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2006 (11) TMI 595 - AT - Service TaxService tax on the franchise services - imposition of penalty - non refundable deposits - claimed the benefit of Notification No. 9/03-ST - exempts taxable services provided in relation to commercial training or coaching by a vocational training institute, computer training institute or a recreational training institute - HELD THAT:- As rightly held by the Commissioner (Appeals) appellant is providing two different services under two different categories, namely-(a) commercial training and coaching services and (b) franchise services. The notification only exempts services provided as commercial training and coaching. The ld Advocate's argument that the expression "in relation to" appearing in the notification is of wide connotation and would include the franchisees services also, cannot be accepted. Even if the said expression "in relation to" is held to be of wide sphere, the same has to be extended only in relation to the commercial training or coaching being given by the institute. It cannot be extended and stretched to such an extension, so as to hold that any service by training institute would get exempted even though it may be in a different field. The services provided by the institute have to be viewed in the light of the definitions of such institute given in the notification. The same cannot be extended to franchise services given by the said institute to the franchisee. As such, we hold that the benefit of the said notification is also not to be available to the appellant. Thus, we hold that the appellant was liable to pay service tax on the franchise services. However, we agree with the ld Advocate that for the purpose of calculation of duty, consideration received by the appellant before July 1, 2003, when franchisee was brought under the service tax net should not be taken into consideration in full and the same should be taken on pro-rata basis for the period after July 1, 2003. For the said purposes, we remand the matter to the original adjudicating authority for recalculation of service tax. He would also consider the appellants plea of penalty under various sections, depending upon the quantum of the service tax recalculated. The appeal is disposed of in above terms.
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