TaxTMI 
TaxTMI 
2019 (12) TMI 943
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....ranting licence to set up an authorised Learning Centre of the Appellant with respect to distance education programmes of Universities with whom the Appellant has entered into contracts. In terms of this LCA, the party has agreed to provide infrastructure and facilities for the purpose of providing distance education programme of SMU/other Universities. Since the entire activity is a "distance education programme" the Appellant has supplied VSAT (Very Small Aperture Terminal) equipment to the contracting party. In terms of LCA, the Appellant receives consideration as follows from the contracting parties - (i) Affiliation fee; (ii) Inspection Fee; (iii) Licence Fee; (iv) One-time VSAT Management Fee and (v) Actual VSAT user costs/reimbursements. 2. Revenue, after investigation, issued a show cause notice, dated 11.3.08, demanding service tax in respect of (i) Affiliation fee; (ii) Inspection Fee; (iii) Licence Fee, under the category of "franchise service". The said notice was adjudicated by passing OIO No.15/2008 dated 2.7.08. The Appellant did not contest the OIO and paid the service tax along with interest and penalty. Revenue issued another show cause notice dated 26.5.08 alleg....
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.... Counsel submits that the appellant registered with the Service tax department during the year 2004 itself; since then there has been protracted correspondence with the Department on several issues; Appellant has also been subjected to periodical visits; they have been subjected to adjudication proceedings on several issues in the past; hence, all the facts and circumstances are well within the knowledge of the Department; besides, all the transactions are duly recorded in the books of accounts maintained by the Appellant; there is no suppression of anything from the books; there is no willful suppression of facts on the part of the Appellant in any manner. He relies on the ration of the decision in Continental Foundation Joint Venture v. CCE, 2007 (216) ELT 177 (SC). 6. Learned Senior Counsel submits that the Respondent has shown supine indifference to the pleas advanced by the Appellant and made out specious grounds to fasten an illegal levy without any justification either on merit or on limitation; the order has been passed without application of mind; the order violates natural justice as it is not demonstrated that justice has not only been done but has been manifestly and u....
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.... Counsel submits that in terms of para-4.5 of LCA, the Appellant provides VSAT to Learning Centres and they charge one-time fee for the same called as VSAT Management Fee; this is nothing but supply of tangible goods; as regards VSAT usage fee charged and collected by the Appellant, it was reimbursement of expenses incurred towards transmission of information; VSATs work on the basis of internet/telephone connection for disseminating information/data during distance education programme by Learning Centres; for this purpose, the Appellant has taken services of telecommunication from Airtel India Ltd who invoice/bill the Appellant for data usage charges which are recovered by the Appellant from the Learning Centres as reimbursements; this again has nothing to do with "franchise service" but only a reimbursement of telecommunication costs/expenses; this was clearly explained by the Appellant to the Department vide their letter dated 27.11.07, which was not appreciated the facts in perspective; at any rate reimbursement of expenses cannot be brought to tax in view of the judgment of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd Vs UOI, 2013 (29) SIR 9 (Del.....
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....h upon the issue on merits though we have held that the issue is barred by limitation. Ongoing through the Learning Centre Agreement, we find that Clause 4.5 reads as under. "4.5. In order to enable the Participant to duly fulfil its obligations hereunder, MUL shall provide a VSAT to the Participant for exclusive use at the Learning Centre, upon payment of a non-refundable fee as set out in Annexure B. The Participant shall comply with the requirements of MUL including the provisions of the Operations Manual with respect to the operation, maintenance and safeguard of the VSAT. For the sake of clarity it is hereby confirmed that the ownership of such VSAT shall always vest with MUL". 11.1 (h) The participants shall not describe itself or act as an agent or representative of MUL. 15.1 It is understood that the arrangement between the parties contemplated by this agreement shall be on a principal-to-principal basis. None of the provisions of this agreement will be deemed to constitute a Joint Venture, agency, a partnership or principal-agent relationship between the parties hereto and neither party by virtue of this agreement, shall have the right, power or authority to act or c....