"PAN : 0532-2400149 CUSTOM 5, 1. RVICE TAX APPE id Red Building, AHababad-2, 00L Regional Branch, Allahabad Dated: 29/01/2016 To Appellant &s be adidtoss in table below Jam directed {o transmit herewith a certifi Finance Act, 1994 relating (o Service ved copy of order passed by the Act, 1994, it, Registrar Application Appeat Name and Address of Appellant i $1/52269/2015 A BC Classes 2nd Floor, Baldev Plaza, Golghar GORAKHPUR up Name and Address of Respondent &C. 3. 38..M G MARG...C. a \" ALLAHABAD,UTTAR PRADE: 211001 Copy To 3Advocaie(s) / onsuitart(s): K.valsH &CO KRISHNA JANKI PALACE,35- 62,NODIA,UP.201301 4Bar Association, CESTAT, Allahabad Director Publications, Customs, Excise. LP. Estare, Delhi 6 M/s Contax Publications Pvt. Ltd., 1512-B, Bhishm Pitamah Marg, New Deihi-3 7 Company J.aw Institute of India Pvt. Ltd, No.2 (old n0.36), Vaithyaram Street, T. Nagar, Cheanah77 8 Taxmann Allied Service Pvt. Lad, $ ew Rohtak Road, New Delhi-110005 9 LAWCRUX Advisors Pvt. Ltd, LAW House, 1-8, Sector-16, Faridabad 121003 (faryana} raxindiaQnline.com Pvt, Lid., 2nd Floor, Vasant Arcade, Vasant Kunj, New Delhi - 110070 ark Professional Services Pvt. Lid, 108, Everest Block, Aditya Enclave, Hyderabad — 38 ‘The ICFAT society, 52, Nagarjuna Hill, Penjagutta Hyderabad,.-560082 13 M/S Knowledge Processing Pvt. td.{tayzhanagementindia.com) Ground,Near Karkargeoma 14 CDR 5 ittice 39, Ist Ploor,Cross Rive IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH : ALLAHABAD COURT No. 2 APPEAL No, $1/52269/2015-CU[DB] sing out of Order-in-Original No. ST (184/2013)06 of 2015 dated: GQ 2015 passed by Commissioner of Central cise & Customs, ANahabad) For approval and signature: How ble Mr. Anil Choudhary, Member (Judicial) and Hon’ ble Mr. Anil G. Shakkarwar, Member (Technical) | the Order for publication as per Rule 27 of the | | CESTAT (Procedure) Rules, 1982? Whet | | the CESTAT (Procedure) Rules, 1982 for | | publication in any authoritative report or not? | | | Department Authorities? M/s ABC Classes Appellant Vs. Commissioner of Central Excise, Allahabad Respondent AL Shri Kapil Vaish, Chartered Accountant, for Appellant Shri Rajeev Ranjan, Joint Commissioner, (AR), for Respondent CORAM: Hon'ble Mr. Anil Choudhary, Member (Judicial) How ble Mr. Anil G. Shakkarwar, Member (Technical) Date of Hearing & Date of Decision: 26/10/2016 FINAL ORDER NO “TLO7 © Per: Anil Choudhary providing the service of education/coaching under classification of ‘commercial training and coaching serv They are in appeal against Order-in-Original No. ST , (184/2013)06 of 2015 dated 02/03/2015 passed by Commissioner of Central Excise & Customs, Allahabad. The issue in this appeal is whether the books of accounts maintained by the appellants and their Service Tax Returns filed time to time could be rejected or have been rightly rejected and the demand raised on the basis of statements under Section 14 of the Central Excise Act, 1994, whether the same is proper and/or whether the appellant have properly disclosed their turnover and maintained proper records which could not have been rejected on account of some variation noticed with the statement recorded by the partners of the appellant, their employees and students. 2. The brief facts are that on inspection took place in the premises of the appellant on 09-09-2010. In the said inspection some records were resumed for further verification and statements were also recorded under section 14 of the Bur ST Appeal No. 52269/15 tral Excise Act, 1994. The statement of partner, Mr. Rajneesh Singh, was recorded along with the statement of Mr. Durgesh Srivastava, the marketing executive, who was working for the last 12 months. As per the statement of Mr, Rajnecesh Singh, who was shown 20 fee receipts issu during April, 2009 te December; 2009 and asked to explain the entries of any of them,but he could not explam. Further, in his next statement on ]11-2-2011] he stated in response to question number 18 that during the current financial year 2010-11, total number of students is approximately 649. He also stated year-wise fee structure for the period 2008-09, 2009-10 & 2010-11 for the various courses conducted by them namely, Target Batch, Vision Batch, Focus Batch, AJEEE Batch, PMT Batch. It is further alleged in the Show Cause Notice that another partner of appellant, Mr. Praveen r 2009-10 and asked to give the batch of the students on which he expressed his inability as the fee receipt did not provide the information like batch number, serial number of the installment. In response to Question No. 8, about