PINNACLE Vs. COMMISSIONER OF C. EX., CHANDIGARH

JUDGEMENT

(1.) THE appellants are in the business of providing commercial coaching services as defined under Section 65(105)(zzc) of the Finance Act, 1994 and they are registered for payment of service tax. They had been paying service tax as calculated by them. During investigation conducted by the department, it was seen that during 1 -4 -2004 to 31 -3 -2006, they had supplied study material worth Rs. 81,63,505/ - to their students but had not included the said amount for arriving at the value of services rendered by them for paying service tax.

(2.) THE Department was of the view that the appellants could not have provided the coaching services without using the books which were sold to the students and the value of the said books recovered from the students should have formed part of the gross value of the services rendered by them and they should have paid tax on such gross value. The department accordingly issued a show cause notice demanding differential tax of Rs. 18,11,568/ - along with interest and also for imposing penalties. The said show cause notice culminated into an order confirming service tax of Rs. 18,11,568/ - along with interest and imposing penalties under Sections 76, 77 and 78 of the Finance Act, 1994. There was also the issue of wrong availment of Cenvat credit of Rs. 16,762/ - which was disallowed.

(3.) THE appellants submit that the study material in question is procured from another company named M/s. Bulls Eye who have appointed them as authorized distributor for the said books in Chandigarh, Punjab, Haryana and Himachal Pradesh. They were not the owner of the said material. They also submit that the books were sold at prices decided by the publisher and printed on the books. They did not get any royalty from M/s. Bull Eye in the sale of such books. So they claimed benefit of exemption under Notification No. -S.T., dated 20th June, 2003 which reads as under : -