9911796707
TMI Blog2007 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Based on the investigation, Revenue proceeded against the appellants on the ground that they have not discharged the Service Tax liability in respect of the amount collected by them towards 'Franchise Service' which became a taxable serviceable with effect from 1-7-2003. The Jurisdictional Commissioner after giving an opportunity of personal hearing passed the impugned order. He confirmed an amount of Rs.52,01,026/- being the Service Tax along with Education Cess payable by the appellants for the period from 1-7-2003 to 31-12-2004 under Section 73 of the Finance Act, 1994. Interest was demanded under Section 75 of the Act. He imposed penalty @ Rs.100/- under Section 76 of the Act for every day during which they failed to pay the amount of tax. Further a penalty of Rs.1000/- was imposed under Section 77 of the said Act for contravening the provisions of Section 70 of the said Act. Finally he imposed a penalty equal to the Service Tax demanded under Section 78 of the Act, for suppressing material facts from the notice of the department with an intent to evade the payment of tax. The appellants are highly aggrieved over the impugned order. Therefore they have come before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he balance amount after adjusting the commission due to the franchisees and this amount received by the appellants shall always represent the gross receipt rendered for franchise services rendered by the appellants. He pointed out that the Commissioner has examined the entire issue in terms of the Finance Act, 1994 and has come to the correct conclusion that the appellants are liable to pay service tax. Therefore he requested to confirm the order. 7. On a vary careful consideration of the issue, we find that as per Section 65 of the Finance Act, 1944, franchise means an agreement by which - (i) franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved; (ii) the franchisor provides concepts of business operation to franchisee, including knowhow, method of operation, managerial expertise, marketing technique or training and standards of quality control except passing on the ownership of all knowhow to franchisee. (iii) the franchisee is required to pay to the franchi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. 4. Franchisee must coiled all the articles entrusted to them by the customers and pack them in separate covers station-wise and handover the same to the franchisor's representative at the place and time specified by the franchisor from time to time. Franchisee also must ensure that, consignment notes are duly discharged by the consignor, making them binding on the terms and conditions printed overleaf of the consignment note. 5. The articles to be delivered to the customers within the franchisees' territory in the designated areas, shall be received by the franchisee from Speed Safe Courier Service, Ernakulam Operations Office/Railway Station as the case may be. Similarly articles that are booked by the franchisee for different destinations, shall also be handed over at the Speed Safe Courier Service, Ernakulam Operations office/Railway Station as the case may be at the franchisees cost. Franchisee shall distribute/deliver the same to the consignees against acknowledgments in the prescribed form/forms free of charge and the proof of delivery (POD) should be returned to the franchisor forthwith. All inbound articles are to be delivered on topmost priority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be limited to 10% of such values per shipment. Necessary documents to ascertain the total amount collected by the franchisee shall be maintained by the franchisee as directed by the franchisor from time to time. It is specifically agreed and understood that the franchisor shall not be liable to pay to the franchisee any amount over and above the commission mentioned above for discharging the obligations under this order. It is further understood by the franchisee that, offering credit facilities to clients, other than approved by the franchisor, will be at the franchisees risk and commission on such booking will be paid to the franchisee only on recovery for such bills. The amounts payable to the franchisor shall be paid by the franchisee every week by demand draft payable at Emakulam without fail. Further it is agreed that franchisee shall not open Bank in the name of M/s. Speed Safe Courier Service, without the franchisors written consent. On a very careful reading of the ingredients of 'Franchise Services' as given in Section 65 of the Finance Act, 1994, and also the 'Franchise Agreement', it is very clear that the appellant has entered into fra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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