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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 ..... nd as declared services under Section 66E(e) for the period Post-Negative Era - HELD THAT:- To bring within the ambit of service tax , it is necessary to analyse the specific factors or the principles, which would constitute that services. The basic principle for a service to be taxable is that it is necessary that there should exist a service provider and a service recipient relationship between the two parties, which, in the present case is missing. From the impugned order, we find that there is no mention of any services, which DTMPL was liable to perform having received the amount, which has been taken to be as a consideration and in absence thereof, DTMPL cannot be termed to be a Service Provider , providing any services to the members /agents. Though the receipt of membership fee by DTMPL can be regarded as income but it cannot be treated as a consideration for rendering any services. In other words, the amount of Rs.5,500/- received by DTMPL is not a consideration in lieu of any services. We are of the view that the impugned order does not show any consideration whether the activity performed by DTMPL satisfies the basic factors to be classified as Franchise Services or as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 crores and after that the chain terminates. On receipt of the payment of the membership fee, the member/agent is issued a welcome letter intimating the user I.D., Pass Word, etc. and also enables the agent to know about the money, which is being deposited with DTMPL by him or by other members of his chain. 2.1. According to the DTMPL, they are engaged in trading of goods and services on the basis of multi-marketing model. Under the said business model, the appellant purchases suit length from various vendors and holiday vouchers comprising of 4 days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the period upto 31.03.2017, M/s DTMPL offered a packaged business opportunity plan for earning income to avail which one paid in advance a one-time membership fee. This was activity carried out by a person for another for consideration. Notwithstanding this, it further also appears that in accepting the consideration of one-time joining/membership fee, M/s DTMPL agreed to the obligation to do an act(s) so as to give effect t the business plan, including acts of providing to each member the enabling rights (including representational rights of the nature described in Section 65(47) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether 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. Batra, learned counsel for the appellant challenged the show cause notice on the ground that it is vague and does not specify the taxability of the given transaction so as to make the DTMPL liable to pay service tax. On merits, he submitted that the activity undertaken by the DTMPL is not liable to tax under the category of Franchise Service for the period 1.4.2012 to 30.06.2012 and the decision in the case of M/s. Amway India Enterprises Pvt. Ltd. Vs. Commissioner of Service Tax [ 2015(39) STR 1006 (Tri.-Delhi)] is not applicable as in the said case there was an agreement between the distributor an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, 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 under the category of Franchise Service for the period during the Pre- Negative Era and as declared services under Section 66E(e) for the period Post-Negative Era. To bring within the ambit of service tax , it is necessary to analyse the specific factors or the principles, which would constitute that services. The basic principle for a service to be taxable is that it is necessary that there should exist a service provider and a service recipient relationship between the two parties, which, in the present case is missing. 13. From the impugned order, we find that there is no mention of any services, which DTMPL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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