number of students during the period 2008-09 to 2011-12, he stated some numbers but also staied that this may not be the exact as he is making a rough estimate. In the light of the statements of the key persons and or perusal of record and documents resumed, it appeared that there was no set pattern for filling and issuing fee As per Revenue there was discrepancy as, — registration number of the service provider was missi the Fee Receipt, secondly value of taxable service provided or to be provided was incomplete, thirdly the columns in respéct of vahie/amount charged were deliberately left blank due to which the actual value of taxable ser s could not determined and fourthly the details of Service tax paid payable had not been mentioned. It, further, appeared that there have been violation of Sub-rule 1 of Rule 4A of the Service Tax Rules, 1994, as the appellant have not maintained proper account evidencing the part or final fee paid by the students. The method of accounting of fee receipts/invoice was manipulated and receipt/inveices were marked by incomplete information. It is further alleged tha fee/invoice do not have running serial number and the fee receipt issued do not have signature of any one of the partners or any of their Authorized Representative. Ped receipts issued curing academic session 2010-11 for PMT Classes, were on ‘white sheet’ which was hand written. Although original and duplicate copy of fee receipts were found to contain information, but the .same was not mentioned in their office copy or the third copy. During search scveral dowuuents like DSK expenditure (Daily Sales Report, cashbook pertaing to a single date, that is 05-08-2010) which shows receipt of Rs.1,41,200/- in cash and Rs, 10,000/- through Cheque from 13 students. Only one fee receipt dated 05-08-2010 Rs.7,000/- for PMT Targ 5 ST Appeal No. 5269/15 appeared to have been issued and that too in the name of Mr. K. M. Tiwari, whose name was not found in the list in the DSR and accordingly it appeared that for the Financial Year 2009-1 , all the receipts are not properly recorded: Accordingly, it appearect to Revenue that the turnover shown be the gross receipt shown, was not credible and was liable to be rejected and the accounts maintained by the appellant are not reliable. Further, the fee receipt books resumed at the time of search were found incomplete only for the year 2009-10. As such, to ascertain the exact number of students from fee receipt, list containing the name of students in alphabetical order was prepared and it was found that number of students as per their fee receipt was 810 as detailed in Annexure (J) to the Show Cause Notice, For the y 2008-09 the average numbers of students as stated by “partner Praveen Kumar Singh, in his statement dated 22-02-2011 was 617. Accordingly, as per the statement, 649 studenis were taken for the period 2010-11. The fee structure is stated by Mr. Rajneesh Singh for the respective years in answer to Question No. 18 in the statement dated 11-02-2011, was taken into consideration while calculating the taxable value of the services. Accordingly, the Revenue proposed to reject the Books of Accounts and estimated the turnover or gross receipts on the basis of statements and accordingly found that the appellant have paid Service tax ‘ short, by not disclosing their actual turnover or gross” receipts, Accordingly, in the Show Cause Notice dated 18-10-2013, it was proposed to demand Service ta paid Rs.55,51,706/- along with interest and further penalty was proposed under Section 76, 77 & 78 of the Finance Act, 1994. The appellant appeared and contested the Show Cause Notice by filing their reply and the Show Cause Notice w Timp Ukira, adjudicated vide, Order-in-Original No. ST (184/2013}06 of “ 2015 dated 02/03/2015 wherem the proposed demand was confirmed along with interest and further penalty of equal amount was imposed under Section 78. Further penalty of Rs.10,000/- under Section 77(2} of the Finance Act, 1994 w imposed. 