2013 (7) TMI 946 - AT - Service Tax

Franchise Agreement Not Business Auxiliary Services

The Tribunal found that the services provided under a Franchise Agreement were primarily related to renting immovable property, not falling under ... - Issues involved: Classification of services under 'Business Auxiliary Services' and requirement of pre-deposit for appeal.Classification of services: The appellant entered into a Franchise Agreement with another company, providing premises, infrastructure, and manpower in exchange for a guaranteed amount or a percentage of turnover. The department classified the services as 'Business Auxiliary Services' and demanded payment. However, upon reviewing the agreement, the Tribunal found that the activity was primarily renting of immovable property, not falling under Business Auxiliary Services. The Tribunal decided to remand the matter to the lower appellate authority for reconsideration without requiring any pre-deposit.Requirement of pre-deposit: The lower appellate authority had directed the appellant to make a pre-deposit of a certain amount along with interest, which the appellant failed to comply with, leading to the dismissal of the appeal. The Tribunal, after determining the nature of the services provided, allowed the appeal by remanding the case for further consideration without insisting on any pre-deposit.