TaxTMI 
TaxTMI 
2019 (11) TMI 436
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....er under which the Appellant was granted the right to use the trademark, logo and proprietary system developed by Career Launcher regarding various courses. According to the Appellant, the agreement between the Appellant and Career Launcher is on a principal to principal basis with no element of agency and the Appellant functions in the capacity of an independent contractor where the Appellant is responsible for providing the cost of the equipments, premises, furniture and allied articles for the recruitment and selection of staff and the faculty. Further, there is no element of any provision of service as both are striving towards a common goal. 3. As per the terms of the agreement, the Appellant and Career Launcher share the revenues collected from the students in the ratio of 75:25%. The Appellant deposits the entire fee with Career Launcher and subsequently the Career Launcher transfers back 75% of the amount to the Appellant. The relevant provisions of the agreement are reproduced below:- 3.8 Exclusion of Licensor's other Trade Marks. Trade Names, Designs, Copyrights, Goodwill etc, This Agreement shall permit the Licensee to use the Licensor's Trade Mark 'CAREER LAUNCHER ....
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.... The parties hereto agree that the Licensee is an independent contractor, nothing herein contained shall constitute the Licensee an agent, legal representative, partner, subsidiary, joint venturer or employee of the Licensor. The Licensee shall have no right or power to, and shall not bind or obligate the Licensor in any way, manner or thing whatsoever, nor represent that he has any right to do so. 2. In all public records and in its relationship with other persons, on letterheads and business forms, the Licensee shall indicate its independent ownership of the said business and that it is a Licensee. 4. However, a Show Cause Notice dated 17 March, 2011 was issued to the Appellant imposing a demand of service tax on the 75% amount of the Appellant under the category of "business auxiliary service" under Section 65(105) (zzb) of the Finance Act, 1994 The Act on the ground that the Appellant is providing the said service to Career Launcher. 5. A detailed reply was filed by the Appellant to the aforesaid Show Cause Notice mentioning therein that there is no element of service in the arrangement between the Appellant and Career Launcher and so no "business auxiliary service" is prov....
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....t business entities engaged in providing two different services under the same service agreement. Shri Niraj Prasad is providing services on behalf of M/s CL hence, the activities, role and responsibilities of Shri Niraj Prasad, the "Service Provider" appears to be squarely covered under the 'Business Auxiliary Services'." 7. The contention of the Appellant that it was entitled to claim exemption under the Notification dated 10 September 2004 was also rejected by the adjudicating authority for the reason that though the exemption is provided in relation to the field of education, but the Appellant was not engaged in the field of education. The relevant portion of the order is reproduced below:- "I find that education is actually a process, which is attributed to the development of human personality. Education is overall development of body, mind, and intellect, whereas the training and coaching are narrow in scope and posses specific purpose. The training and coaching is designed to achieve a specific target. In the modern word coaching or training for achieving specific target has got vide acceptance and has been adopted as a business profession and that is why the same has bee....
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.... Tax department, and had regularly been paying Service Tax on the collections received as fees from the students under the CTC services only. Over the point of payment of Service Tax in the appropriate category, I find that the party has totally misconstrued the issue. I find that the services provided by the party in this case were not the "Commercial Training and Coaching service", but as per the agreement, it was clear that the party was arranging to provide services on behalf of M/s Career Launcher for which they were getting paid thus, the activities undertaken by the party were squarely covered clause (vi) of the definition of "Business Auxiliary Service". Therefore, the party was liable to pay Service Tax under the category of 'Business Auxiliary Services, on the amount received from their client. I do not find any reason to agree with the contention of the party that demanding the tax from them will amount double taxation of same amount. The tax already paid by M/s Career Launcher in respect of "Commercial Training and Coaching service" cannot be said to have been paid by the party or on behalf of the party." 9. Shri B.L.Narasimhan, learned Counsel appearing for the Appell....
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....liary service" as it resulted in double taxation. Learned Counsel also placed reliance upon the judgment of the Supreme Court in Damodar J. Malpani v. Collector of Central Excise 2002 (146) E.L.T. 483 (S.C.). 10. Learned Authorized Representative of the Department supported the impugned order and submitted that the Commissioner committed no illegality in confirming the demand. Learned Representative pointed out that the Appellant was providing a separate "business auxiliary service" for which Service Tax had been demanded and confirmed. Learned Authorized Representative also submitted that the Appellant was not entitled to claim benefit of the Notification dated 10 September 2004, nor could it be said to be a case of revenue sharing. 11. The submissions advanced by the learned Counsel for the Appellant as also the Authorized Representative of the Department have been considered. 12. To appreciate the rival contentions, it will be appropriate at this stage to refer to the agreement dated 15 March 2007 entered into between Career Launcher and the Appellant. The agreement grants licence to the Appellant by granting a right to operate the professional learning centre. The fee to be ....
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....tage of the net revenue. In such a situation, it cannot be said that the Appellant was a service provider and Career Launcher was a service recipient. No service was, therefore, provided by the Appellant to Career Launcher. This view finds support from the decision of the Tribunal in Mormugao Port Trust. The Tribunal found that unless it can be established that a specified amount had been agreed upon to be paid as a quid pro quo for undertaking any particular activity, it cannot be assumed that there was a consideration agreed upon for a specific activity so as to constitute a service. The Tribunal relied upon its earlier decision rendered in Cricket Club of India v. Commissioner of Service Tax, 2015 (40) S.T.R. 973 and the relevant portion of the order is reproduced below:- "17. The question that arises for consideration is whether the activity undertaken by a co-venture (partner) for the furtherance of the joint venture (partnership) can be said to be a service rendered by such co-venturer (partner) to the Joint Venture (Partnership). In our view, the answer to this question has to be in the negative inasmuch as whatever the partner does for the furtherance of the business of t....
