TaxTMI 
TaxTMI 
2006 (11) TMI 595
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....sing these parties to use their name for the operation of the centres. With effect from July 1, 2003 service tax was levied in respect of commercial training or coaching services as well as franchise services. However, the commercial training or coaching by a vocational training institute or computer training institute was exempted from payment of whole of service tax vide Notification No. 9/ 2003-ST dated June 20, 2003, as amended by Notification No. 1/2004-ST dated February 4, 2004. The dispute in the present appeal does not relate to the services being provided by the appellant in their own centres as computer training or coaching services. Inasmuch as, the appellant has entered into franchise agreement with other independent parties al....
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....er section 78 and of Rs. 500 under section 75A of the Act, and penalty of Rs. 2,000 for non-filing of returns under section 77 of the Act. Appeal against the above, did not succeed before Commissioner (Appeals). Hence the present appeal. We have heard Shri V.S. Nankani, learned Advocate appearing for the appellant and Shri P.K. Katiyar, learned SDR appearing for the Revenue. The statutory definition of franchise as appearing in section 65(47) of the Finance Act, 1994 defines "franchise " as follows: "65(47) 'franchise' means an agreement by which- (i) franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, ....
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....any other business from the said premises and shall remain an exclusive of the franchisee of the franchisor". The second line of the above clause clearly puts the restraint on the franchisee to enter into any other franchisee agreement, when it says that franchisee shall remain an exclusive franchisee of the franchisor. As such, it is clear that the franchisee is under an obligation not to provide identical services or to enter into franchise with any other person. The taxable service stands defined in section 65(105)(zze) of the Finance Act, as "any service provided to a franchisee, by the franchisor in relation to franchise". The franchisor develops the brand name, concept of following the business, promotes the same and establishes the ....
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....d the appellant is liable to pay service tax on the said services. The appellants have also claimed the benefit of Notification No. 9/03-ST dated June 20, 2003, which exempts taxable services provided in relation to commercial training or coaching by a vocational training institute, computer training institute or a recreational training institute, to any person from the whole of the service tax leviable thereon under sub-section (2) of section 66 of the said Act. Reading of the above notification clearly leads to the conclusion that the exemption provided is in respect of services relating to commercial training or coaching. As rightly held by the Commissioner (Appeals) appellant is providing two different services under two different cate....