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2014 (11) TMI 709 - AT - Service TaxFranchisee service - Whether it can be said that appellants have been granted representational right to the franchisor or not - Held that:- If prior to 16.05.2008, the service was correctly classifiable under franchise service and broader category was brought into the statute subsequently it does not mean that for the earlier period it could not have been classified under franchise service. Hence in our opinion appellants have to be put to some terms because we find that appellants do not have prima facie case on consideration of the agreements, the definition in the statute and the consideration of submissions made by both the sides. We have not considered it necessary to go into the technical literature regarding franchise and licensing which was also presented by both the sides and both the sides claimed support from such literature. Basically the source was USA where the matter has a long history whereas in India this concepts have been coming up in recent times only especially after service tax was introduced. Therefore without considering these aspects also in our opinion if we consider the statute and the agreements, at this stage it would be sufficient and the conclusion is that appellants do not have a strong prima facie case. Business Auxiliary service - Appellants are not providing any services on behalf of Oracle. Appellants have paid VAT on consideration received towards product/software updates as it amounts to sale of software and after 16.05.2008 they have been paying the tax. Information Technology Services were excluded from the scope of Business Auxiliary Service right from the date of introduction of Business Auxiliary Service as taxable on 01.07.2003. This exclusion lasted till 16.05.2008 when the new taxable service ITSS was introduced. It was also submitted that the scope of Information Technology Service excluded from the levy of service tax under Business Auxiliary Service was very wide and covered all services relating to design or development of computer software, computerized data processing or system networking or any other service preliminarily in relation to operation of computer system. Prima facie we find force in this argument. Therefore in respect of this service, we consider that appellant has made out a prima facie case for waiver. Management Consultancy services - reverse charge - in the impugned order that professional consultancy charges are liable to tax under Management Consultancy Services. It was submitted by the appellant that the appellants have not made any payments towards shared support charges payable to Oracle. On this count the demand for ₹ 60,99,236/- has been submitted as not payable. It was also submitted that the centres are engaged in the actual execution of the work and are not providing advice or consultancy to the appellant. The appellants relied upon Hewlett Packard India Sales Pvt. Ltd. V. CCE & ST, Bangalore LTU [2014 (11) TMI 658 - CESTAT BANGALORE]. It was also submitted that such services even though they are liable would be covered under Business Auxiliary Service or Business Support Service. It was also submitted that computation of demand is erroneous. Further submission was also made that no reason has been given to justify classification of the services under this heading. We find that these submissions would result in conclusion that appellants have made out a prima facie case in their favour. If the appellants deposit 50% of the demand within the normal period in respect of Franchise Service along with proportionate interest payable till the date of payment, the same would be sufficient for the purpose of hearing the appeal. The total demand within the normal period in respect of Franchise Service as quantified by the appellants to be ₹ 34,87,23,385/- is accepted and the demand of 50% has to be calculated on this basis and proportionate interest also has to be paid on the said amount. - Decided partly in favour of assessee.
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