The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no service tax can be levied on value of sale of books separately identifiable from audited financial statement and sold to third parties.
The present appeal has been filed by M/s. Kanhaiya Singh Vision Classes Pvt Ltd, the Appellant is aggrieved by the order passed by the Adjudicating authority by which the demand of service tax of Rs. 3 crores by invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 was confirmed along with imposition of interest and equivalent penalty under the provisions of the Finance Act, 1994.
The appellant is engaged in providing coaching services to the aspiring students for qualifying the competitive entrance examinations into the engineering/medical institutes and is thus registered under the service tax regime.
It was the allegation of the department that the appellant has artificially bifurcated the consideration received towards coaching services (under the head tuition fee from students) in to other categories such as Income from Bag trade, Sale of I Card, Sale of Prospectus/Form and publication Section L. Thus, it was alleged that the Appellant is also liable to pay service tax on consideration received towards Publication Section L, major being the income from sale of publication section L.
It was also alleged that the Appellant has reported less turnover in their audited financial statement for certain years and thus the demand came to be calculated on the basis of the documents seized by the department by ignoring the audited financial statements.
The appellant had replied to the Show Cause Notice by stating that the value of sale of books cannot be included in the value of coaching services as the same was sale of goods and cannot be taxed as per Notification No. 12/2003-ST dated 20.06.2003.
The Two-Member Bench comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “We find that since the value of sale of books is separately identifiable from the audited financial statements of the Appellant and there are documents to show that such sale was also made not to the students but to third parties also, the question of levy of service tax on such value from sale of books/publication cannot be sustained.”
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