Hitech Institute of Advance Technologies Pvt. Ltd. Vs Commissioner of CGST (CESTAT Delhi)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, dismissed the appeal filed by the appellant challenging the order of the Commissioner (Appeals), which had confirmed the service tax demand on royalty received from franchisees and set aside the earlier order of the Assistant Commissioner that had dropped the proceedings.
The appellant was registered with the service tax department for providing commercial coaching and training services, maintenance and repair services, and franchise services. During the relevant period, the appellant operated educational courses under the brand name “Hitech” both directly and through franchisee centres.
Following a search and investigation, the department issued a show cause notice alleging short payment of service tax amounting to ₹16,22,737 on royalty received from franchisees during the period from 1 October 2013 to the financial year 2015-16. Under the franchise arrangement, franchisees collected fees from students, and 10% to 20% of the fee amount was payable to the appellant as royalty for use of the “Hitech” brand name.
Initially, the Assistant Commissioner dropped the demand proposed in the show cause notice. However, the department preferred an appeal before the Commissioner (Appeals), who allowed the departmental appeal and confirmed the service tax demand. Aggrieved by this order, the appellant approached the Tribunal.
