TMI Blog2019 (11) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... this connection what is important to notice is that the exemption is in relation to education . It cannot be doubted that the activity conducted by the Appellant is in relation to education and, therefore, the Appellant would clearly be entitled to the benefit of the exemption Notification dated 10 September 2004. It would be appropriate to refer to the decision of the Tribunal in SUNBEAM INFOCOMM PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (8) TMI 783 - CESTAT MUMBAI] wherein even though education in Information Technology was conducted through authorized training centers throughout the State of Maharashtra, but the Appellant therein was only an authorized agency for supplying books of various courses, creation of authorized training centers, supervision of authorized training centers, collection of fees for various courses conducted and remitting the same to the authorized training centre. The Tribunal held that the activities were incidental or ancillary to the promotion of Information Technology Education of Maharashtra and, therefore, would be exempted under the Notification - In the present case, apart from imparting some of the aforesaid activities, the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Appellant entered into agreement dated 15 March 2007 with Career Launcher (India) Limited Career Launcher which was engaged in providing commercial training and coaching services through its numerous centres located across the country. Shri Niraj Prasad The Appellant entered into a License agreement with Career Launcher under which the Appellant was granted the right to use the trademark, logo and proprietary system developed by Career Launcher regarding various courses. According to the Appellant, the agreement between the Appellant and Career Launcher is on a principal to principal basis with no element of agency and the Appellant functions in the capacity of an independent contractor where the Appellant is responsible for providing the cost of the equipments, premises, furniture and allied articles for the recruitment and selection of staff and the faculty. Further, there is no element of any provision of service as both are striving towards a common goal. 3. As per the terms of the agreement, the Appellant and Career Launcher share the revenues collected from the students in the ratio of 75:25%. The Appellant deposits the entire fee with Career Launcher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orking day. The Licensee shall issue receipts on behalf of the Licensor in respect of monies received under this Agreement. All such payments shall be due to and payable to the Licensor and not to the Licensee. ----------------- 5.6 RECURRING FRANCHISE FEES The licensee shall be paying recurring franchise fees to the Licensor @ 25% of the Net Revenue (net of taxes, applicable now or at any time in future) earned from the operations. 8.2 No Agency 1. The parties hereto agree that the Licensee is an independent contractor, nothing herein contained shall constitute the Licensee an agent, legal representative, partner, subsidiary, joint venturer or employee of the Licensor. The Licensee shall have no right or power to, and shall not bind or obligate the Licensor in any way, manner or thing whatsoever, nor represent that he has any right to do so. 2. In all public records and in its relationship with other persons, on letterheads and business forms, the Licensee shall indicate its independent ownership of the said business and that it is a Licensee. 4. However, a Show Cause No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus the activities undertaken by the party were squarely covered under clause (vi) of the definition of Business Auxiliary Service, and the Service Tax is leviable under Section 65(105)(zzb) of the Act in the said category. Further, I also fail to find any force in the plea taken by the party that the CTC services were provided by them jointly and Service Tax on the said services was being paid by M/s Career Launcher at Delhi in as much as the same is contrary to the spirit of the statutory provisions of the Finance Act 1994, because both M/s Career Launcher and Shri Niraj Prasad are two different business entities engaged in providing two different services under the same service agreement. Shri Niraj Prasad is providing services on behalf of M/s CL hence, the activities, role and responsibilities of Shri Niraj Prasad, the Service Provider appears to be squarely covered under the Business Auxiliary Services . 7. The contention of the Appellant that it was entitled to claim exemption under the Notification dated 10 September 2004 was also rejected by the adjudicating authority for the reason that though the exemption is provided in relation to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of the party appears attractive and convincing at the first instance, but is devoid of substance. Considering the contention of the party that the amount of Service Tax payable on the gross value of the taxable services has already been paid by M/s Career Launcher, I observe that M/s Career Launcher are registered with the Service Tax department for providing of Commercial Training and Coaching service which are taxable as per Section 65(105)(zzc) of the Finance Act, 1994. I find that M/s Career Launcher had themselves classified the services rendered by them under the category Commercial Training and Coaching service and had taken Registration from