Franchise coaching fees are taxable only on the service provider's retained share, not the full student collection.

Service tax under Section 67 of the Finance Act, 1994 on franchise-based coaching fees is taxable only on the gross amount actually charged for the services received by the assessee. Where student fees were collected in the franchisor's name, routed through an escrow account, and partly remitted as royalty to the franchisor, the taxable value was confined to the appellant's retained share for providing commercial coaching or training services. Following earlier Tribunal rulings on identical franchise arrangements, the demand on the entire student collection was not sustainable.

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Issues: Whether service tax on the coaching fees collected under the franchise arrangement was payable on the entire amount collected from students or only on the appellant's 80% share.

Analysis: The appellant's fees were collected in the name of the franchisor and routed through an escrow account, with 20% remitted to the franchisor as royalty and the balance retained by the appellant. Applying Section 67 of the Finance Act, 1994, the taxable value is the gross amount charged for the services actually received by the assessee. Following earlier Tribunal decisions on identical Aptech franchise arrangements, the amount received by the appellant for providing commercial coaching or training services was only 80% of the student fees, and service tax was payable only on that amount.

Conclusion: Service tax was not payable on the entire student collection, but only on the appellant's 80% share, and the demand could not be sustained.

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