Custom, Excise & Service Tax Tribunal
Commissioner Of Service Tax, Chennai vs M/S. Sip Academy India Pvt. Ltd on 26 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. ST/425/2010
(Arising out of Order-in-Appeal No.63/2010 (MST) dated 26.3.2010 passed by the Commissioner of Central Excise (Appeals), Chennai)
Commissioner of Service Tax, Chennai Appellant
Vs.
M/s. SIP Academy India Pvt. Ltd. Respondent
Appearance Shri R. Subramanian, AC (AR) for the Appellant Ms. A. Bakkiya Lakshmi and Shri Joseph Prabhakar, Advocates for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 26.02.2018 Final Order No. 40502 / 2018 Per Bench The respondents are engaged in imparting coaching programme through their appointed franchisees to develop the mental skills of children using ABACUS and Brain Gym techniques under the brand name SIP Academy. They run the programme through their appointed franchisees in different parts of India. From the records, it was noticed that the respondents have registered themselves under Franchise Service and they have entered into agreement with each of their franchisees and collect various fees like licensing fees, annual fees, student fees etc. from the franchisees based on the agreement. They were discharging service tax only on the license fees and not on the other fees / amounts collected from their franchisees, though all fees / amounts were collected based on the agreements entered into with them. Show cause notice was issued proposing to demand service tax for the franchise service rendered by them along with interest and also for imposing penalty. After due process of law, the original authority confirmed the demand of Rs.32,65,685/- along with interest and also imposed penalty under section 78 of the Finance Act. In appeal, the Commissioner (Appeals) set aside the entire demand. Hence the department is now before the Tribunal.
2. On behalf of Revenue, ld. AR Shri R. Subramanian reiterated the grounds of appeal. He submitted that the Commissioner (Appeals) has erred in setting aside the demand observing that the services are exempted as per Notification No. 24/2004-ST dated 10.9.2004. The said notification provides exemption for recreation training institute and vocational training institute. The show cause notice was issued for demand of service tax under franchise services whereas the Commissioner (Appeals) has relied upon the decision in the case of Fast Arithmetic Vs. ACCE, ST & EOU 2009 (94) RLT 657 (CESTAT Ban.).
3. The ld. Counsel Shri Joseph Prabhakar and Ms. A. Bakkiyalakshmi appeared and argued the matter on behalf of the respondent. He submitted that the respondent is imparting coaching programme to develop the mental skills of children using ABACUS and brain gym techniques. The said activity is exempted from service tax as per Notification No. 24/2004. The very same issue was decided in the case of Fast Arithmetic (supra) and therefore the Commissioner (Appeals) has rightly set aside the demand.
4. Heard both sides.
5. On perusal of the impugned order, we find that the Commissioner (Appeals) has been carried away by the decision in the case of Fast Arithmetic (supra). The show cause notice proposes ingredients of franchise services wherein the demand is under the same. The original authority has also taken note of the contentions put forward by the respondent and also addressed the issue of classification of the services. The respondent had taken up the plea that the activity would fall more specifically under Commercial Coaching or Training Service and in para 14.2, the original authority has observed that the said contention is only an attempt to confuse and mix up the services done under the franchise agreement. The original authority in para 14.3 has observed that consequently the question whether the services is exempted from Commercial Training or Coaching Service is not relevant. Thus, the demand was confirmed under franchise service by the adjudicating authority. Thus, taking note of the fact that the Commissioner (Appeals) has erred in applying the decision of Fast Arithmetic (supra) without considering whether the demand under franchise service is sustainable or not, we are of the considered opinion that the matter requires to be remanded to the Commissioner (Appeals) for fresh consideration of the same.
6. The ld. Counsel for respondent has also argued on the ground of limitation. Since the matter is remanded, all the issues are kept open. The impugned order is set aside and the appeal is allowed by way of remand to the Commissioner (Appeals).
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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