggest that these coaching materials by any means enjoy exemption under law and not taxable. The notification relied upon by the Appellant relates to works contract case whereas pure and simple commercial coaching cannot be called as works contract for the peculiar nature of the services involved being intellectual in nature.

6. In view of prima facie observation as above, we ore of the view that Revenue shall be prejudiced if no pre-deposit is called for during pendency of the Appeal. Accordingly, we direct the Appellant to make pre-deposit of Rs. 13.00 lakhs (Rupees Thirteen Lakhs) within six weeks hereof and make compliance on 30th September 2011. Subject to compliance, realisation of the balance amount shall be stayed during pendency of the Appeal.

NF