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Demand made involved three issues (i) coaching given to the students held to be recreational activity (ii) Abacus training imparted to teachers would either get employed or could opt for self-employment held in the nature of vocational training (iii) with respect to franchisee services the demand was confirmed after adjustment and penalty accordingly reduced.
Facts:
The appellants hold franchisee for ‘Abacus’ training which is an ancient Chinese tool to solve arithmetical calculations with speed and accuracy without calculator. They are engaged in imparting such training to students as well as teachers who could be either employed by them or had an option for self-employment after such training and to train students at various centres run by themselves. They also receive amounts towards granting franchise for imparting training through Abacus. For all the three revenues, service tax was demanded.
The appellant contended that the training imparted to the students could not be taxed under the category ‘Commercial Training or Coaching Services’ for it was recreational in nature as held by the Bangalore Bench in Fast Arithmetic v. Asst. Comm. of Central Excise & ST, (2010) 17 STR 158. Also, no service tax was payable for training which is recreational in nature vide Notifications Nos. 9/2003 and 24/2004. Similarly, the above Notifications also exempted such vocational training provided to teachers.
Held:
In terms of the Notifications and case cited above the demand with respect to training given to students and teachers was set aside along with the penalty.
On the other hand the amount received towards franchisee services was held liable to service tax. The appellant did not dispute this and had paid service tax on the franchise fee received. The penalty stood reduced only to the extent of delayed payment towards franchise fee and the cost was waived.