the Service Tax department, and had regularly been paying Service Tax on the collections received as fees from the students under the CTC services only. Over the point of payment of Service Tax in the appropriate category, I find that the party has totally misconstrued the issue. I find that the services provided by the party in this case were not the Commercial Training and Coaching service , but as per the agreement, it was clear that the party was arranging to provide services on behalf of M/s Career Launcher for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would amount to double taxation inasmuch as Career Launcher had paid tax on the entire amount recovered from the students and in support of this submission, learned Counsel placed reliance upon a decision of the Tribunal in M/s Samadhan Systems Pvt.Ltd. v. Commissioner of C.Ex., Jaipur-I Service Tax Appeal No.1079 of 2011 decided on 9 January 2018; and (v) The Appellant is entitled to the same relief as was granted to other similarly placed assesses. Elaborating this submission, learned Counsel pointed out that the Commissioner(Appeals) by the order dated 25 October 2012, which attained finality and is in regard to a similar issue, set aside the order of the adjudicating authority that required the Appellant therein to pay Service Tax on business auxiliary service as it resulted in double taxation. Learned Counsel also placed reliance upon the judgment of the Supreme Court in Damodar J. Malpani v. Collector of Central Excise 2002 (146) E.L.T. 483 (S.C.). 10. Learned Authorized Representative of the Department supported the impugned order and submitted that the Commissioner committed no illegality in confirming the demand. Learned Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dealing with this aspect has been reproduced above. A perusal of the said paragraphs indicate that the adjudicating authority found as a fact that both Career Launcher and the Appellant were two different business entities working under a service agreement and the responsibility of the Appellant was appropriately covered under the business auxiliary service . 15. A perusal of the agreement between Career Launcher and the Appellant reveals that the Appellant was entitled to 75% of the net revenue amount deposited by it in the bank account of Career Launcher towards the fees collected from the students, while Career Launcher was entitled to the remaining 25%. This arrangement is a typical revenue sharing model arrangement. The Appellant was not to receive fixed amount per annum or per month from Career Launcher but only a certain per centage of the net revenue. In such a situation, it cannot be said that the Appellant was a service provider and Career Launcher was a service recipient. No service was, therefore, provided by the Appellant to Career Launcher. This view finds support from the decision of the Tribunal in Mormugao Port Trust. The Tribunal found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice Tax, reported in 2005 (40) S.T.R. 973 it was held that mere money flow from one person to another cannot be considered as a consideration for a service. The relevant observations of the Tribunal in this regard are extracted below: 11. ..Consideration is, undoubtedly, an essential ingredient of all economic transactions and it is certainly consideration that forms the basis for computation of service tax. However, existence of consideration cannot be presumed in every money flow .. The factual matrix of the existence of a monetary flow combined with convergence of two entities for such flow cannot be moulded by tax authorities into a taxable event without identifying the specific activity that links the provider to the recipient. 12. .Unless the existence of provision of a service can be established, the question of taxing an attendant monetary transaction will not arise. Contributions for the discharge of liabilities or for meeting common expenses of a group of persons aggregating for identified common objectives will not meet the criteria of taxation under Finance Act, 1994 in the absence of identifiable service that benefits an identified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 10 September 2004 by which the Central Government exempted taxable service provided to a client by any other person in relation to business auxiliary service in so far as it related to a provision of service on behalf of a client and provided in relation to education. 20. To appreciate this contention it would be appropriate to reproduce the said Notification which is as follows:- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service provided to a client by any other person in relation to the business auxiliary service, insofar as it relates to, - (a) procurement of goods or services, which are inputs for the client; (b) production or processing of gods for, or on behalf of, the client; (c) provision of service on behalf of the client; or (d) a service incidental or auxiliary to any activity specified in (a) to (c) above, and provided in relation to agriculture, printing, textile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd Edition) assigns the meaning of the word education as follows:- education -noun [mass noun] 1 the process of receiving or giving systematic instruction, especially at a school or university: a course of education. ▪ the theory and practice of teaching: colleges of education. ▪[count noun] a body of knowledge acquired while being educated: his education is encyclopedic and eclectic. ▪ information about or training in a particular subject : health education. 