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TMI Blog2023 (12) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 However, since the appellant had provided taxable service without obtaining Service Tax registration and had also contravened various statutory provisions of the Act, penalties under Sections 77(1) & 77(2) of the Act are imposable in this case. Thus, after taking into consideration the facts of the case, I hold that a total penalty of Rs. 10,000/- under both Sections 77(1) & 77(2) of the Act, is sufficient in this case." 2.1 Complain was received to the effect that: (i) the Punjab Technical University, Jalandhar, Punjab (a University established by an Act of State Legislature of Punjab), had appointed Master Companies/ Regional Learning Facilitation Centers across the county, for the purposes of their Distance Education Courses, (ii) these RLFC's had further appointed Learning Centres (LCs) who had signed Memorandum of Understanding (MoU) with the Punjab Technical University, Jalandhar, Punjab (PTU) on fee sharing basis, (iii) fees collected by the LCs were handed over to the PTU through RLFCs and the PTU after retaining their share and after deducting TDS, disbursed the balance amount to RLFCs and LCs and (iv) thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abide by the provisions of Section 69 of the Act, ibid. (iv) Further, I also impose a penalty of Rs 10,000/- upon the party under the provisions of Section 77(2) of the Act for failure to abide by the provisions of Section 69 of the Act, ibid. 2.5 Appellant had challenged this order before the Commissioner (Appeal), who by the impugned order dismissed the appeal. 2.6 Aggrieved appellant have filed this appeal. 3.1 We have heard Shri Vijay Kapoor appearing for the appellant and Shri Santosh Kumar learned Authorized Representative appearing for revenue. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 Prior to 01.07.2012 Commercial Training and Coaching Services have been defined under Section 65 (26), 65 (27) and 65 (105) (zzc) which are reproduced bellow:- "Section 65(26): "commercial training or coaching" means any training or coaching provided by a commercial training or coaching centre. Section (27): "commercial training or coaching centre" means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted outside Punjab the benefit of award of degree cannot be extended to the appellant who is located in Varanasi. 4.4 Same things have been stated by the Appellate Authority in para 4.3-4.6 which are reproduced bellow:- "4.3 I also find that in the case of Prof. Yashpal & Anr. Vs. State of Chattisgarh & Ors in Writ Petition (Civil) 19 of 2004, the Hon'ble Supreme Court vide Order dated 11.02.2005, upheld the supremacy of the University Grants Commission Act, 1956 and the Regulations issued by the University Grants Commission under Section 26 of the University Grants Commission Act, 1956 over the State Acts and after taking into consideration the UGC (Establishment of and Maintenance of Standards in Private Universities) Regulations, 2003, (which, inter alia, allows a university established under a State Act to operate within the boundary of the State concerned), struck down Sections 5 and 6 of the Chhattisgarh Niji Kshetra Vishwavidyalaya (Sthapana Aur Viniyaman) Adhiniyam, 2002. 4.4 Since the PTU established by an Act of the State Legislature of Punjab, were eligible to operate within the State of Punjab and not outside, the distance learning courses of the PTU con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the University Grants Commission Act, 1956 and the Regulations made thereunder, the degree/ qualification conferred upon the students on completion of such courses, cannot be considered as recognized. Thus, I find that the appellant were liable to pay Service Tax on the consideration received by them, for carrying out their aforesaid activity of conducting distance learning courses of the PTU." 4.5 Above observations made in the impugned order go contrary to the entire scheme of 'distance learning program' operated by various Universities across the country. In distance learning program the university is registered in a particular state and is awarded degree on that place. He prepares for that by going to any centre that being so, once someone deserves a degree or award by a university is goes out from the purview of the scheme by the University. The details in respect of the scheme of Distance Education Program of Punjab Technical University as available on their website are reproduced below: "Punjab has been one of the most prosperous states in India since independence by way of Green Revolution coupled with white revolution. In order to give the equal momentum to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (CPP-II) dated 27.06.2013, had notified its policy on territorial jurisdiction to be followed by all Universities/ Institutes and a University established or incorporated by or under a State Act would operate only within the territorial jurisdiction allotted to it under its Act and in no case beyond the territory of the State of its location." In our view the said circular do not in any way states that the degree conferred by the university will not be recognized outside the jurisdiction of the state. It is undisputed that Punjab Technical University has been constituted by the Act of State Legislature. The degree is conferred by the said university on the students who undergo the courses offered by the said university either by attending the residential programs or attending the courses through distance Education Program. The clarification or circular issued by the UGC do not bar the conferment of the degree by Punjab Technical University to the students who undertake the degree programmes offered by the university through distance education programme. In our view once the degree has been conferred by the university duly constituted under a State Act or a Central Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Act, 1996, being Act No. 1 of 1997 of the Punjab State Legislature, is engaged, amongst