The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the service tax can be levied on the franchisee centers of Punjab Technical University (PTU) which falls under the category of ‘franchise service’.
School of Information Technology, the appellant assessee was an institution located in Varanasi which was appointed by the PTU and the Punjab Technical University, Jalandhar, Punjab (a University established by an Act of the State Legislature of Punjab), had appointed Master Companies/ Regional Learning Facilitation Centers across the county, for their Distance Education Courses.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of Service Tax amounting to Rs 67,448.00 including education cess and higher secondary education cess, should not be demanded and recovered from them under the provisions of the proviso to section 73 (1) of Chapter V of the Finance Act, 1994.
Vijay Kapoor, the counsel for the assessee contended that the institute is acting as a learning center for Punjab Technical University, and as a result of the same a degree or a diploma was awarded to the students for participating in the offered programs. Once that is by the definition as it exists during the relevant period, they are out of this definition as the definition clearly stated that it was with the purpose of issuance of occasional commercial teachings, not a degree or a diploma granted by the university.
Santhosh Kumar, the counsel for the department contended that the clarification by the University Grants Commission (UGC) was that the degree awarded by PTU would be recognized only in the state of Punjab, and as the learning center was located outside Punjab the benefit of the award of degree cannot be extended to the assessee who was located in Varanasi.
The Bench observed that in the case of Prof Yashpal, the court held that the clarification or circular issued by the UGC does not bar the conferment of the degree by Punjab Technical University to the students who undertake the degree programs offered by the university through the distance education program and after examining the Memorandum of Understanding etc has held that such centers are a franchisee of the PTU and has held that service tax will be leviable under the category of Franchisee Services.
The two-member bench comprising P K Choudhary (Judicial) and Sanjiv Srivastava (Technical) held that the transactions between the assessee had been held to be taxable under the category of Franchisee Services and if the service tax was now levied under the category of Commercial Coaching and Training Centre Service again the same will amount to double taxation under two different categories.
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