Tribunal Orders Deposit of Rs.5,00,000 with Waiver on Compliance

The Tribunal directed the applicant to deposit Rs.5,00,000 within six weeks, with the remaining dues waived upon compliance. Recovery was stayed during the appeal, considering the tax was prima facie payable as per the agreement with franchisees. The limitation argument raised by the applicant's counsel would be further assessed during the appeal process.

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Issues:
Waiver of pre-deposit of tax, categorization of services as Franchisee Service or IPR Service, limitation on tax demand.

Analysis:
The judgment pertains to an application for waiver of pre-deposit of tax amounting to Rs.12,90,762/- along with interest and penalty for the period from 1.4.2004 to 19.4.2006. The applicant had engaged individuals as franchisees for the use of their trademark 'BharatMatrimony.com' and other services, entering into franchisee agreements with them. The revenue department demanded tax under the category of Franchisee Service, which the applicant disputed. The counsel argued that the services actually fell under the category of IPR Service and contended that the demand was time-barred. The AR, on the other hand, supported the Commissioner (Appeals)'s findings and insisted on the deposit of the entire tax amount based on the agreement.

Upon hearing both sides and examining the records, the Tribunal found that prima facie, the tax was payable as per the agreement between the applicant and the franchisees. However, the Tribunal acknowledged the counsel's argument regarding the limitation aspect, which would be further evaluated during the appeal hearing. Consequently, the Tribunal directed the applicant to deposit a sum of Rs.5,00,000/- within six weeks and report compliance by 30.8.2013. Upon this deposit, the pre-deposit of the remaining dues would be waived, and the recovery thereof stayed during the pendency of the appeal. The judgment was dictated and pronounced in open court by one of the judges.

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