2019 (1) TMI 436

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....658/- for the use of logo and study material to their USA based franchiser, namely, M/s. Crest Com International Limited, USA. Department took the view that the activity of the appellants would fall under ambit of 'Franchise services' as per section 65 (105) (zze) of the Finance Act, 1994. Accordingly, a show cause notice dated 18.03.2009 was issued to the appellants inter alia, proposing demand of Rs. 20,84,270/- under franchisee service for the period January 2007 to December 2008 along with interest thereon and also imposition of penalty under various provisos of law. In adjudication, original authority vide an order dt. 31.07.2009 confirmed the demand as proposed in SCN with interest and also imposed penalty under Section 77 & 78 of the....

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....unds : (a) The actual distributor or the above distributor conducts the management training programme and for whatever amount is collected, pays the service tax, as applicable. For all the payments received from the distributors, the appellants have collected service tax and remitted the same to the department. There is not a single case where service tax was not collected and not remitted in respect of training programmes conducted. The revenues earned from these transactions by the appellants was shared as per the percentages mentioned in the distributor agreement. Therefore, it can be seen that such sharing of the revenue are after payment of applicable service tax only. (b) There is no separate service envisaged from the USA suppl....

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....ts are made by them to Crest Com International Ltd., U.S.A only after payment of service tax for which a detailed working had been enclosed as an annexure. However, we find that these averments of the appellant have not been critically analyzed by the original authority. 4.2. We find that as per the grounds of appeal, summarized in para-3 of the order, all the payments made to Crest Cam International Ltd., U.S.A were paid only after payment of service tax in India. However, even the lower appellate authority has dismissed the prayer on the grounds that onus is on the appellant to substantiate the contention that royalty paid by them to foreign service provider already suffered service tax and that the same had been paid to the department....