2013 (10) TMI 1216 - AT - Service Tax

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 ... Franchisee Services – Bar of Limitation - Assessee contended that the demand was made on the basis of the agreement but the real state of affairs would reveal that the services fall under the category of Intellectual Property Rights Service - Held that:-The demand of tax on the franchisee service is based on the agreement - Prima facie, the tax is payable as per the agreement between the applicant and other persons - The submission of the learned counsel on the limitation aspect would be examined at the time of appeal hearing - applicant was directed to deposit a sum - Upon such deposit, pre-deposit of the balance dues stand waived and recovery thereof stayed during the pendency of the appeal – Partial stay granted. 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.