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of <h1>Service tax ruling favors appellant in franchise fees case, orders set aside</h1> The Commissioner ruled in favor of the appellant in a case concerning the liability for service tax on license fees collected from dealers under the ... - Issues involved: Determination of liability for service tax on license fee collected from dealers u/s franchise services category.Summary:1. The appeals were filed against orders confirming demands of service tax and penalties on the appellant for collecting license fees from dealers. Show cause notices were issued based on the grounds that the license fee collected falls under the taxable category of 'franchise services'. 2. The appellant argued that the license fee is for the usage of infrastructure facilities provided at retail outlets, not for representational rights or display of trademarks. The relationship between the dealer and appellant is of Principal to Principal, not Principal and Agent.3. The appellant presented arguments citing similar cases and decisions to support their position. The issue of limitation was also raised, questioning the clarity of classification/taxability by the Department.4. The Commissioner waived the condition of pre-deposit in one appeal based on compliance with a stay order in a similar case. Both appeals were decided together as they involved the same issue.5. The Commissioner found that the amounts received by the appellant from dealers were for the use of outfit and premises, not falling under the taxable category of 'franchise services'. The license fee was deemed as rent for the use of infrastructure facilities.6. The Commissioner referred to relevant case law and upheld that the license fee collected did not have a connection with the goods sold, therefore not liable for service tax under 'franchise services'. The introduction of a new taxable category further supported the appellant's position.7. Consequently, the orders confirming service tax demands and penalties were set aside, and both appeals were allowed in favor of the appellant.
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