TaxTMI 
TaxTMI 
2023 (11) TMI 171
X X X X Extracts X X X X
X X X X Extracts X X X X
.... manufacturing and distribution of footwear and have entered into separate agreements dated 31.03.2003 with M/s Liberty Shoes Ltd. for transfer of their business of the respective manufacturing units; accordingly, they have received payments from M/s Liberty Shoes Ltd. and have paid service under the category of "Intellectual Property Service" up to 15.06.2005. For the period after 15.06.2005, they started paying service tax under the category of "Franchise Service". Department entertained a view that both the appellants are required to pay service tax under the Head "Franchise Service" even before 15.06.2005, as they fulfilled all the criteria required to be so categorized. Two separate show-cause notices both dated 21.04.2010 were issued ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isfied. After the amendment in the definition of "Franchise" w.e.f. 16.05.2005, they have been discharging duty under Franchise Service. He submits that Circular No.59/08/2003 dated 20.06.2003 issued by CBEC clarified that unless all the ingredients are satisfied, the agreement cannot be said to be a Franchise Agreement. The appellants' agreement did not satisfy the condition no. (iv) that the franchisee is under an obligation not to engage in selling or providing similar goods or services or processes, identified with any other person was not satisfied. He submits that the Department relies heavily on Clause 7(j) of the Agreement to come to a conclusion that they fulfilled condition no. (iv); however, it is clear from the Clause that the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lies on the following: • Standard Grease & Specialities Pvt. Ltd. - 2014 (303) ELT 434 (Tri.) • Commissioner Vs Tarapur Grease India Pvt. Ltd.- 2016 (334) ELT 416 (Bom.) • Standard Drum & Barrel Mfg. Co. - 2017 (&) TMI 392- CESTAT Mumbai • Sanvijay Rolling & Engineering Ltd. - 2018 (11) GSTL 344 (Bom.) 5. Shri Nikhil Kumar Singh, assisted by Ms. Shivani, learned Authorized Representatives for the Department, reiterates the findings of the OIO and OIA highlighting various clauses in the argument to show that the agreement is a Franchise Agreement. He submits that condition No. (iv) in the definition of Franchise, as it existed before 16.05.2005, is satisfied by the Clause 7(j) of the Agr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to operate or trade at the Premises nor without such approval to extend the scope or range of the Business at the Premises and if the LE approves any such sharing or extension to procure that the gross sales of the same shall be subject to this Agreement and to pay the Continuing Fees." 8. We find that the agreement itself is settled agreement for transfer of business on franchise basis. We find on going through the various clauses of the agreement are in the nature of Franchise Agreement. The agreement includes conditions for following the concept of business operation, manufacture or technical specifications, marketing etc. in addition to the restriction on selling, producing or providing similar goods or services identified with any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nchisor. 58. A representational right would mean that a right is available with the franchisee to represent the franchisor. When the Franchisee represents the franchisor, for all practical purposes, the franchisee loses its individual identity and would be known by the identity of the franchisor. The individual identity of the franchisee is subsumed in the identity of the franchisor. In the case of a franchise, anyone dealing with the franchisee would get an impression as if he were dealing with the franchisor". We feel that above decisions squarely covers the situation as present in the case at hand and we feel that the services received by the appellant are correctly classifiable under 'Franchise service'. Thus we don't ....