AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 546
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....RTC). The transport undertaking of the Government of Maharashtra entrusted their 'parcel, luggage, newspaper, courier and allied services', facilitated to the public through the parcel booking offices at bus stations to be carried on roofs of buses, to the appellant as successful bidder of tender process which, in turn, was assigned to M/s Shri Sai Transport and Courier Pvt Ltd for consideration of Rs. 16,47,44,850 during the period of dispute. The original authority held that the appellant had granted 'representational rights', inherent in the contract so awarded, to the de facto operator and the amount received thereon was liable to tax under section 65 (105)(zze) of Finance Act, 1994 with the appellant as 'franchisor' and to M/s Shri Sai Transport and Courier Pvt Ltd as 'franchisee' within the meaning of section 65(48) of Finance Act, 1994. The determination that the contractual agreements among the three parties aggregated as 'franchise' was founded upon the terms and conditions of the arrangement and the presence of the marks, associated with the transport corporation and with the appellant, in the invoices issued by M/s Shri Sai Transport & Courier Pvt Ltd. 2. A proposition ....
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....ransport Corporation (GSRTC) from M/s Shri Sai Marketing & Trading Co for similar activity, and advising that 'support services of business or commerce' as the appropriate entry in section 65 (105) of Finance Act, 1994 to be invoked, which was relied upon by the Tribunal in Commissioner of Service Tax, Ahmedabad v. Gujarat State Road Transport Corporation [2014 (33) STR 283 (Tri-Ahmd)], he contended that the notice for recovery was faulty. 5. Learned Authorised Representative elaborated upon the ingredients in section 65(47) of Finance Act, 1994 after 16th June 2005 that, taken together, altered the approach to the levy by eliminating some of the hitherto restrictive determinants of 'franchise' and, according to him, the amended version intended the expression 'identified with franchisor' to qualify each of the foregoing activities. The principle expounded on this aspect of statutory interpretation by the Hon'ble Supreme Court, in Union of India v. Ind-Swift Laboratories Ltd [2011-TIOL-21-SC-CX], thus '17. ................ The issue is as to whether the aforesaid word "OR" appearing in Rule 14, twice, could be read as "AND" by way of reading it down as has been done by the High ....
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....essly, the keys for evaluating taxability as 'representational right' and 'identified with the franchisor'; to deprive the activities other than 'undertake any process' from being qualified by the latter of the two would reduce the definition to consequence that was not intended in re Delhi International Airport P Ltd. 7. Franchise is a business model that affords access to market by riding on the back of a product or offering that is well-entrenched in the minds of consumers and for which the franchisor is entitled to recompense from the franchisee. Many national jurisdictions have special laws for governing such commercial engagement but we do not and remedies are enforceable only within the generality of Indian Contract Act, 1872. The expression is evocative of congruity of intent between two parties with stipulations that obligate, along with indebtment of, the beneficiary in exchange for specific offering from the benefactor. The range of contract is, thus, too vast for encapsulation within the confines of a statutory definition. The initial foray, effective from 1st July 2003, by incorporation of section 65(47) of Finance Act, 1994 subjected the consideration in transactions....
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....posed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the Official Gazette and also in such other manner as the State Government may direct." in section 68C of Motor Vehicles Act, 1939. Later versions of the law retained this empowerment and every state of the Union has actively pursued this objective. 10. The ubiquitous 'state transport corporations' are integral to the transport sector in India with nationalized bus routes acquiring a firm grip on the road network. Among the several operators offering transport of passengers and goods across the length and breadth of the country, nationalized operations, through the agency of 'transport corporations' - unified or disaggregated - are numero uno. Though catering primarily to passengers, the roofs of 'state transport buses' piled with luggage and goods portrays our Indian way of life almost as much as our attire and spicy curries do. Not only does this serve a practical requirement, but they also represent an activity, with concomitant assurances, that resonates with the teeming millions that make for t....
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....'13. The aforesaid two decisions (Sultan Bros. and Byrom) afford no possible guidance to resolution of the issue whether the transactions involved in the present appeals fall within the taxable - "franchise service". It cannot be gainfully contended by the assessee that provision of buildings and infrastructure and footing of the expenditure therefore by the other parties to the agreements are the foundational premises of the enterprise nor does the contention commend acceptance that these are the essential integers of the enterprise. The dominant component of the enterprise is the provision by the assessee of the four ingredients of "franchise" service as per the definition upto 15-6-2005 and the ingredients of the definition subsequent thereto; namely granting of a representational right to provide service or undertake any process identified with the assessee. The fact that buildings and infrastructure are requisite for the pursuit of the enterprise would not derogate from the fact that without the transfer of the expertise; know-how; operational methodology; brand name and other incidents of the assessee's experience in the field, the enterprise would not have fructified. Fertil....