Tribunal decisions: Upheld service tax liability on course fee, overturned penalties.

The Tribunal rejected the appeal in Appeal No. ST/70/2006, affirming the service tax liability on the 25% course fee retained by the appellant. In Appeal No. ST/332/2007, the Tribunal allowed the appeal, setting aside the penalties imposed by the Reviewing Authority.

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Issues Involved:
1. Liability to pay service tax on 25% of the course fee retained by the appellant.
2. Imposition of penalties for non-payment of service tax.

Detailed Analysis:

1. Liability to Pay Service Tax on 25% of the Course Fee Retained by the Appellant:
The appellant, a service provider in Commissioning and Installation, Maintenance or Repair Service, and Scientific and Technical Consultancy, entered into franchising agreements for the CMC Modular DAST course. The Department argued that these agreements met the definition of Franchise services under Section 65 of Chapter V of the Finance Act, 1994, making the appellant liable for service tax from 1/7/2003. The appellant collected fees but did not register under Franchisee Services, leading to a service tax demand of Rs.4,49,825/- for the period from 1/7/2003 to 30/6/2004.

The appellant contended that their activities fell under Commercial Coaching or Training service, which was exempt from service tax under Notification No.9/2003-ST until 1/7/2004. They argued that the 25% fee retained was not a franchise fee but part of the course fee. The Tribunal examined the agreement clauses and found that the 25% fee retained was labeled as royalty, fitting the definition of franchise services. The Tribunal referenced the case of Jetking Information Ltd., which supported the view that such fees are taxable under franchise services.

2. Imposition of Penalties for Non-Payment of Service Tax:
The Revenue reviewed the adjudicating authority's decision not to impose penalties and subsequently imposed penalties under Sections 76 and 78 of the Act. The appellant argued that the review was invalid as the original order had merged with the appellate order and was stayed by the Tribunal.

The Tribunal held that the Reviewing Authority was within its rights to impose penalties. However, it accepted that the appellant might have had a bona fide belief that their services were exempt under Notification No.9/2003-ST, as their courses were related to computer education. Invoking Section 80 of the Finance Act, 1994, the Tribunal found justifiable reasons for non-payment of service tax and set aside the penalties.

Conclusion:
- Appeal No.ST/70/2006: The Tribunal rejected the appeal, affirming the service tax liability on the 25% course fee retained by the appellant.
- Appeal No.ST/332/2007: The Tribunal allowed the appeal, setting aside the penalties imposed by the Reviewing Authority.

Both appeals were disposed of as indicated.

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