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....s for the discharge of liabilities or for meeting common expenses of a group of persons aggregating for identified common objectives will not meet the criteria of taxation under Finance Act, 1994 in the absence of identifiable service that benefits an identified individual or individuals who make the contribution in return for the benefit so derived. 13. ....Neither can monetary contribution of the individuals that is not attributable to an identifiable activity be deemed ot be a consideration that is liable to be taxed merely because a "club or association" is the recipient of that contribution. 14. ....To the extent that any of these collections are directly attributable to an identified activity, such fees or charges will conform to the charging section for taxability and, to the extent that they are not so attributable, provision of a taxable service cannot be imagined or presumed. Recovery of service tax should hang on that very nail. Each category of fee or charge, therefore, needs ot be examined severally to determine whether the payments are indeed recompense for a service before ascertaining whether that identified service is taxable.' 19. We are accordingly of the v....
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....ided in relation to agriculture, printing, textile processing or education from the whole of service tax leviable thereon under section 66 of the Finance Act:" (emphasis supplied) 21. The only dispute between the parties is as to whether the taxable service was provided in relation to education. The adjudicating authority has dealt with this issue at some length. The relevant paragraphs have already been reproduced in the earlier paragraphs of this order. The adjudicating authority has drawn a distinction between the terms "training", "coaching" and "education" and after noticing that education mainly involves three factors namely (i) the process of teaching; (ii) the theory and practice of teaching and (iii) training in a particular subject, the Commissioner observed that 'education' is different from 'commercial training' or 'coaching' since the word "education" is much broader than "training", or "coaching" and ultimately concluded that conducting a course at a fairly high level can be termed as providing education. Thus, whatever service the Appellant was providing to the students on behalf of the client, in the opinion of the adjudicating authority, cannot be considered as "....
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....homes, streets, or meeting places. It is not confined to traditional school subjects such as mathematics or history, though these will usually constitute an important part of it, nor is it offered only by paid teachers, for parents and elder brothers and sisters may well play a central part in it. Increasingly, education is seen as something which should develop the whole person, not just as a narrow academic training. Thus in a vast variety of locations around the world, from lavishly equipped buildings with the latest laboratory equipment to simple huts in poorer countries, children and adults are learning the basic skills of reading, writing, and arithmetic, developing qualities which will be valuable in adult life whether at home or work, and in many cases taking retraining courses because the job for which they originally prepared has been transformed." 27. It is, therefore, clear that the word "education" has a wide meaning and includes the practice of teaching or training in a particular subject. The adjudicating authority, even after noticing that education apart from the process of teaching and learning includes training in a particular subject, erred in observing that 'e....
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....rvice Tax on the entire amount of fees collected from the students. It is on a revenue sharing basis, that part of this fee is remitted to the Appellant by Career Launcher. The Appellant, therefore, cannot be required to again pay Service Tax on this fee. As noticed above, in fact no service is provided by the Appellant to Career Launcher because in terms of the agreement, the revenue is shared between Career Launcher and the Appellant. In coming to this conclusion reliance can be placed on the decision of the Tribunal in M/s Samadhan Systems Private Limited and the relevant paragraphs are reproduced below:- "9. The admitted facts are that the appellants had Agreement with M/s. MAAC. The said Agreement stipulates various obligations / responsibilities of both the parties. The students who got admitted for the courses pay a consideration, which is credited to M/s. MAAC in full. We have perused the sample invoices. This fact cannot be disputed. The full consideration so received by M/s. MAAC has been subjected to Service Tax under commercial training and coaching service. This has not been disputed. The fact that the premises in which the training is carried out by the appellant is....
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....m M/s CLI, on which the department has demanded the service tax, is nothing but a part of the entire transaction of Rs. 5,22,67,103/- on which the service tax has already been paid by M/s CLI. It is clear from the documents on record that the service tax has been paid on the entire amount i.e. the tax to be paid by M/s CLI as well as by the appellant stands paid. It is also on record that CLI have obtained centralized registration for payment of Service Tax and the Professional Learning Centres at Agra & Bareilly were included in the said centralized registration. I also find that it is not the case of the department that M/s CLI has not paid the service tax on the entire fee collected at Agra & Bareilly centres. Keeping this in view the demand of service tax on the same transaction under the category of 'Business Auxiliary Service 'is not sustainable................. 4.2.1 Further, I also observe that in Allahabad Commissionerate, the department has accepted such type of certificates where M/s CLI, New Delhi had already discharged the service tax on the entire fee collected from different centers and on that basis they dropped the recovery proceedings of the show cause notices a....
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....the appellants to the Excise Authorities requesting that a sample of the appellants' product may be chemically analysed at the appellants' cost for the purpose of determining whether the appellants' product or process in any way differed from the product and process of M/s. Chandulal K. Patel and Company. However, the Excise Authority decided against the appellants without heeding such request. On 4-8-88 a decision was taken by the Assistant Collector to classify the appellants' product under Tariff Heading 24.04. On 11-8-88 a sample of the appellants' product was taken by the respondents but returned within one week without testing on the ground that the issue was being finalised by the Assistant Collector. In the appeal preferred to the collector, the appellants again raised the issue specifically that the process followed by and the product of the appellants were identical with that of M/s. Chandulal K.P. Patel and Company and that the appellants product should be similarly classified under Heading 24.01. While upholding the decision of the Assistant Collector, the Collector did not consider this aspect of the matter at all. The point was again taken specifically in the appellan....