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2016 (1) TMI 162
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..... It provides courses leading to degree/diploma in engineering, management, architecture, paramedical and various other programmes. The appellant designed its distance education programme and created a 3-tier architecture for running the same (i.e. distance education programme) through LCs (3rd tier) which were to be supervised by Regional Centres (RCs) (2nd tier). The Memorandum of Understanding (MOU) entered into by the appellant with LCs/ RCs lists out obligations of the appellant, RCs and LCs. The ground for confirmation of demand is that the appellant rendered "Franchisor Service" to its RCs and LCs and the entire fee received by it (under various heads like admission fee, examination fee, miscellaneous fees/late fee, result/certificate fee, challenge checking fee, migration fee, M Tech Viva, Thesis Fee, Scholarship fee, inspection fee, recovery, etc.) from its students enrolled at LCs was the assessable value for charging service tax under the said service. 3. Ld. Advocate for the appellant contended that (i) None of the ingredients of franchise service are present in the present case. It was imparting education through Learning Centr....
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....fee collected by appellant should be treated as value of franchise service which will reduce the demand to Rs. 5,86,003/- after cum-tax benefit, as shown in para 36 of grounds of appeal. (xiii) The extended period in this case is not invokable as there is no suppression of facts or wilful mis-statement and these activities of the appellant were made public even on its website. (xiv) The facts of this case are not similar to the case of DPS Vs. CST [2013 (32) STR 179 (Tri.-Del)] decided by CESTAT. (xv) It cited in its support judgments of CESTAT in the cases of Franch Express Network Vs. CST, Chennai [2008 (12) STR 370 (Tri.-Chennai)] and Bonanza Speed Couriers Pvt. Ltd. Vs. CCE, Cochin [2010 (19) STR 675 (Tri.-Bang.)]. (xvi) Revenue has failed to show any trade mark, service mark, or logo or any such symbol of the appellant, which was used by LCs for providing service, which is an essential ingredient for franchise service. 3. Ld. Departmental Representative, on the other hand stated that (i) the MOU entered between the appellant and LCs clearly shows that it satisfies all ingredients of franchise agreement ....
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.... UNIVERSITY, Ladowali Road, Jalandhar, Punjab, India-144001, through its Dean (DEP) hereinafter referred to as "PTU", which expression shall include its successors and assigns (part of the first part); AND M/S SYMANTEC INFOWAYS, 3789/1 JAGAT JEET NAGAR, LUDHIANA, PUNJAB, THROUGH ITS ARC M/S VICE, having its office at 2647, HUTSON LINE, NEAR NORTH CAMPUS, DELHI UNIVERSITY, DELHI, DELHI, India, through its CHAIRMAN, RAJAN CHOPRA. Hereinafter referred to as PTU's REGIONAL CENTRE, hereinafter further referred to as "RC", which expression shall include its SUCCESSORS and assigns (party of the second part). This MoU is in furtherance to the earlier agreement, duly extended after following due process of law and amended and modified as per requirements of the distance education system of Punjab Technical University. The clauses contained hereinbelow shall override the clauses of the earlier agreement. WHEREAS the PTU, a University established under the Punjab Technical University 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 Program....
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....treams through the distance education made. AND WHEREAS this arrangement under the present MOU is not a franchising arrangement in any way but that this a model of public-private partnership for providing effective student support services keeping in mind the present structure of PTU. AND WHEREAS by this arrangement under the present MOU, no essential, basic and statutory function of the PTU shall be outsourced to the RC. NOWTHEREFORE in consideration of the aforesaid binding premises, and the mutual covenants and promises made hereinafter, the parties hereto, i.e., the PTU and the RC, agree as follows to create a legally binding mutual relationship: Section 1 : FEES: 1.1 Mode of collection of fees by the LCs: The fees from the students shall be collected by the LCs (located within the entire allotted zone of RC) only by way of Demand Drafts drawn in the name of the Registrar, Punjab Technical University, Jalandhar, payable at Jalandhar, against proper receipts. 1.2 Collection of fees from the LCs: The RC will collect the fees from each LC located within its entire allotted zone. The RC will cross-check from th....
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....rous of running both IT & Mgt. and Non IT streams shall have to provide separate infrastructure for these streams. It shall be responsibility of the RC concerned to make these guidelines known to the LC and train them as per rules and ensure strict compliance of the instructions of the University. 2.2 Venue for conducting the courses: The courses mentioned in para No. 2.1 shall be conducted only at the designated location of the LC, as stipulated in the letter of authorization issued to the LC by the PTU. In no case the location of the LC can be shifted to any other place of its own without the prior written permission of the PTU after verifying the suitability of the said venue. RC shall have to ensure that no LC in their region of operation, either sells, transfers, or closes the operation without properly taken care of the interests of the students enrolled with the University. 2.3 Norms for Infrastructure & Facilities: The norms for infrastructure and instructional facilities as decided from time to time shall be enforced at each LC by the RC concerned within their zone and deficiency, if any, shall be reported to the Universit....
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.... courses. (12) The PTU will lay down all the requisite norms which shall be implemented by the LCs to ensure the imparting of quality education by the LCs to the students of PTU enrolled for the authorized courses. 4.2 OBLIGATIONS OF THE REGIONAL CENTRE (RC) (Party No.2 herein) (1) The RC will coordinate with the PTU on the one hand and the LCs on the other hand in all matters as required by the PTU from time to time. (2) The RC will provide logistic support to the PTU and LCs as per norms of PTU, to carry out the objects and obligations under the MOU. (3) Provide information about each LC to the PTU and assist in its proper monitoring. (4) In case any LC is closed by PTU then it would the liability of the RC to assist the PTU to ensure that students do not suffer & their studies are conducted alternatively in PTU's another authorized LC within the zone allotted to RC. Before officially closing the center, all student record files and "No Dues" must be submitted by RC to the University. (5) RC would be responsible for conducting the marketing / advertisement campaigns & st....