other activities, in importing education under its Distance Education Programme (for short, "DEP") by running its distance education courses through the distant mode regulate by its own Distance Education Council (for short, "DEC") as a part of the "continuing education programmes" as authorised by Section 4(2) of the said Act No. 1 of 1997, through its own approved organs and outreach local centres called the LEARNING CENTRES, hereinafter referred to as the "LCs" duly set up and established at the chosen places by the PTU under separate letters of authorization issued by PTU, and each individual LC concerned is required to provide the requisite infrastructure for offering the various Courses of Information Technology and Management (for short, I.T.) and non-Information Technology (for short, Non-I.T.) and other related fields, and its said LCs being located at various local places in the respective zones in the country, and the PTU is accordingly engaging its REGIONAL CENTRES for its each zone in the country to be allotted to the RCs for providing logistic support to and effecting supervision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fees from each LC located within its entire allotted zone. The RC will cross-check from the receipt books and the students enrolments records maintained by the LC concerned that all the Demand Drafts in respect of the fees collected from all the students enrolled and studying at the LC concerned have been accounted for and handed over to it. The RC will maintain a MIS as per form of EDP Cell of PTU. 1.3 Transmitting of fees to the PTU : The RC will then send all those Demand Drafts towards fees collected as above from all the LCs located within its allotted zone to the PTU. 1.4 Fees Sharing : Out of the total fees collected from the students and transmitted to the PTU by the RC as above, the fee shall be shared as follows between the PTU, RC and the LC : (1) Share of the PTU : 28/32.5/37% (>28 <37%) (2) Share of the RC : 18/20/22% (as per incentive based assessment) (3) Share of the LC : 45/47.5/50% (as per incentive based assessment) 1.5 Authorization fee : For all the courses offered at the LC as per letter of authorization issued by the PTU, a nonrefundable authorization fee shall be paid by the LC to the PTU by way of bank Demand Draf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Curriculum mapping. (2) Infrastructure planning. (3) Faculty planning. (4) Batch launch planning. (5) Assisting in curbing commercialization of education (6) Assisting in Monitoring activities (7) Invitation of registrations/enrolments-Marketing. (8) Taking registration (9) Course commencement. (10) Delivery of the course. (11) Conducting tests & preparing eligibility list for issuing certificates to the successful students. (12) Conducting soft skill training to students. (13) Conducting faculty training within their zone. (14) Any other matter/item at the sole discretion and with the prior approval of the PTU. Section 4 : OBLIGATIONS 4.1 OBLIGATIONS OF THE PTU (Party No. 1 herein) (1) PTU will appoint RC and allot zone of operation under this MOU, and shall monitor the working of the RC, and may at its sole discretion, for the development of the system, restructure zone(s) allotted to the RC or advertise for a new RC where performance of RC is poor or not up to the satisfaction of the University. (2) PTU will establish and monitor all the LCs in the Zone through the RC. (3) The LCs will be under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance cell and liaise with industry through its experts & place students appropriately and maintain data of such placements. (9) To assist PTU in defending or fighting legal cases within the zone allotted to the RC. (10) To ensure timely delivery of course material, identity cards, etc. to LCs. (11) Coordinate efforts for preparing digital contents, CD's Learning Materials, MIS, and LMS, etc., for quality teaching-learning process within the allotted zone and for the overall development of distance education. (12) To participate in national and international events pertaining to distance education within and outside the country, in consultation with the PTU. (13) The RC will assist the PTU for conduct of the examinations as per Rules & Regulations of the PTU and ensure fair practices. (14) The RC will issue State level advertisements for Admission Notices for the aforesaid courses in the leading Newspapers in coordination with the LCs in consultation with the PTU. (15) The RC will arrange to provide training for the latest technologies and teaching pedagogy to the staff of the LCs in coordination with the PTU. (16) The RC will make timely collection from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, guidelines (whether issued to the RC or the LCs) and office orders of the PTU issued from time to time. 4.3 OBLIGATIONS OF LEARNING CENTRES (1) Each LC shall abide by all the terms and conditions laid down in the letter of its Authorization read with the guidelines issued by the PTU. (2) To establish and maintain infrastructure as per norms of the PTU. (3) To maintain a strict academic calendar for timely completion of courses and to arrange for practicals within the center. (4) To maintain student record files and comprehensive MIS for each PTU student enrolled at the LC. (5) To follow, in letter and spirit, all rules and regulations, notifications, guidelines and office orders of the PTU issued from time to time. (6) To enhance student skills and facilitate their placements. (7) To effectively coordinate with the RC and to work in close cooperation with the RC. (8) To participate in meetings and training programmes organized by the RC/PTU. (9) To adhere to the norms & standards of the PTU at all times, as modified from time to time. If the LC is not able to admit students for two consecutive semesters or does not comply with the orders, norms & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any breach by the RC of any of the foregoing terms and conditions contained in this MOU, or for its unsatisfactory performance, or