2008 (4) TMI 189 - AT - Service Tax

Demand is of service tax in the category of franchise by invoking larger period of limitation - demand of service tax is on the gross amount collected by a network of persons across the country for courier service and passed on to the appellants consideration of contracts & determination of nature of service reserved for final hearing - all the relevant information regarding the subject transactions were available with the department so stay is granted on limitation

Summary

Issues:
1. Waiver of predeposit and stay of recovery application
2. Early disposal of the appeal application

Waiver of Predeposit and Stay of Recovery Application:
The case involved a demand for service tax under the category of "franchise" for a specified period, invoking the extended period of limitation under Section 73(1) of the Finance Act, 1994. The demand was based on the gross amount collected by a network of persons for courier services and passed on to the appellants. The agreements between the appellants and these persons designated the former as "franchiser" and the latter as "franchisees". The appellants argued that these agreements were mere agency contracts, while the Revenue contended that they constituted franchise agreements as per Section 65(47) of the Act. Although the agreements did not explicitly mention any fee to be levied by the appellants, the Revenue claimed that certain lump-sum amounts represented fees for the franchise. The appellants challenged the demand on the grounds of limitation, citing a letter from the Superintendent of Central Excise in 2003 as evidence that the department was aware of the transactions early on. The Tribunal, considering the limitation plea, granted waiver of predeposit and stay of recovery for the service tax and penalties.

Early Disposal of the Appeal Application:
The second application sought out-of-turn disposal of the appeal, which was unopposed. Given the significant stakes involved in the case, the Tribunal directed the appeal to be scheduled for hearing on a specific date to expedite the process.

In conclusion, the Tribunal granted the waiver of predeposit and stay of recovery based on the limitation plea raised by the appellants, while also ordering an out-of-turn disposal of the appeal to expedite the proceedings due to the substantial nature of the case.