TMI Blog2011 (4) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, and the appellant is liable to pay service tax on the said services. - Appellant liable to pay service tax. Notification no. 9/03 ST dated 20-6-2003 - 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. Regarding penalty - invoking the provisions Section 80 of the Finance Act, 1994, there being justifiable reason for non-payment of service tax, we are of the considered view that appellant need not be visited with any penalties. In view of this, the penalties imposed by the ld. Commissioner in the Order-in-Revision No.01/2007-Service Tax dt. 29/5/2007 is set aside. - ST/70/06; ST/332/07 - - - Dated:- 19-4-2011 - Mr. M.V.Ravindran, Mr. P.Karthikeyan, JJ. Mr. K. Parameshwaran, Advocate for the appellant. Mr. Harish, JDR for the Revenue. Per M.V.Ravindran These two appeals are filed against the following impugned orders:- Appeal No.ST/70/2006 Order-in-Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority did not agree with the contentions and held that the appellant is liable to pay the service tax on the amount of 25% retained by them. But he refrained from imposing any penalties on the appellant. Aggrieved by such an order, appellant preferred an appeal before the ld. Commissioner(Appeals) contesting the service tax liability on the 25% course fee received by them. Ld. Commissioner(Appeals) did not find any merits in the appeal filed by the appellant and coming to such a conclusion, he rejected the appeal. Hence, appellant is before us in appeal No.ST/70/2006. 3. In respect of appeal No.ST/332/2007, the Revenue aggrieved by the Order-in-Original passed by the adjudicating authority by not imposing any penalties on the assessee, reviewed the order of the said adjudicating authority by the powers vested in Commissioner under Section 84 of the Act and passed an Order-in-Revision wherein penalties under Section 76 and 78 were imposed on the assessee. Aggrieved by such an order, the assessee is also on appeal before us. 4. The ld. Counsel appearing on behalf of the appellant would submit that the appellant has been undertaking the activity of franchisee services and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that when an activity to be considered as a computer coaching or training, the same could not have been taxed under any other category i.e. to say when an activity cannot be taxed directly, it cannot be also taxed indirectly as laid down by the Hon ble Supreme Court in the case of CCE, Pondicherry Vs. Acer India Ltd. [2004(172) ELT 289 (SC)]. It is his submission that after going through the clauses of agreement, it would become clear that the franchisees are not required to pay any fees relating to the appellant and the amount retained by them would not become a franchisee fee thereon. For this proposition, he would rely upon a decision of the Tribunal in the case of Bonanza Speed Couriers Pvt. Ltd. Vs. CC CE, Cochin [2010(19) STR 675 (Tri. Bang.)], Franch Express Network (P) Ltd. Vs. CST, Chennai [2008(12) STR 370 (Tri. Chennai)]. 5. As regards the appeal No.ST/332/2007, it is his submission that the review undertaken by the ld. Commissioner against the Order-in-Original was much after the Order-in-Original got merged with the Order-in-Appeal and even after the grant of stay by the Bench in the same matter. It is his submission that Order-in-Revision should not have been pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the student for the purpose getting a degree of CMC Modular DAST Course . 9. It is undisputed that the appellant is conducting CMC Modular DAST course not by himself but through franchisees all over India. It is also undisputed that the appellant is getting fixed amount on execution of agreement as a franchisee fee, on which service tax liability has been fastened and discharged by the appellant along with interest and is not being disputed before us. It is also undisputed that the certificate issued on completion of such course is given by the appellant. 10. On this factual matrix, we proceed to decide the issue. The definition of the franchise service during the relevant period reads as under:- Franchise Service : Franchise service is a service provided by franchiser to a franchisee. Section 65 of the Finance Act 1994, (sub section 47) defines franchise as a specific type of agreement. This agreement has various ingredients, which have been specified in the said definition. For removal of doubt it is clarified that unless all the ingredients mentioned at (i) to (iv) of the said sub section are satisfied, the agreement can not be called as franchise agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een from the said clause that the franchisee has to provide an annual business plan which includes marketing and teaching plans of the courses covered under the agreement and that said clause also talks about forecasting the amount of royalty payments expected to be paid to the appellant. We find that Clause No.11 of the said agreement is of financial considerations to be paid by the franchisee to the appellant which we may reproduce:- 11. Financial considerations:- i. The current schedule of charges for conducting CMC Modular DAST Course facilities by the Franchisee is as follows:- a) The franchisee will pay to CMC a one time Franchise Fee of Rs.1,44,000/- (Rupees one lakh fourty thousand only) per location for the specific twenty seven months period under this agreement. b) A royalty worked out at the rate of 25% of course fee of each participant to CMC Modular DAST Courses. Fee for the courses would be determined from time to time by CMC. The current fee schedule applicable for the Modular DAST Courses Semester wise is given in Annexure-II. 14. It can be seen from the above reproduced clauses in the Financial consideration in the agreement that 25% of the fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the definition of Franchise as provided under Section 65(47) of the Act, and the appellant is liable to pay service tax on the said services. 7. The appellants have also claimed the benefit of Notification No. 9/03-ST, dated 20-6-2003, which exempts taxable services provided in relation to commercial training or coaching by a vocational training institute, computer training institute or a recreational training institute, to any persons from the whole of the service tax leviable thereon under Sub-Section (2) of Section 66 of the said Act. Reading of the above notification clearly leads to the conclusion that the exemption provided is in respect of services relating to commercial training or coaching. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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