TMI Blog2023 (12) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of issuance of occasional commercial teachings not a degree or a diploma granted by the university. After 01.07.2012 the definition of service was amended and concept of negative list is brought. 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 - Once the degree has been conferred by the university duly constituted under a State Act or a Central Act, the institute offering such programmes will, go out of the ambit of the Commercial Coaching and Training Services. Delhi bench has in case of Punjab Technical University [ 2016 (1) TMI 162 - CESTAT NEW DELHI] after examining the Memorandum of Understanding etc has held that such centres are franchisee of the PTU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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 the various courses of the PTU provided by the LCs, were covered under the Commercial Training Coaching Centre Services taxable under the Finance Act, 1994, on which service tax was required to be paid. 2.2 Acting on the above complain inquiries were initiated against the appellant and it was noticed that during the period from 01.10.2011 to 31.03.2015 appellant has provided Commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. 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 other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force*. *The under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 conducted by the appellant, were, therefore, not recognized under 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. 4.4.1 Further, I do not find any merit in the submission of the appellant that the territorial jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 industrial growth of Punjab educated skilled workforce in sufficient numbers has always been a need of the hour. The Globalization of Indian economy in early 90 s further extrapolated the need of such a young innovative workforce. To address this issue of Technical professional workforce shortage and to usher into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 institute offering such programmes will, go out of the ambit of the Commercial Coaching and Training Services. 4.7 Delhi bench has in case of Punjab Technical University after examining the Memorandum of Understanding etc has held that such centres are franchisee of the PTU and has held that service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 of the said LCs on PTU s behalf within the zone allotted to the RC concerned. AND WHEREAS the PTU s and its said authorized LCs, being the very organs and authorised outreach local centres of PTU created as aforesaid, are engaged in providing training/education by offering PTU s various approved Distance Educat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 Draft drawn in the name of Registrar, Punjab Technical University, Jalandhar, payable at Jalandhar, as per rates as fixed and as per norms of the PTU in force from time to time. 1.6 Additional Authorization Fee : For starting any other course(s) not initially mentioned in the letter of authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olments-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 the direct strict control of PTU. (4) The PTU will approve the syllabus, courseware examination process. (5) The students will be on the rolls of PTU. (6) The prospectus and application form will be approved by PTU. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases 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 the LCs of the fees paid by the students at the LCs for the allotted courses. (17) The RC will keep regular and periodic checks on the LCs so as to ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 guidelines of PTU, its authorization shall stand cancelled withdrawn. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this MOU shall be typed, each one on a separate non-judicial paper of the requisite va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, qualifications of staff, etc. as elaborated in the MOU. Though the MOU stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that out of the total fee collected by the appellant through LCs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 guidelines issued by University Grants Commission (UGC). The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 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 qualification which is recognized by law the same is exempted from the tax limits. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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