TaxTMI 
TaxTMI 
2020 (12) TMI 637
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....cense the software, third party database and third-party software to 'end user' in the territory, on 'reverse charge basis' under the taxable head "Franchise Services" from 18.04.2006 onwards. 2. The services received are classified by Revenue as "Franchisee service" in the impugned orders, and the demand is for the period April 2006 to March, 2008 and is quantified at Rs. 79,07,67,027/-. Apart from this demand, there is interest and also penalty imposed vide the impugned orders. Show Cause Notice dated Service Tax Appeal No. Period Tax demanded (Rs.) Penalty (Rs.) 16.01.2007 564 of 2012 01.07.2003 to 31.03.2006 Nil (as rule 66A was enacted w.e.f. 18.04.2006) 23.10.2008 1509 of 2012 April,....
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....dation of the software, that is being done by SAP, Germany which is being passed on to the licensees (end users) as per the agreement at the time of licensing, for which they continue to make payment as per the agreement. He argues that this activity amounts to 'licensing of copyrights' and it cannot be brought under the definition of 'franchisee service', and therefore, the demand made is not sustainable. 5. The Counsel for the appellant submits that the said activity became taxable with effect from 16.05.2008 under the head 'Information Technology Software Service' (ITSS), and the appellant has been paying service tax under this head from the said date. He also points out that the classification of the service received by the appellant....
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....ment by which the 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, service mark, trade name or logo or any such symbol, as the case may be, is involved; 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 terms "franchisee" shall be construed accordingly; Section 65(105)(zze) : "Taxable service" means any service provided or to be provided to a franchisee, by the franchisor in relation to franchise; 7. According to the Counsel, the appella....
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....ct of such services. According to him payments are made to SAP AG, Germany only under three articles of the agreement which are the following: (i) Under Article 6.1. this payment is for license fees for the software developed by SAP AG, Germany and third party databases and third party software which their principal is authorised to license to other end users. (ii) Under Article 6.2. This is for support services for software which is essentially for upgradations in the software and also for fixing technical difficulties encountered while using the software. (iii) Under Article 3.7.2. This payment is on account of use of SAP software and third party software by appellants themselves, that is for the copies licensed for use by the ap....
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....6.2 and 3.7.2 of the agreement between them, noticed hereinabove which is payment towards license fee for use of software by the client in India for the software developed by SAP, Germany and 3rd party database / software and also towards support services for software which is essentially for upgradation of the software and for fixing technical difficulties encountered while using the software. Amount paid under Article 3.7.2 is for use of SAP software by appellant itself to SAP, Germany. We find that the services squarely covered in the forecorners of the definition of Information Technology Software Service as defined under Section 65(105)(zzzze) of the Finance Act, 1994, which was brought on statute w.e.f. 16.05.2008. 10.1 We further ....