TaxTMI 
TaxTMI 
2017 (6) TMI 54
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....hts Institute of Fashion & Technology" (Heights) are engaged in imparting vocational training in the field of fashion designing, interior designing, painting, English speaking courses, accountancy learning courses and various computer software & hardware courses etc. This unit had also entered into agreement with various entities to provide business know-how to these entities and authorized them to use brand name "Heights". (b) "Bachpan" units are merely providing their brand name "Bachpan" and business know-how to its customer for running play schools. The Business patterns of "Bachpan" is different from "Heights" unit as it does not run any school or impart any education/training to children. 3. The assessee was receiving amounts to....
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....hisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person. Section 65(48) "Franchisor" means any person who enters into franchise with a franchisee and includes any associate of franchisor or a person designated by franchisor to enter into franchise on his behalf and the term "franchisee" shall be constructed accordingly. Section 65(105)(zze) "Taxable Service" means any service provided to a franchisee, by the franchisor in relation to franchise. The Section 65(47) was substituted vide Finance Act, 2005 with effect from16.06.2005 by which sub-clause (ii) to (iv) were deleted. Prior to 16.06.2005, all the four conditions specified there....
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....105) (zzr) Taxable service means any service provided or to be provided to any person, by the holder of Intellectual Property Right, in relation to Intellectual Property Service. It is submitted that trademark is in the nature of property and the right to use trademark is a transaction in property. The trade-mark are goods and licence to use trademark is nothing but a right to use property and the grant of licence to use trademark is a transaction of sale. It is a share of product or profit reserved by owner for permitting another the use of his property. 9. The dispute which is the subject matter of the present appeals is whether amounts recovered by the assessee's towards royalty, advertising plan, cost of manual supplied a....
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....te four conditions have been specified, which are required to be cumulatively satisfied for levy of Service Tax under Franchise service. The assessee has claimed that the brand name "Bachpan" is allowed to be utilized by the licensee and also the necessary know-how for functioning of play school is provided to the licencee as per the agreement. The claim of the assessee is that the agreement does not satisfy the requirements of 65(47) both prior to 16.06.2005 as well as for the subsequent period. Consequently, they have claimed that no service tax will be liable in respect of "Bachpan". In respect of "Heights" also the royalty fee charged for supplying the Know-how etc will not be liable to service tax for the entire period. They have also ....
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....ncluded in the gross amount for charging service tax. The assessee has disputed the fact that the advertisement expenditure of the franchise has been received. It is settled provision of law that any expenditure incurred by the service provider in the course of providing taxable services and reimbursed cannot be considered as consideration for taxable services. This view has been settled by the Hon'ble High Court of Delhi in case of Sercon India Pvt. Ltd. Vs Commissioner (Adjudication) Service Tax reported as 2013(30) STR (454) (Del.). In view of the above, there is no justification for including reimbursable expenditure in the taxable service tax. 16. Next, we consider the issue of the amounts received by the assessee towards cost of ma....
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.... get included in the gross value charged for providing the taxable services. To this the noticee contended that it is the substance and not the form of the thing that matter in the eye of the law and the activities mentioned in the above write up proves this beyond doubt that the noticee is providing complete technical know-how to their franchisees and the payments received in lieu of the above technical assistance in whatever name is not taxable. 79. To support their above statement the noticee relied on the judgment of The CESTAT, West Zonal Bench, Mumbai, in the matter of M/s. Navinon Limited vs. Commissioner of Central Excise, Mumbai, in which the bench held that the payment of royalty cannot be insisted as a payment for a service. I....