Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2019 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 830 - CESTAT CHANDIGARHClassification of services - Franchise Service or not - sharing of profit - Management fee and Warranty fee - Revenue entertained a view that the Management fee and Warranty fee are chargeable to service tax under the category of ‘Franchise Service’ - HELD THAT:- In this case the franchise is providing infrastructure for refurbished the car and also provide facility to the employees and franchise also making efforts to marketing to MTV cars on the basis of market support and guidance provided by the appellant. The appellant only provide guideline how to ascertain the value of car and how to refurbish the car and after the sale of car, the appellant share the profit with the licensee 25% and 75% respectively. As the agreement between the appellant and the licensee/dealer is in nature of share of profit in the ratio of 25% and 75% and in cases where there is a loss, the appellant does not received any amount towards the activity, in that circumstances, we categorically held that the agreement between the appellant and the dealer is in nature of joint venture for which no service tax is payable by the appellant. Warranty service - HELD THAT:- The appellant has undertaken to provide warranty service to the customers and receiving the payment through dealers for warranty during the period of warranty. It is like an assurance given by the appellant to the customers that during the period of warranty, if any, defect arises the same will be make good without any fees - The said activity cannot be termed as ‘Franchise Service’ and same is not liable to pay service tax under ‘Franchise Service’. The management service and warranty fee recovered by the appellant from the dealers is not taxable under the category of ‘Franchise Service’ - demand set aside - penalty also set aside. Appeal allowed - decided in favor of appellant.
|