TaxTMI 
TaxTMI 
2019 (6) TMI 109
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....ctively on the Management Consultancy Services, Franchisee Services and Commercial Training and Coaching Services. The same i.e. Rs. 1,17,65,723/- (Rupees One Crore Seventeen Lakhs Sixty Five Thousand Seven Hundred and Twenty Three only) is ordered to be recovered along with interest at appropriate rate under Section 75 of the Finance Act, 1994. 5.02 Penalty of Rs. 1,17,65,723/- (Rupees One Crore Seventeen Lakhs Sixty Five Thousand Seven Hundred and Twenty Three only)is imposed on the noticee under Section 78 of the Finance Act, 1994. 5.03 Proceedings demanding service tax on other services dropped. 5.04 CENVAT Credit of Rs. 5,12,27,873/- (Rupees Five Crore Twelve Lakhs Twenty Seven Thousand Eight Hundred and Seventy Three only) disallowed and ordered to be recovered under rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994 along with interest at appropriate rates under Rule 14 ibid, read with Section 75 of the Finance Act, 1994. 5.05 Penalty of Rs. 5,12,27,873/- (Rupees Five Crore Twelve Lakhs Twenty Seven Thousand Eight Hundred and Seventy Three only) imposed on the noticee under Rule 15(3) of the CENVAT Credit Ru....
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....C. The agreement with these registering authorities clearly state that they shall not adopt any trade mark, service mark, trade name or logo i.e. similar to any trade mark, service mark, trade name or logo of the appellant's. The agreement also provides that these registering authorities are not agents, employees or joint venture of appellant and they have no authority to bind the appellant for contractual liability. The registration Authorities collect the DSC Fee from the applicants to be remitted to the appellant when they would raise periodical invoices on the registering authorities for receiving these DSC Fee collected from the applicants. Though the Show Cause Notice demands service tax under the category of Franchisee Service for period from 01.04.2005 to 30.04.2006 and from 01.05.2006 onwards under the category of Business Support Services, the entire demand has been confirmed under the category of Franchisee Service. These services do not qualify as Franchisee Service as has been held in case of- i. Sify Technologies Ltd [2018 (14) GSTL 268 (T-Chennai)] ii. Global Transgene Ltd [2013 (32) STR 86 (T-Mum)] iii. Direct Internet Solutions P Ltd [201....
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....ts against which they have taken the credit can be produced before the Tribunal or before the adjudicating authority for consideration if the matter is remanded back to him. vi. All the services with respect to information technology software including maintenance thereof was brought under tax, by introduction Information Technology Software Services with effect from 16.05.2008. {Reliance on SAP India Pvt Ltd [2011 (21) STR 303 (T-Bang)], Persistent Systems Ltd. [2016 (42) STR 890 (T-Mum)], Larsen & Tuobro Limited [2017 (4) GSTL 271 9T-Mum)]} vii. Even the explanation appended to the definition of Management Maintenance and Repair Service definition clause w.e.f 01.06.2007 cannot have retrospective effect as this being substantial expansion to create a levy of tax on software maintenance, it cannot be applied retrospectively. Reliance on {Martin Lottery Agencies Ltd [2009 (14) STR 593 (SC)], Kasturi & Sons Ltd [2011 (22) STR 129 (Mad)], Financial Software Systems Pvt Ltd [2014 (3) STR 393 (T-Chennai)], Phoenix IT Solutions Ltd [(22) STR 400 (T-Bang)], NCR Corporation India Pvt Ltd [2008- TIOL-1322-CESTAT-BANG], India Switch Co Pvt Ltd [2015 (39) STR 288 (T-Chennai)]. Further ....
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....ment an Supply Agency, he submitted in same set of facts in case of Future Focus Infotech Pvt Ltd [2010 (18) STR 308 (T-Chennai)], Focus Infotech Pvt Ltd [2018 (18) STR 441 (T-Chennai)] & Six Sigma Soft Solution [2018 (18) GSTL 448 (T-Mad)]. Since the issue has been settled in favour of revenue by the said decisions the order of Commissioner dropping the demand cannot be sustained. 4.1 We have considered the impugned order along with the appeals filed by both appellant and revenue and the submissions made during the course of argument and in written submissions filed. 4.2 Issues for consideration can be grouped in two categories as follows: I. Demand of Service Tax on services provided by the appellants in category of- i. Franchisee Service; ii. Management Consultancy Services; iii. Commercial Coaching and Training Services; iv. Management Maintenance & Repair Service; & v. Manpower Recruitment or Supply Services. II Demand of CENVAT Credit disallowed for non production of documents. 4.3 Demand of Service Tax on services provided by the appellants in category of- 4.3.1 Franchisee Service- a. As per the order of Commi....
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....ons. They interacted with the customers clearly representing that certification would be by TCS. However, they were not "agents" of the noticee and were not working for any commission. Instead they were paying fees to TCS in return of the right granted to them. Thus the first clause of the definition is satisfied. v. However, there is nothing on record to show that TCS provided the concepts of business operation to the service receivers. There is nothing to show that they provided any know how, method of operation, managerial expertise, marketing technique or training or standards of quality control to them. Thus, the agreement doesn't pass test of second clause. vi. It has been rightly noted in the show cause notice that in order to be recognized as a 'franchise' for the period prior to 16/06/2005, the agreement must fulfill all the four conditions. Since the agreement doesn't meet terms of second clause, it cannot be termed as Franchise. Consequently the, the demand for the period upto 15.06.2005 is dropped. vii. For the period from 16/06/2005 onwards, the clause (ii) to (iv) were absent in the definition and only the first clause was retained. It has a....
