CMC LTD. Vs. COMMISSIONER OF C. EX., HYDERABAD

JUDGEMENT

(1.) THESE two appeals are filed against the following impugned orders : - Appeal No. ST/70/2006 Order -in -Appeal No. 32/2005(H -II) S. Tax, dated 29 -12 -2005 Appeal No. ST/332/07 Order -in -Revision No. 01/2007 -Service Tax, dated 29 -5 -2007 Since the issue involved in these two cases are inter -connected and is of the very same assessee, we dispose these appeals by a common order.

(2.) THE relevant facts that arise for consideration are that the appellant is service provider of Commissioning and Installation, Maintenance or Repair Service and Scientific and Technical Consultancy. Department gathered intelligence that CMC entered into Franchising agreements with several subscribers to lend its Modular part time semester wise course leading to Diploma in advanced software technology, popularly called as CMC Modular DAST course and for use and access under its Franchise Scheme by the subscribers. The assessee has not registered itself with the Department under Franchisee Services. The Department contended that the Franchising Agreement entered by CMC with the subscribers have satisfied the definition of Franchise services under Section 65 of Chapter V of the Finance Act, 1994 (the Act) with effect from 1 -7 -2003 and they are liable to pay service tax w.e.f. 1 -7 -2003 as per provisions of Chapter V of the Act. The Department found that CMC collected one time franchise fee/licensing fee and deducts 25% of course fee as royalty from the course fee collected, as per Franchising agreement and has collected Rs. 8,13,697/ - on licensing fee and Rs. 48,09,109/ - on course fee fro the period from 1 -7 -2003 to 30 -6 -2004 from the subscribers and has not paid service tax of Rs. 4,49,825/ -. The Department alleged that CMC by reason of omission or failure on their part have failed to disclose wholly or truly all -material facts required for verification of the assessment under Section 71 of Chapter V of the Act and that the value of taxable service that has escaped assessment is on account of failure on the part of the assessee to disclose the true value of the service rendered by them and hence, the extended time limit of five years was invoked to recover service tax, in view of the assessee failing to pay service tax by reason of omission or failure on their part, thereby making himself or herself liable to penalty under Section 78 of Chapter V of the Act read with Section 73(1) of Chapter V of the Act. The appellants contested the demand before the adjudicating authority. The adjudicating authority did not agree with the contentions and held that the appellant is liable to pay the service tax on the amount of 25% retained by them. But he refrained from imposing any penalties on the appellant. Aggrieved by such an order, appellant preferred an appeal before the ld. Commissioner (Appeals) contesting the service tax liability on the 25% course fee received by them. Ld. Commissioner (Appeals) did not find any merits in the appeal filed by the appellant and coming to such a conclusion, he rejected the appeal. Hence, appellant is before us in appeal No. ST/70/2006.

(3.) IN respect of appeal No. ST/332/2007, the Revenue aggrieved by the Order -in -Original passed by the adjudicating authority by not imposing any penalties on the assessee, reviewed the order of the said adjudicating authority by the powers vested in Commissioner under Section 84 of the Act and passed an Order -in -Revision wherein penalties under Section 76 and 78 were imposed on the assessee. Aggrieved by such an order, the assessee is also on appeal before us.