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TMI Blog2016 (10) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant with any other person, therefore the condition of the definition of “Franchise” also stand fulfilled. As regards the submission of the appellant that the said condition is not fulfills for the reason that the “Franchise” has liberty to provide the training in graphic animation for indicating computer education on their own. In this case it is clear that course material provided by the appellant is “Franchise” cannot be used for providing services to any other person on their own. The “Franchise” can provide service other than MAAC brand course materials this should not affect to “Franchiser”. Therefore in our considered view the service of the appellant clearly covered under the “Franchise Service”, hence the same is taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Franchise Service included in Service Tax net w.e.f. 01.07.2003, as per Section 65(105)(zze) of Chapter V of the Finance Act, 1994. The appellant entered into a business partner agreement with M/s Digital Puppet Animation Studio for providing Computer Education and Training Programmes in Graphic Animation and Cinematics recognizing the benefits to be derived from being associated with MAAC and technical assistance rendered by MAAC and using MAAC course materials for the purpose, has requested to be associated with MAAC and the right to use MAAC course materials as covered in this agreement for all the MAAC course offerings for the training programme in computers, graphics animation. Under the agreement the appellant agrees to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nchise there are four clauses given and fourth clause is the franchisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person. In the present case clause (iv) is not complied in terms of clause no. 3.7.1 of the agreement. The service recipient undertake to conduct similar course other than the courses offered by the appellant under the same category. In view of this position the service does not qualify as Franchise Service , hence not taxable. Learned Chartered Accountant alternatively submits that quantification of the demand of Service Tax of ₹ 14,24,506/- is not correct for the reason that how to the total value taken in the show-cause notice incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s terms of Franchise Service which are reproduced below:- (a) Franchise means an agreement by which- (i) Franchisee is granted representational rights to sell or manufacture foods or to provide service or to undertake any process identified with franchiser, 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 franchiser provides concepts of business operation to franchisee, including know-how, method of operation, managerial expertise, marketing technique or training and standards of quantity control except passing on the ownership of all know-how to franchisee. (iii) The franchisee is required to pay to the franchiser, directly or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Franchise can provide service other than MAAC brand course materials this should not affect to Franchiser . Therefore in our considered view the service of the appellant clearly covered under the Franchise Service , hence the same is taxable. As regards the quantification of the Service Tax the appellant submitted the following chart:- MAYA ENTERTAINMENT LIMITED 01.07.2003 TO 16.06.2005 Working of Taxes Payable and Taxes paid for the period Particular Value Tax As per Adjudication Order Less: Export of Services Less: Services in the state of J K Less: Services prior to 01.07.2003 Less: Amounts not received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the Balance Sheet of the appellant which shows that the appellant has no intention to hide the service value. The issue involved is of interpretation of definition of the Franchise Service , therefore for this reason also malafide intention cannot be alleged. It is also evident that the appellant has discharged the Service Tax amount of ₹ 7,90,760/- along with interest. Considering this fact, we are of the view that the appellant has been able to show the reasonable cause for non-payment of Service Tax in time. Therefore, we set aside the penalty under Section 78. As per the above discussion, we hold that the appellant s service is chargeable to Service Tax under the category of Franchise Service . However the quantificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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