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TMI Blog2008 (8) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... training' is classifiable as 'commercial Training or Coaching' under Section 65 (27) of the Finance Act, 1994 and on this basis exempt from service tax under Notification No. 9/2003-ST dated 20/06/03, as claimed by the Appellant or this activity is classifiable under heading online information and data base access and/or retrieved service defined under Section 65 (75) of the Finance Act, and chargeable to service tax accordingly. The other point of dispute is with regard to the real time training/coaching centres managed through franchisees and the same is whether the franchise fee being received by the Appellants from their franchisees is liable to service tax under 'Franchise Service' as defined under Section 65 (47) of the Finance Act, 1994. 1.1 The Commissioner by the impugned order has decided both the issues against the Appellants and (a) has confirmed the Service tax demand of Rs. 3,07,47,922/- against the Appellants under Section 73 (1), read with Section 66 and 68 of the Finance Act, alongwith interest at the applicable rate on this amount as per the provisions of Section 75, in respect of online computer training for the period from 16/07/01 to 06/10/03 by classifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed educational institutions are adopting this method to extend the scope of distance education. Indira Gandhi National Open University (IGNOU) has taken initiative in launching online educational computer programmes are 'The Bachelor of Information Technology' and 'Advanced Diploma in Information Technology' are offered through a virtual campus initiative. In addition to IGNOU, www.e-gurukul.com; www.vidyarthi.com, www.classteacher. com etc. are providing interactive educational programmes online. TRU in its circular No. B-11/1/01-TRU dated 9/1/01 has given the examples of paid websites like www.taxindiaonline.com, www.cllonline.com etc. as the paid websites covered by 'online information and data base access and/or retrieved service but it has not mentioned educational websites like www.e-gurukul.com etc. as covered by this service. (5) Importing knowledge or education is different from mere disseminating information/data, which alone is taxable under entry online information and database access and/or retrieved service. Education is the result produced by instruction, training and study. The Appellants are using internet as the medium for instruction and other related activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by this entry. For an activity to be covered under the entry online information and database access and/or retrieval, what is necessary is that information is provided online through computer network, even if the website is interactive. (2) There is no exclusion of interactive, access as the words in relation to in Section 65 (105) (Zh) are very wide. (3) Shri Rishi Sehdev, M.D. of the Appellant Company has accepted that as per his understanding the service of online computer courses being provided by his company is taxable and for this reason, in addition to basic charge, an amount equal to the service tax chargeable, was being collected from the customers, but the same was not being paid to the Department. (4) As regards the Franchise service, all the conditions in the definition of Franchise service are satisfied as the burden of proving that the fourth condition in the definition of Franchise Service is not satisfied in this case is on the Appellants, which has not been discharged. (5) The show cause notice dated 24/08/04 has been correctly issued by the Assistant Commissioner as at that time Section 73 provided for issue of Show Cause Notice by Assistant/Deputy Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test. The online computer courses have all the features of traditional computer classes and only the difference is medium. The users can subscribe for online courses through a referrer, who is a person already using online education facilities of the appellants and the subscription for online computer courses is Rs. 6,000/- per subscriber, in which the subscriber gets unlimited education alongwith 35MB of Web space and online tools for a period of one year from the date of registration. 4.2 The competing entries for the above activity are online information and data access and/or retrieval service defined under Section 65 (75) of the Finance Act, 1994 and commercial training or coaching service as defined under Section 65 (27) of the Act. 4.2.1 Online information and data access/or retrieval service which is taxable since 01/7/01 is defined under Section 65 (75) of the Act as providing data or information, retrieval or otherwise, to a customer in electronic form through a computer network and the taxable service with regard to online information and Data Base access or retrieval has been defined as service provided to a customer by any person in relation to online informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant's activity of providing online computer courses is nothing but online information and data base retrieved access or retrieval service, even if the website through which the courses are conducted is interactive. On the other hand, the contention of the Appellants is that they are providing e-education service and that except for the medium there is no difference between the online computer courses and the traditional real time computer courses being provided by them. 4.4 The activity of providing online computer courses is not simply providing online access to data or information. What is being provided to the clients is online lessons on various topics in computer hardware and software and besides this, the clients are also provided the facility of online interactive chat with other students, faculty and external experts and the clients can also give online test. Thus the essential character of service being provided is online training or coaching or in other words e-education and not mere the facility of access or retrieval of data or information. Wikipedia, (http://en.wikipedia.org/wiki/E-learning) describes e-learning as under :- "E-learning is a type of education when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hisees would attract service tax under entry franchise service or not. 4.5.1 During the period of dispute under Section 65 (47) the word Franchise had been defined as under - franchise means an agreement by which (i) franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not under a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved, (ii) the franchisor provides concepts of business operation to franchisee, including knowhow, method of operation, managerial expertise, marketing technique or training and standards of quality control except passing on the ownership of all knowhow to franchisee; (iii) the franchisee is required to pay to the franchisor, directly or indirectly, a fee; and (iv) the franchisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person. 4.5.2 The word franchisor has been defined under Section 65 (48) of the Act as any person who enters into franchise with a franchisee and includes any associate of franchisor or a person designated b ..... 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