CESTAT, NEW DELHI BENCH
Commissioner of Central Excise, Lucknow
MISC. ORDER NO. ST/M/190 of 2012-CUS.
STAY ORDER NOS. ST/S/543-544 of 2012-cus.
APPLICATION NOS. ST/STAY/3227 & 3363 OF 2011 & ST/COD/409 OF 2011
APPEAL NOS. ST/1527 & 1607 OF 2011
APRIL 30, 2012
Ms. Archana Wadhwa, Judicial Member – The delay in filing the present appeal is of 16 days, the condonation of which is sought on the ground that main appeal was filed within time and present appeal is only of Managing Director. Keeping in view the above fact, we condone the delay and allow the COD application.
2. After hearing both sides, we find that demand of Service Tax of Rs.98,93,491/- stands confirmed against the applicant M/s. Rubic Rostrum along with imposition of penalty of Rs. 1,97,86,982/- in terms of provisions of section 78 of the Finance Act and penalty of Rs.5,000/- under section 77. In addition, penalty of Rs.5,000/- stand imposed on the second applicant Shri Aditya Kumar, Managing Director.
3. After hearing both sides at length duly represented by Shri B. R. Tripathi, learned advocate and Shri B.L. Soni, learned AR, we find that the applicant is running coaching classes, which are liable to Service Tax with effect from June, 2003 onwards. The applicant were discharging their Service Tax liability in respect of tuition fee being charged by them from their students. Their premises were visited by the officers on 7.1.2010 and scrutiny of various records maintained by the appellants revealed that no Service Tax was being paid by them on pre-schooling coaching, sale of text books, conducting of mock test series etc. On further investigation, Revenue entertained a view that in fact no pre-schooling coaching was being undertaken by the applicant and the amount received on the said ground was in fact on account of coaching classes for pre-engineering and pre-medical preparations. Similarly, there was no actual sale of text books and the said study material was being provided by the coaching classes, the cost of which was inclusive in the tuition fee charged by them. The bifurcation of the tuition fee was only being reflected in the account maintained by them. Similarly, Revenue also entertained a view that mock test conducted by the appellants were nothing but a part of the coaching exercise and value of the same is required to be added in the value of service. We find it is also the contention that pre-school coaching is exempted from Service Tax and inasmuch as they were actually providing the same, no tax can be confirmed in respect of the same. As regards sale of study material and text books, the appellants contention is that the same was independent activity and it was optional for the student to buy or not to buy the said books. As regards test series, the applicants plea is that such tests were being conducted to evaluate the students which may not be technically a coaching activity. The said activity is different from providing coaching to the students.
4. The above view does not stand accepted by the Commissioner who, confirmed the demand and imposed penalties and hence the present appeal along with stay petition.
5. After appreciating the submissions made by both the sides, and after going through the impugned order, we find that there is recording of fact by the adjudicating authority that the applicant, instead of having provided number of opportunities, have not been able to substantiate their plea of pre-school coaching. No evidence stands produced by the applicant in the shape of names of the students or their addresses or their identity, names of the teachers, to show that actual pre-school coaching was being conducted by them. As regards sales of text books, the adjudicating authority has found that no separate receipts were being issued for the same and only consolidated tuition fee is being recovered and it was only in their account that they segregated two amount. Similarly, the conducting of tests has also been held to be a activity integrally connected with the coaching of the students so as to include the value of the same in the services.
6. Learned Advocate appearing for the appellant has also assailed the impugned order on the point of limitation by submitting that the show-cause notice stand issued on April, 2010 for the period 1.4.2004 to 30.9.2009. On being questioned as to whether the fact of conducting of pre-school coaching and separate sale of books was revealed to the Department, at any point of time, learned advocate submits that such information was being provided in ST 3 returns. However, we find from the impugned order of the Commissioner that there was no such disclosure in the ST 3 returns. The appellant has not been able to produce any ST-3 return before us so as to substantiate their plea.
7. At this stage, learned advocate also submits that in any case cost of books and materials sold is not required to be taken into consideration for confirmation of Service Tax, in terms of provisions of Notification No. 12/03. He also submits that entire Service Tax should be treated as cum duty price and the deduction on account of tax is required to be given to them. He also submits that rate of tax during the relevant period was on the lower side whereas the tax stand confirmed against them by applying the higher rate of duty prevalent at the time of issuance of SCN.
8. Learned advocate also relied upon the provisional balance sheet for the year 1.4.2011 to 31.3.2012 in support of his plea of financial hardship. Countering the argument of financial difficulty, learned AR submits that there is reserve and surplus to the extent of Rs.76 lakhs. Further pre-schooling fee stand reflected to the tune of Rs. 1.40 crores, which is much more than the tuition fee for coaching, which has been shown as around Rs.55 lakhs. By this, he submits that balance sheet reflects upon the rosy/financial status of the appellant.
9. We find that various issues required to be decided in the present appeal relates to factual examination. Keeping in view the finding arrived at by the adjudicating authority, as regards evidence in support of non-providing of pre-schooling coaching, non-submission of receipts for sales of books, charging of one consolidated fee from the student, non-disclosure of information in ST 3 returns and non-rebuttal of above finding by the appellant by production of evidence to the contrary, we are of the opinion that appellant does not have prima facie, case in their favour. Similarly, as regards the financial position, we find that the provisional balance sheet figures produced before us do not reflect upon the very serious financial difficulty on the part of the appellant. Accordingly, keeping in view the appellants stand to treat Service Tax as cum duty price and rate of duty etc, and keeping in view the fact that the applicant has already deposited Rs. 11 lakhs during the course of investigation, we direct the appellants to make further deposit of Rs. 20,00,000/- (Rupees Twenty lakhs only) within a period of 8 weeks from today, subject to which pre-deposit of balance amount of duty and entire amount of penalty shall stand waived and its recovery stayed during the pendency of the appeals.
10. Matter to come up for ascertaining compliance on 12.7.2012. COD application also gets disposed of.