for non-performance, or for abandonment of the project or for any other reason or issue to be felt or determined by the PTU, a show cause notice will be served to the RC concerned with details of deficiencies and a written reply shall be sought within 15 days. The reply to the show cause notice shall then be considered by the DEP Council, and if required, the RC concerned shall be asked to defend their case before the DEP Council. The matter with the recommendations of the DEP Council shall then be sent to the BOG of PTU and further decision regarding any punitive action may include modification/restriction/termination of the zone of RC under this MOU, as per decision of the BOG and such decision shall be final and binding on the RC. The decision so taken may be represented against by the concerned RC and the Board may consider appointing a committee to reconsider the decision after giving an opportunity of being heard in the matter to the RC concerned. The decision so taken shall be final. Section 10 : Stipulation. 10.1 For MOU : Two sets of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with the norms and standards laid down by the appellant for the skill based learning leading to the award of degrees/diplomas by the appellant in the concerned courses/streams through the distance education mode.From the foregoing there remains no doubt that LCs were authorised to take students by claiming and making it clear that the education they were providing was on behalf of the appellant. They were allowed even to advertise to that effect. It was because LCs were representing the appellant with regard to providing education, that the MOU cast strict obligations on LCs to ensure that the quality of education remained as per the standards of the appellant. It also comes out from the MOU that RCs framed marketing strategies to be implemented by LCs in consultation with the appellant. As per the MOU, the format and style of any advertisement or hoarding to be placed by RCs/LCs had to be done with the prior written approval of the appellant lest these bring down or cast aspersions on or discredit the appellant. Owing to the fact that LCs represented the appellant with regard to providing education, MOU laid down strict requirements of infrastructure, processes, quali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preted the definition of franchise as it existed prior to 16-6-2005 and therefore the said judgement is not germane to the issue in the present case. On the other hand, we find that the facts in the case of DPS v. CST, Delhi (supra), where CESTAT held that there was rendition of franchise service by DPS, are pretty similar to facts in the present case inasmuch as in that case also, the appellant provided concepts of business operation to the franchisee including know-how, method of operation, managerial expertise, etc. Further, the definition of "franchise" as applicable to the present case is much wider than the definition which existed during the period covered by the DPS case (supra), making the ratio of the DPS judgment squarely applicable (and more) to the present case. Indeed, the MOU in question is so clear an example of "franchise" as defined in Section 65(47) ibid that any further elaboration on this point will be an exercise in over-kill. 5. Coming to the aspect of valuation of service, we find force in the contention of the appellant that the entire fee collected by LCs in the name of the appellant cannot be treated as assessable value of franchise service. We note th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed as per law with the Department. Thus they have suppressed the fact of providing the taxable service from the Department with an intent to evade payment of Service Tax and have violated the provisions of Sections 66, 68, 69 and 70 of the Act read with Rules 4, 5, 6 and 7 of the Rules. By these acts of omission and commission, they have rendered themselves liable to penal action under Sections 76, 77 & 78 of the Act. 14. The extended period of limitation of five years as provided under proviso to Section 73(1) is clearly invokable in this case as the Noticee had suppressed the fact of providing the taxable service from the Department with an intent to evade payment of Service Tax and had the department not gathered the information on their own about the services provided by the Noticee, this huge evasion of Service Tax would not have come to the notice of the Department as the Noticee neither got themselves registered with the Department nor filed the prescribed returns during the relevant period as required under the law." The appellant was established under Punjab Technical University Act, 1996 and started distance education programme through LCs in terms of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant are classifiable under the category of Commercial Coaching and Training Center Services is contrary to the above decision of Delhi Bench. 4.7 Tribunal in the case of M/s Bitcom Services Pvt. Ltd. Vs CCE, Delhi Final Order No.53238 of 2018 dated 05.11.2018 whereby the case of the same university was also under consideration rejected the arguments made by the revenue to classify these services under the category of Commercial Coaching and Training Center Service. In para 8 & 9 of the said decision Tribunal observed as follows:- "8. After hearing both the parties on this issue and pursing the record we observe that the demand has been confirmed for want of evidence establishing that the income for the impugned period was received for and on behalf of IGNOU and PTU. But we observe that due accreditation of appellants from both these universities is very much on record. There is no dispute that IGNOU and PTU both are constituted under law. In view of this apparent fact the definition of Commercial Training & Coaching Services and the discussion, as above, is relevant. 9. The bare perusal makes it clear that any institute or establishment issuing any educational ..... X X X X Extracts X X X X X X X X Extracts X X X X
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