25. Chambers English Dictionary assigns the meaning of the word education as follows:- Educate ed u-kat, v.t. to bring up and instruct; to teach; to train. adj ed ucable. ns. educabil ity; educatabil ity; educa tion bringing up or training, as of a child: instruction: strengthening of the powers of body or mind: culture. 26. Encyclopedia, Edited by David Crystal assigns the meaning of the word education as follows:- Education what takes place when human beings learn something, often from others but sometimes for themselves. It may happen during the day in specially constructed buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogy Education of Maharashtra and, therefore, would be exempted under the Notification. 29. In the present case, apart from imparting some of the aforesaid activities, the Appellant is in fact also providing education to the students and, therefore, the principles enumerated in the aforesaid decision of the Tribunal will apply with greater force in the present case. 30. The next alternative contention of the learned Counsel of the Appellant is with regard to double taxation. It has been submitted that Career Launcher has a central registration with the Department and the premises of the Appellant are included in the Centralized registration. Service Tax has been paid on the entire amount of fees deposited by the students. It has, therefore, been contended that if the Appellant is required to pay any Service Tax, it would amount to double taxation, which is not permissible. 31. The adjudicating authority did not accept this contention of the Appellant and the relevant paragraphs have been reproduced. According to adjudicating authority, two separate services exist namely service provided by Career Launcher as commercial training and coa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x at their hands. 10. We also perused the order of Commissioner (Appeals), Aurangabad in a similar set of facts though with reference to another business partner of MAAC. The issue was examined in detail in the said order. It was concluded that no Service Tax liability will arise on the business partner of MAAC under commercial coaching and training service. (emphasis supplied) 33. The last alternative contention of the learned counsel for the Appellant, is that the Department cannot be permitted to discriminate between various assesses inasmuch as in the case of certain assesses, relating to same issues, a view was taken that training centres like the Appellant will not be required to pay Service Tax under the category of business auxiliary service , if Service Tax has been paid on the entire amount by the agencies with whom the agreement has been entered into. 34. There is considerable force in the submission advanced by the learned Counsel for the Appellant. A bare perusal of the order passed by Commissioner (Appeals) in Appeal No.287 on 25 October 2012 reveals that the demand of Service Tax under the category of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the amount of ₹ 3,45,18,649/- received by the appellant from M/s CLI, on which the department has demanded the service tax, is nothing but a part of the entire transaction of ₹ 5,22,67,103/- on which the service tax has already been paid by M/s CLI. It is clear from the documents on record that the service tax has been paid on the entire amount i.e. the tax to be paid by M/s CLI as well as by the appellant stands paid. It is also on record that CLI have obtained centralized registration for payment of Service Tax and the Professional Learning Centres at Agra Bareilly were included in the said centralized registration. I also find that it is not the case of the department that M/s CLI has not paid the service tax on the entire fee collected at Agra Bareilly centres. Keeping this in view the demand of service tax on the same transaction under the category of Business Auxiliary Service is not sustainable. 36. This order, it has been stated, has attained finality and nothing to the contrary has been pointed out by the learned Authorized Representative of the Department. 37. Once the Department permitted this order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formity was to call upon the Revenue Authorities to explain why they were making a distinction between the appellants product and that of M/s. Chandulal K. Patel without subjecting the appellants product to any chemical analysis. 5. In their appeal from the decision of the Tribunal before us the appellants have again raised the issue that the Tribunal should have considered the fact that the appellants and Chandulal K. Patel Co s products were identical and were the outcome of an identical process, and that since the latter had been exempted from paying any central excise duty on the ground that their product was classifiable under Tariff Heading 24.04, the appellants should get the same benefit. 6. At the hearing today we sought an explanation from the learned Counsel appearing on behalf of the Revenue Authorities as to why different stand had been taken in the cases of M/s. Chandulal K. Patel Company and the appellant. Since the matter had not been squarely dealt with on facts at any stage by any of the authorities below, it was not possible for learned Counsel to give us the reasons for drawing this distinction between the two manufacturers an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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