Franchise agreement treated as a franchisee arrangement, leading to waiver of pre-deposit and stay of recovery

An amount received under a franchise arrangement was examined for service tax liability as consideration for Business Auxiliary Service in the context of a stay application. The Bench treated the arrangement as a franchisee agreement and followed an earlier view that an identical agreement had already been characterised in the same way. On that basis, it granted waiver of pre-deposit and stayed recovery of the disputed amount until disposal of the appeal.

---

---

Issues: Whether, for the purpose of waiver of pre-deposit and stay of recovery, the amount received under the franchise arrangement was liable to service tax as consideration for Business Auxiliary Service.

Analysis: The arrangement was found to be a franchisee agreement. The Bench noted that an identical agreement had earlier been held to be a franchisee agreement in a similar matter, and followed that view for the present stay application.

Outcome: Waiver of pre-deposit was granted and recovery of the disputed amount was stayed till disposal of the appeal.

---