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TMI Blog2024 (11) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... of one time fees. To become a member of the company, a person is required to pay one time membership fees, which at the relevant time was Rs.5,500/- and after successful payment, DTMPL provides a suit length of 3 Mts., a voucher comprising of 4 days and 3 nights stay in a hotel for two adults and 2 kids upto the age of 8 years from M/s. Countrywide Holidays Pvt. Ltd. [(CHPL] and an accidental insurance policy of Rs.4 lakh for one year from M/s. National Insurance Co. Ltd. [NSIC] . The DTMPL purchases all these items/vouchers in bulk quantities and vouchers for stay in a hotel is provided for Rs.125/- from CHPL with a minimum guarantee of Rs.60,000/- for potential customers. The members so enrolled may bring one or two more members like him for membership in the appellant company and the newly added members also get the same package of the suit length, holiday vouchers and insurance policy. In the event of addition of the subsequent member, the initial member gets commission of Rs.1,000/Rs.2,000/- from DTMPL, which is a chain level of multiplying the membership, which continues till a member reaches upto the 16th level, where he could receive the incentive/commission of Rs.1.51 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements signifying existence of agreements in which the joining members paid consideration as joining/membership fee to M/s DTMPL who granted representational right covered in the scope of expression "to sell or manufacture goods or to provide service or undertake aný process identified with M/s DTMPL, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved", leading to existence of "Franchise" as defined in Sec 65(47) of the Finance Act, and that M/s DTMPL entered into franchise with the member who joined on payment of the one-time membership fee such that M/s. DTMPL were the "franchisor" and the member(s) were the "franchisee" as defined in section 65(48) of the Act, and this amounted to service provided or to be provided to a franchisee by the franchisor in relation to franchise which was a taxable service in terms of Section 65(105)(zze) of the Finance Act, 1994. It also appears that the Central Government has not appointed the date with effect from which the provision of Section 65 A of the Finance Act (Chapter V) shall not apply; and (2) notwithstanding the above, the collective aspects also indicate that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iged to do, and therefore the income under payout charges forms a part of gross consideration under Section 67(1) read with Rule 5(1) of Service Tax (Determination of Value) Rules, ) 2006." 6. On adjudication the impugned order was passed confirming the allegations and the demand for the period 1.4.2012 to 31.03.2017 under the category of "Franchise Service" (upto 30.06.2012) and for the subsequent period, it was held that the activity undertaken by DTMPL falls under the definition of "service" and hence, the same is taxable under Section 66B of the Act. But did not find necessary to consider whether the activity is the case of deemed service under Section 66E(e) of the Act. The invocation of the extended period of limitation was held invokable and accordingly, the penalties were imposed on DTMPL as well as on the Directors. Thus demand of Rs.52,97,77,051/- was confirmed after extending the benefit of cum-tax. Being aggrieved, the present appeals have been filed before this Tribunal. 7. Heard Shri Ashok Batra and Ms. Sakshi Khanna, Chartered Accountants, learned Counsel for the appellant and Shri Rajeev Kapoor, learned Authorised Representative for the respondent. 8. Shri A.K. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the appellants next challenged the valuation of the total tax liability. He submitted that the membership fee is not a consideration for any product provided by DTMPL but is a consideration for becoming an agent and the payment charges are the deductions from the commission earned by the agents. Lastly, the learned counsel for the appellants challenged the invocation of extended period of limitation and imposition of penalty, as according to him, the DTMPL believed that their business activity was not exigible to service tax. It is also his submission that the show cause notice is barred by limitation, as the same is issued after a period of more than 6 years and, therefore, the liability, if any, shall be computed only for the period between 23.05.2016 to 23.11.2017 as the show cause notice is required to be issued within a period of 18 months as per Section 73(1) of the Act. 11. Learned Authorised Representative for the respondent relied on the finding of the Adjudicating Authority and the decision of M/s. Amway India Enterprises Pvt. Ltd. (Supra). 12. In nutshell, the allegation of the Revenue is that the activity undertaken by DTMPL of enrolling the members falls und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial reasons as to how the activity of enrolling the members amounts to rendering the services for the purpose of levying the service tax and consequently, the incidental issues of computation, limitation, interest and penalty on DTMPL and its Directors may be re-considered. Similarly the plea of the show cause notice being vague has been dealt with by the Adjudicating Authority by merely stating that extensive investigation has been conducted by the Department. We do not feel that it is the correct approach, as conducting investigation by the Department is one thing and raising allegations in the show cause notice with reference to the statutory provisions and linking to the facts of the case is another thing. Hence, the Adjudicating Authority on remand may de-novo examine the submissions of the learned counsel for the appellant that the show cause notice is vague. We have not expressed any opinion on merits as to whether the appellant is liable to pay service tax and what has been discussed is only for the purpose of remanding the matter. The Adjudicating Authority may consider the allegations raised by the Revenue with reference to the provisions of law in the light of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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