Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2011 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (8) TMI 273 - AT - Service TaxFranchisee service or not - From the contract submitted along with appeal papers that there was no condition that the M/s K.P. Pan Flavours (P) Ltd., the franchisee should have been manufacturing the goods only under the brand names of the main Respondent - The statement of Shri Pradeep Kumar Chaurasia indicates only the factual position and does not indicate the legal obligation under the contract with the main Respondent - Therefore, we are not convinced by the arguments put forthwith by Revenue and we are in agreement with the findings of the Commissioner (Appeals) - Therefore the Appeals filed by the Revenue are rejected - Decided in favour of assessee.
Issues:
1. Whether the service rendered by the main Respondent to another party falls under the definition of franchisee service as per the Finance Act, 1994? 2. Whether the conditions for franchisee service under Section 65(47) of the Finance Act, 1994 are satisfied in the present case? 3. Whether the agreement between the main Respondent and the other party constitutes a franchise agreement, thereby attracting Service Tax liability? Analysis: Issue 1: The main issue in this case revolves around determining whether the service provided by the main Respondent to another party can be classified as a franchisee service under the Finance Act, 1994. The Revenue contended that the main Respondent should have paid Service Tax for allowing the other party to use their brand name. The dispute arises from an agreement between the main Respondent and the other party for the manufacture and sale of specific products under various trade marks. Issue 2: The crux of the matter lies in analyzing whether the conditions outlined in Section 65(47) of the Finance Act, 1994 are met in the service provided by the main Respondent to the other party. The Revenue issued a Show Cause Notice alleging that the service rendered falls under the definition of franchisee service, thereby demanding Service Tax along with interest and penalties. The Adjudicating Authority confirmed the demand, leading to an Appeal by the Respondents challenging the decision. Issue 3: The final issue to be resolved is whether the agreement between the main Respondent and the other party constitutes a franchise agreement, thus attracting Service Tax liability. The Commissioner (Appeals) found that the condition regarding exclusivity in the definition for franchisee was not satisfied, indicating that there was no exclusive contract with the main Respondent. The Revenue contested this finding, arguing that the facts demonstrated exclusivity, while the Respondent emphasized the terms of the contract to support their position. In the judgment, the Tribunal examined the contract between the main Respondent and the other party and concluded that there was no condition requiring the other party to manufacture goods exclusively under the brand names of the main Respondent. The Tribunal also noted that the statement provided by a director of the other party only reflected the factual position and did not establish a legal obligation under the contract. Consequently, the Tribunal rejected the Appeals filed by the Revenue, affirming the findings of the Commissioner (Appeals) in favor of the Respondents.
|