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TMI Blog2012 (10) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in franchise service and he is liable to pay Service tax on the Royalty charges paid to the foreign company under “Franchise Service”. Payment of service tax - Held that:- it is evident that the appellant had collected service tax while charging the above fees from their distributors but they had not produced any evidence whether the collected service tax was paid to the Department - onus is on the appellant to substantiate their contention that the royalty paid by them to the Foreign service provider had already suffered Service tax and the same had been paid to the Department. In the absence of any documentary evidence it cannot be said that he had paid service tax to the department on the fees collected which includes royalty char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under Sections 76, 77 and 78 of the Finance Act, 1994 was issued to the appellant. After due process of law, the Lower Adjudicating Authority confirmed the proceedings initiated in the Show Cause Notice vide impugned Order-in-Original after dropping the penalty imposed under Section 76 but by giving an option to the appellant that the penalty imposed under Section 78 would be Rs. 5,21,100/- if the payment of Service Tax with interest and penalty were made by the appellant within thirty days of Communication of this impugned Order-in-Original. But the appellant had not utilized the opportunity. 3. Aggrieved by the impugned order, the appellant filed the present appeal mainly on the following grounds - (i) that no services are rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 2(1)(d)(iv) of Service tax Rules. Thus, it is clear that liability of appellant arises only when services is received in India . In appellant s case no services are received in India. A personal hearing was held on 2-6-2011. Shri. S. Murugappan, Advocate and Shri V. Swaminathan, Chartered Accountant appeared on behalf of the appellant. They have stated that whatever amount received from the distributors including the royalty payment suffered Service tax and hence demanding Service tax again on the royalty amount paid to the Principal would amount to double taxation. Shri G. Elangovan,. Superintendent of Service tax represented for Revenue-Respondent. 5. I have carefully gone through the records of the case and submissions made by bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as mentioned in Section 65(47) then. But after 16-6-2005, only the condition mentioned above is required to be satisfied and the other three conditions were dropped to make the coverage of service more comprehensive. Any person having representational right to sell or manufacture the goods, or to provide services or undertake any process identified with any person is liable to be taxed. Such identification may be in the form of trademark, service mark, trade name or logo or any other symbol. Thus any person carrying out the process of manufacture also which is identified with any other will be liable for tax. In the instant case the appellant is providing the service of training by using the logo of M/s. Crest Com International Ltd. USA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes any associate of franchisor or a person designated by the franchisor to enter into agreement. However, as per the definition, the franchise agreement must satisfy the following condition w.e.f. 16-6-2005. (i) The agreement must provide right to franchisee to represent the franchisor. The right can be for sale of goods only. It can be in the form of manufacture of goods or to provide services. In the instant case the above definition of franchisor is tailor-made for the M/s. Crest Com International Ltd. USA as the brand name is developed by them. I find from the copy of agreement produced before me that it speaks about the concepts of operating the business and guidelines to carry out the business under various headings. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y carefully, I find that the agreement terms M/s. Crest Com International Ltd. USA as franchisor and the appellant as franchisee under the head Guaranty and assumption of Franchisee s obligations . I find from the agreement, that under the head compensation to be shared between producer (M/s. Crest Com International Ltd. USA) and Master distributor (the appellant) it states that how the initial franchisee fee paid by the new distributor and the royalty fee paid by the distributors is shared by the Producer and the Master distributor. In addition, under the head Royalty fees the agreement states that in the event, the master distributor itself is marketing the Bullet proof manager course, that it shall be paying Royalty at the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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