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.... the franchisee would get an impression as if he were dealing with the franchisor." e. Similarly in case of Global Transgene Ltd [2013 (32) TR 86 (T-Mumbai)] Tribunal has held as follows: "5.2 From the above, it will follow that before the amendment w.e.f. 16-5-2005 and thereafter the foremost, and key pre-requisite to qualify as taxable service is that the franchisee should have been 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, service mark, trade name or logo or any such symbol, as the case may be, is involved. Board, vide Circular No. 5918/2003-S.T. and Circular No. B1/6/2005-TRU, has recognized this aspect. 5.3 Undisputedly, the appellants have imported the Technology which is owned by BTC and patented in China. The said technology is imported in the form of the mother seeds and the same are multiplied in the laboratory by or on behalf of the appellants and given to the sub-licencee to further multiply for onward sale by them to the farmers for the purpose of growing commercial crop. The appellants are not granted any 'representational righ....
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.... similar areas of management.]' with effect from 01.05.2006 b. As per the Agreement dated 15th January 2005, "HAIL has entered into contracts with its customer Tata Consultancy Services Ltd ("Customer") for the supply of smart card based physical access control solution, access controller/ readers and associated software ("Products") to the Customer ("Contract") and require the services of the Contractor to provide project management services including but not limited to on site job coordination, delivery and job execution scheduling, technical support on design of the solution and installation of the Products and related services thereto." c. As per the Annexure-II PO No 38187 dated 18/07/2005, (Purchase Order of Honeywell Automation India Ltd) following is scope of work assigned to appellant: 1. Technical Support and consultancy on design of smart card. 2. Project Management, Scheduling and Delivery Coordination. 3. On site job coordination for front availability and implementation infrastructure. 4. Develop customized interface software between Honeywell EBI and Ultimatix 5. User acceptance test support to HAIL on solut....
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....t consultant" as understood in the above statutory definition. In view of the test laid down therein the present case will fall within the category of Management Consultancy Services. f. The test laid down in case at 'ii' is as follows: "7. The above definition makes it clear that what is envisaged from a consultant is advisory service and not the actual performance of the management function. In the present case, the appellant was in-charge of the operation of the factory and thus was performing the management function." This case lays down the test that Management itself cannot be management consultant. Since that's not the issue in dispute in present case we do not find that this decision is applicable. g. The issue in consideration in decision at 'iii' was in relation to Consulting Engineer Services and not Management Consultancy Service. Hence that decision to is distinguishable. 4.3.3 Commercial Coaching and Training Services: a. Commercial Training or Coaching as per Section 65(26) of Finance Act, 1994 means any training or coaching provided by a commercial training or coaching centre. As per Section 65(27) ibid, Commercial Training or Coaching Cen....
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....n the definition of taxable service and has been provided for a commercial consideration. d. Since we find that in view of the specific finding that training in the software developed has been provided by the appellant for a commercial consideration the same is covered by the definition of Commercial Training and Coaching Services and is taxable accordingly. Thus we uphold the demand confirmed by the Commissioner against this service. 4.3.4 Management Maintenance & Repair Service: a. Demand in respect of service provided by the appellants in respect of annual maintenance contracts of softwares, under taxable category "Management Maintenance and Repair Services" has been dropped by the Commissioner on the ground of limitation holding that extended period of limitation shall not be available. Revenue has challenged the said order referring to certain circulars dated 7.10.2005 and 7.03.2006, and amendments made subsequently. We are not impressed by any of such submissions. Commissioner has relied upon the letter dated 14.06.2005, which was issued specifically to the appellants stating that services provided by them are not taxable under this category. Revenue has sought to br....
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....ly of manpower, temporarily or otherwise, to a client. The term 'commercial concern' was substituted by the term 'any person' with effect from 1-5-2006. 'Taxable service' means any service provided or to be provided to a client, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner'. The expression 'in relation to' has wide connotation. In Doypack Systems (P) Ltd. v. UOI, 1988 (36) E.L.T. 201 (S.C.), the Apex Court have ruled that, 'in relation to, would mean 'pertaining to'. Thus, the service of supply of manpower will fall under this service. The scope of this service is found explained in paragraph 22 of Service tax Instructions F. No. B1/6/2005-TRU, dated 27-7-2005. Paragraph 22.2 is extracted below for ready reference. "A large number of business or industrial organizations engage the services of commercial concerns for temporary supply of manpower which is engaged for a specified period or for completion of particular projects or tasks. Services rendered by commercial concerns for supply of such manpower to clients would be covered within the purview of service tax." ....
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....CENVAT Credit has been sought to be disallowed for the reason of non production of documents. Appellants claim that they are in possession of the documents and can produce the same before the adjudicating authority. In our view the end of justice will be met if the matter is remanded back to the adjudicating authority for affording the opportunity to appellants to produce the documents as prescribed by Rule 9 of CENVAT Credit Rules, 2004 for purpose of availment of credit. Commissioner should consider the documents produced by the appellants before him and then decide with regards the admissibility of CENVAT Credit against those documents. 4.5 Since the matter is being remanded back to Commissioner on various issues as discussed above, Commissioner should in remand proceedings also quantify the penalty to be imposed depending on his findings in remand proceedings and demand upheld by us in these appeals. 4.6 Thus we summarize the outcome of discussions as follows: I. Demand of Service Tax on services provided by the appellants in category of- i. Franchisee Service: Demand is not maintainable on merits ii. Management Consultancy Services: Demand upheld ....