Tribunal dismisses Revenue's appeal on service tax demand, ruling service as tangible goods. License fee not for representational rights.

The Tribunal ruled in favor of the respondent, dismissing the Revenue's appeal against the dropping of service tax demand. The Commissioner determined that the service provided was not franchise service but a tangible goods service chargeable to service tax. The Tribunal emphasized that the license fee was primarily for the use of facilities and equipment, not for representational rights. Despite the argument regarding the use of the respondent's logo in the dealer agreement, the Tribunal found that the agreement focused on premises and equipment usage rather than granting representational rights to the dealers.

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Issues:
- Whether the license fee collected by the respondent could be considered for granting any representational right to sell products.
- Whether the license fee is primarily for the use of facilities or for other conditionalities.
- Whether the license fee is in respect of the amount received for the license to use the respondent's logo.
- Whether the agreement between the respondent and the dealers grants representational rights.
- Whether the agreement terms grant rights to use premises or equipment.
- Whether the agreement clauses grant representational rights to the dealers.

Analysis:
1. The appeal was filed by the Revenue against the dropping of demand for service tax by the Commissioner in relation to alleged franchise service provided by the respondent. The issue revolved around the treatment of license fee as franchise service and the subsequent demand for service tax from July 2003 to December 2007.

2. The Commissioner held that the service provided was not franchise service but a supply of tangible goods service chargeable to service tax from May 16, 2008. The decision was based on the argument that the license fee was primarily for the use of facilities and not representational rights. The Commissioner emphasized the dominating nature of the service in determining its classification.

3. The Revenue argued that the license fee was also for the use of the respondent's logo, citing Clause (10) of the dealer agreement. This clause indicated that the products were to be sold under the name and logo of the respondent, granting representational rights to the dealers. However, the Tribunal found no merit in this argument as the agreement terms focused on the use of premises and equipment rather than representational rights.

4. The Tribunal analyzed the agreement clauses, highlighting that the purpose was to grant rights to use premises or equipment. The agreement did not explicitly grant representational rights to the dealers. The Tribunal dismissed the appeal, stating that the agreement did not support the claim of representational rights. The decision was pronounced on November 21, 2017.

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