3. Being aggrieved the appellant is before this Tribunal. The ld, Counsel for the appellant, Shri Kapil Vaish, Chartered Accountant, states that the appellant have maintained proper: Books of Account all throughout. Further, their Books of Accounts are duly audited by a Chartered Accountant as required under the provisions of the Income Tax Act and proper audit reports are obtained and the same are filed with the Income Tax Department etc. He, further, invited our attention to a chart prepared as per the statements of various persons, as regards the number of students. Out of the statements jconnected to five persons, including the partner and one of the students and Marketing Executive of the appellant the maximum figures stated have been considered, 7 ST Appeal No. 52269/15 by the Revenue for the purpose of estimation. The appellant have further demonstrated ai page 19 of the Compilation filed in the course of hearing that the gross receipts or turnover-for. the coaching service is in consonance as per the Book ‘Accounts maintained in the ordinary course of business: inere is no discrepancy on comparison with the ST Returns and the returns filed under various other laws including the Income Tax Act. He, further, points out from the statement of Mr. Praveen Singh, partner, which is contained at page 71 of the Appeal Book wherein answer to Question No. 3 it is stated that they maintain proper records like Attendance Register, Salary Register, Fee Receipts, Identity Card issued to students. Further, on the question that - what is the basis of issue of Identity Card to the students, It has been stated that Ahey also conduct free classes. Students do not come in one jot. Some students come to attend/or avail free classes and thereafter sorne students take admission. Further, the admitted and free students are given classes together. This continues during the first 2 to 3 months of the new session, Thereafter, on the basis of fee receipts, Identity Cards were issued. In answer to Question No. 8 wherein it was asked about the details of enrolled students in each year batch wise /course wise, wherein he stated as follows: - \"TET (Target) | PMT | Target | 00) | 450) | ahve Lure 1S pet , It was stated that fee stated above as by his memory which ig ar approx and is not exact figure. . 4. He further stated that this is approx data and also stated that as per the actual receipts, record in Books of Account are maintained and returns w filed with the Service Tax Department. He, further, states that Service tax Ong returns aif filed on the basis of gross fee received. Further, on “ a a query in Question No. 10, it was stated that students do not deposit the total fee in one go. They pay in installments. Accordingly, there will be more than one receipt in the name of a student. Normally students pay in two or thr installments but some students pay in more number of installments. Further, on a query that the fee receipts of the appellant do not show maintenance of record in a proper oo - Jos manner, it 48 stated that actually students in free class and regular class study together. In the receipt, name of the student & parents name is filed in, along with date and the amount received. As per the fee receipt available with the student Identity Card is issued. Many students are allowed concession in the fee. On further query whether in the fee receipt it is not important to mention the number 9 ST Appeal No. 52269/15 installmeni(s). It was answered that they do not mention the number of installments but on the basis of data mentioned in the receipt Register, they are able io make out. the installment. Due to the free students, during the initial’ e session, they are unable to know the exact number of paying students. Further, on query in Question } No, 19 - that in the fee receipts issued, all columns are not filled deliberately; it was answered that this happens due to the concept of free classes: Both the regular students and the free students attend the class together. The students of AIEEE course and WT are taught together and it is subsequently decided which student will go in which batch. Further, in response to question whether it is not natural when the student deposits the fee, he knows or is infortued pouat the fee he is depositing is for a pardcular course which ‘he wants to study. In answer, it was stated that as all the : matters cannot be decided at the admission counter. A student pays the first installment and is put in the batch. Subsequently, as per aptitude and progress, the batch is re-allotted to the students. Further, on query in Question No. 22 - as the fee of the student is the responsibility of his guardian; it was stated that the guardian is concerned with the quantum of fee and the batch or type of course which his ward is going to attend. Further, in response to query _ whether if any person or Government agency wants to know Vthe receipt batch wise, course wise, number of students for a 10 Sv Ay particular financial year, how wouid you tell. it was answered that they may not be able to tell batch wise/course wise ‘number of students. But