TaxTMI 
TaxTMI 
2009 (11) TMI 529
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....outside Kerala. Though the assessee had entered into franchise agreement with several persons, it did not discharge liability to service tax under the category 'franchise service' classifiable under Section 65 clause (47) of the Finance Act, 1994 (the Act) during the period July 2003 to March 2005. After due process of law the original authority demanded service tax of Rs. 2,37,847/- (Rupees Two lakhs thirty seven thousand eight hundred and forty seven only) found due from the appellants under the category 'franchise service' along with applicable interest. He also imposed penalties on the appellants under Section 78 of the Act (Rs. 2,37,847/-) and under Section 76 of the Act (Rs. 10,000/-). Vide the impugned order, the Comm....
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....t of the claim. The show cause notice had not alleged fraud or suppression or other grounds to justify invocation of extended period. They cited the definition of 'franchisee' appearing in 65(47) of the Act and argued that the appellants had not appointed franchisees within the meaning of the above clause. The assessee reimbursed only the actual expenditure incurred by its agents. In the absence of any franchisee fees collected by the appellants from its agents, these agents could not be termed as franchisees for the purpose of the act. The impugned demand was not sustainable. Therefore, the demand of interest and penalties imposed were also liable to be vacated. 3.They relied on the following case laws in support of the appeal :....
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.... goods or services or process, identified with any other person." 5.1 It was submitted that the agreement with the agents was not implemented/enforced particularly as regards the provisions relating to payment of franchisee fees to the franchiser and the prohibition that the franchisee was not engaged in providing similar services identified with any other person. We find that the Commissioner (Appeals) has not given a categorical finding in the impugned order that the appellants received any fees from its agents designated in the agreement as franchisees. As regards the assessee not enforcing the clause relating to the franchisees not rendering similar service to any other person, the lower appellate authority found that the assess....
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....ts were not franchisees and M/s. FEL franchiser in a franchisee. The persons whom the Commissioner found to be franchisees were only agents of M/s. FEL carrying out part of the operations of M/s. FEL which constituted 'Courier Agency Service.' 5.3 In the Dewsoft Overseas Pvt. Ltd. case, the appellants therein were held to be not a franchiser as the Revenue had not proved that the agreement between the appellant and its client was a franchise agreement within the meaning of the term defined under Section 65(47) of the Act. The Tribunal had found as under : "4.5.2 The word "franchisor" has been defined under Section 65(48) of the Act as "any person who enters into franchise with a franchisee and includes any associate ....
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....se" as given in Section 65(47) the franchise agreement, which attracted service tax was to satisfy four conditions, and if the Revenue wants to subject a person to service tax under this entry, the burden of proving that the agreement between that person and his client is a "franchise agreement" within the meaning of this term, as defined under Section 65(47) of the Finance Act, 1994, would be on the Revenue. If the Appellants were not coming forward with the information with regard to condition No. '4', it was possible for Revenue to conduct enquiry with the franchisees for ascertaining as to whether in terms of their agreement with the Appellants, they are under an obligation not to engage in providing similar service identified w....