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....so be mentioned /reviewed by PTUs Regional Monitoring Committee (RMC). (21) In addition to review by the RMC, a continuous monitoring mechanism will be in place for assessment by the PTU of the performance of RCs and LCs. (22) The format of style of any advertisement and hoarding to be placed / put up by the RC and LCs under the RC shall be done with the prior written approval of the PTU. Any advertisement and hoarding to be placed; put up by the RC / LCs should not bring down or cast aspersions on or discredit the PTU, and the decision of the PTU ordering the withdrawal of the advertisement or removal of the hoarding shall be final and binding on the RC / LCs. (23) The RC may take part actively with the PTU in image building exercises and must organize at least one public function, seminar, counselling session in their region each semester. (24) The RC agrees to provide expertise for infrastructure, equipments, teaching and training necessary for the course as and when called to do so by the PTU in respect of any LC within the zone allotted to the RC. (25) The RC shall ensure that the learning imparted to ....
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....ible for any sort of legal consequences arising out of any violation of the IPRs by the RCs and LCs concerned. Section 6: Authorization: 6.1 In supersession of the existing Agreement: The authorization under this MOU, as per provisions of the earlier Agreement (by way of extension of the existing tenure of the existing RC and by re-allotment of its zone of operation, under the present policy of PTU for renewing the existing terms of the existing RCs after due assessment of their performance) shall be in supersession of the existing MOU of the RC with the PTU. 6.2 Duration: The validity of authorization period by way of extension of the existing tenure of RC and by re-allotment of its zone of operation on the terms and conditions as laid down in this MOU under the aforesaid present policy of PTU, shall be as stipulated under this MOU. Section 7 : Validity of authorization period and the re-allotted zone: This authorization as RC (being granted under the present policy of PTU for renewing the existing terms of the existing RCs after due performance appraisal as per ____________ approved by BOG) is presently valid for a term of 2.5 ye....
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.... each set containing the MOU & the Affidavit) prepared as stipulated in Section 10 above, one original thereof has been kept for record by each of the two parties hereto. IN WITNESS WHEREOF both the parties hereto set their respective hands to this writing (MOU) at this day and year mentioned above" Section 65 (47) of the Finance Act, 1994 reads as under:- ""Franchise" means an agreement by which the franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved;" As evident from the MOU, appellant approved and monitored all LCs. It approved the syllabus, courses and examination process. Students are on the rolls of the appellant and the prospectus and the application form is approved by the appellant. The examination, evaluation, declaration of results and award of degrees are also the obligations of the appellant. The appellant lays down infrastructural requirements to be adhered to by LCs. It also lays down the eligib....
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....for deciding classification of the service rendered thereunder, we have to see the nature, terms and conditions thereof; it is immaterial as to what nomenclature is assigned to it. Thus, notwithstanding that the MOU states that it is not a franchise agreement, the aforesaid analysis leaves no doubt that it satisfies all ingredients of franchise as defined in Section 65 (47) of the Finance Act, 1944 in-as-much-as LCs were granted representational rights to provide service and to undertake various activities identified with the appellant. The contention of the appellant that franchise has to involve trade mark, service mark, trade name or logo or any other such symbol is untenable as the definition of franchise given in Section 65(47) ibid quoted earlier clearly states that these may not be involved. In the case of Global Transgene Ltd. Vs. CCEST, Aurangabad [2013 (32) STR 179 (Tri.-Del.)], CESTAT has held that "admittedly in a franchisee transaction, the franchisee loses his individual identity and represent the identity of the franchisor to the outside world, as in the case of "McDonald" the customers are not concerned with who owns the "McDonald's restaurant (fra....
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.... LCs, a part was given back to LCs. Obviously, the part of the collection which was given back by the appellant to LCs cannot form part of the assessable value for the purpose of taxability. As per Section 67 ibid, the value of taxable service is the gross amount charged by the service provider for such service and gross amount will be only the amount, which remained with the appellant after payments to LCs. However, the contention of the ld. advocate that only authorisation fee and additional authorisation fee should be taken as a consideration for the service rendered is untenable, because the valuation for the impugned service is to be done in accordance with the provisions of Section 67 ibid, which, to repeal, in effect, states that the value of the taxable service will be the gross amount charged for the service and the gross amount charged by the appellant for the service rendered has to be equal to the amount collected by the appellant from LCs minus the amount paid by it to LCs. It is pertinent to mention that the amount paid by the appellant to RCs would not be excludible from the assessable value, because the RCs were created by the appellant to en....
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.... in terms of the guidelines issued by University Grants Commission (UGC). The details of such programme were advertised and also displayed on its website. It entered into MOUs with almost 1,000 LCs. In these circumstances, the allegation that it suppressed this activity or indulged in wilful mis-statement is simply preposterous. In the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh-I [2007 (216) ELT 177 (SC)], the Supreme Court observed that "an incorrect statement cannot be equated with a wilful mis-statement - There cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for purpose of proviso to Section 11A ibid - Mis-statement of fact must be wilful". Also in the case of Nestle India Ltd. Vs. CCE, Chandigarh [2009 (235) ELT 577 (SC)], the Supreme Court held that "extended period invokable only when there is positive act other than mere inaction or failure on the part of manufacturer and there must be conscious or deliberate withholding of information by manufacturer". While there are bland statements made in the Show Cause Notice alleging wilful mis-statement/suppression of f....