TaxTMI 
TaxTMI 
2008 (12) TMI 57
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....furniture, interiors, menu cards, napkins, cutlery etc and all these are as decided by Nirulas. As per the agreement, the items which can be sold by the restaurant, the method of preparation of the said items, the quality of the product to be sold, the quantity to be sold in individual portions and the prices at which they are to be sold and the life period of any items to be sold are decided by Nirulas. If any item is held to be unfit for consumption as per the standards laid down by Nirulas, the same has to be destroyed and the loss has to be borne by Sagar. (b) For enforcing all these conditions arising out of the agreement, Nirulas have placed their own employees in the cadre of restaurants advisor, manager and other skilled staff in the premises of Sagar and the salary and other allowances for these officers and staff of Nirulas, are to be reimbursed to Nirulas by the Sagar. (c) For having allowed the use of their brand name, good will and reputation, the expertise, Nirulas are getting one time payment of a sum of Rs.3 lakhs as technical assistance fee, and in addition 8 = % of gross sale amount on a monthly basis. (d) The Commissioner, relying....
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.... Nirulas has been described as that management consultant and advisor. 6.1. We have carefully considered the statement of both sides. The definition of management consultant under section 65 (65) of the Finance Act reads as follows. "65(65) " management consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualising, devising, development, modification, rectification or up gradation of any working system of any organization" 6.2. The definition of franchise service, introduced with effect from 1.7.03, under section 65 (47) reads as follows: 65(47) "franchise" means an agreement by which - (i) 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; (ii) the franchisor provides concepts of business operation to franchisee, including kno....
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....t of such information and representation from the Restaurant Advisor / Manager or First Party, if any, shall decide whether such instructions issued by the restaurant Advisor/ Manager are in the interest of better functioning of the restaurant or not, and which decision shall be binding on both the First party and restaurant Advisor / Manager. The Second Party shall not be responsible for any act of omission or commission of the staff working at the First Partys restaurant. The First Party shall reimburse the expenses of the Second Party for the Restaurant Advisor / Manager / skilled staff as clarified vide para 4.2." "4.2 The First Party further agrees to pay every month a sum determined by the Second Party depending on the number of persons appointed, as a compensation for the service of the Restaurant Advisor/ Manager /Skilled Staff appointed by the Second Party as mentioned in Para 1.10 of this agreement ..............." "5.7 The First Party shall within 15 days of signing the agreement execute and deliver to the Management Consultants and Technical Advisors the appropriation instruments containing full and correct description of the property and access thereto." "5.8....
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....d Party or the agent into bad repute. 8.1 A reading of the above clauses of the agreement would suggest that the role of the appellant is much beyond the scope of management consultant. M/s Sagar is required to build on the site a Restaurant as per specifications of the appellant. The appellant is required to manage, sale and supervise preparation of items in accordance with the policies of Second Party ( i.e. the appellant). We also find that the appellants had placed their man power for supervising and operating the restaurant and to ensure that the various conditions in the agreement are fulfilled. Any violation to fulfil the conditions envisages unilateral revocation of the agreement by Nirulas. It would be farfetched to consider a prominent role for implementation to the consultant and that too with power to impose penal consequences for not following his advice on the person to whom the advice is rendered. In other words, the consultants are not empowered to impose their advice. This type of arrangement, in our opinion, cannot be considered as relating to a consultant and the person who consults. 8.2. The definition of management consultant makes it clear that what is e....