total number of students and the gross fee received, which will “be as per the records maintained by them. Further, in Question No. 27, query made that as per the fee receipts of students starting with thé Page 36, students were randomly selected and as per the receipt books from 21 students fee collected is Rs.3,000/- to 5000/-, from 10 students Rs.5,000/- to 10,000/- from 3 if students Rs.10,000/ to 20,000/- & from 2 students Rs. 20,000/-. Thus the average comes to Rs.7,340/~- per student which does not match with the fee structure of the appellant and a doubt was raised on the records maintained by the appellant. In answer, the partner stated that whatever be the fee structure they have kept; they usually do not get the said amount and whatever they get they maintain. proper records om The id. Counsel also draws our attention to the statement of the Marketing Executive, Shri Durgesh Srivastava, recorded on the date of search wherein he has stated that they are properly registered with the Scrvice Tax Departinent lor “dhe fast lour years and have been Lbng their six monthly returns regularly. He has further stated that all the students who study in their Coaching/Institute do not pay fee at the same rate or the same amount. Some students are meritorious but poor in which case they are allowed a ST Appeal No, 5269/15 rebate in the fee. Fees are normally paid by the students in for sh and sometimes in cheque and for every receipt proper acknowledgement of fee receipt is issued. The Id. counsé! ner points out that the ld. Commissioner bave not fo fany discrepancy and/or mismatch in the records maint: by the appellant, save and except the variation with the oral statements. In spite of voluminous records‘examined and resumed by the Revenue the authorities have not found a single instance of any receipt voucher found unrecorded in the Books of Accounts maintained. He, further, urges that under the facts and circumstances; their Books of Accounts and the returns filed could not have been rejected and/or brushed aside and the best judgment assessment has been made on some illusory basis, He, further, states that even wotherwise the best judgment assessment made by the Id. ‘Commissioner have got no legs to stand being a wild guess work ,without any proper basis and accordingly the demand and penalties are fit to be set aside. He, further, states that Revenue have not brought any corroborative evidence save and except relying on the statements which cannot form the sole basis of a be t judgment assessment under the facts and SWUuN stances. 6. The id. AR relies on the impugned order. 7. Having considered the rival contentions, we observe that no discrepancy has been found out by the Revenue during investigation and or at the time of adjudication in the Books of Accounts and records maintained by the appellant,in ordinary course of business. Further, we find that the staternents have been recorded in a flimsy manner without informing the persons, that whatever they state even if} approximation, the same will be used st making a best judgment assessmentyor in any proceedings under the Act. Further, we find that even the instances quoted in the Show Cause Notice, hike the fee receipt in the case of one Saddam Husain S/o Abdul Hameed, a student of the appellant, is found to be properly recorded in the Books of Accounts maintained by the appellant. We, further, find that the persons who have stated the number of students in the statement, have also clarified the same that the figures aré based on approximation and the exact figures has to be taken from the records maintained by the Institute. The said on of the approximate figures cannot form basis of reje Books of Accounts and estimation of turnover by way of wild guess work. There is absolutely no evidence on record to ry and ak prove that appellants received any amount ov ie whieh has been recorded in Books of Account. Even in the statements recorded by Revenue there is no such averment/confession. Accordingly, we find there is no proper basis adopted by the revenue for rejecting the books of 13 ST Appeal No. 52269/15 account and the Returns filed, and resorting to best judgment ass nent. In this view of the matter we allow this appeal and set aside the impugned order. The appellant willibes. | noord entitled to consequential benefits, if any, in accordanc “law. The copy of the order be given. dasti. (Dictated and pronounced in Court) (ANEL.G. SHAKKARWAR) i ANEL HARY MEMBER (TECHNICAL) C CHOUDHARY) MEMBER (JUDICIAL) INTO TERS EE MeKER Wek recent cote ttn "