CESTAT ruled that a state university's arrangement with Learning ...

University's Distance Learning Centers Providing Support Services Not Taxable as Franchise Under Service Tax Rules

March 6, 2025

Case Laws     Service Tax     AT

CESTAT ruled that a state university's arrangement with Learning Centers (LCs) and Regional Centers (RCs) for distance education programs did not constitute taxable franchise services. The university maintained core control over admissions, curriculum, examinations, and degree conferral, while LCs/RCs provided teaching and operational support. The revenue-sharing arrangement, where LCs/RCs received percentages of collected fees, demonstrated they were service providers to the university rather than franchise recipients. The Tribunal determined these were education-related services falling under the Negative List and exempt under Notification No. 25/2012-ST and 6/2014-ST. The university's use of its name by LCs/RCs did not qualify as trademark or franchise rights under ejusdem generis principles. Appeal allowed with full relief from service tax liability.

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