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2013 (12) TMI 1217 - AT - Service TaxDemand of service tax - Penalty u/s 76, 77 & 78 - Franchise services - Held that:- distributors are appointed by the Company for buying the goods from them and selling the same to the home consumers or to sell the same to the dealers who may be further appointed by them. As such, in the process, they act as independent contractors and does not have any relationship with the appellants brand name. They simply procure the goods from the appellants and further sell the same on commission basis. There is no representational right to their distributors to sell the goods in the market. And as such, at this prima facie stage, it can be safely concluded that the appellants cannot be held providing promotional services to the said distributors. Distribution agreement was examined by DGCEI in the year 2005. It is not the Revenue’s case that the agreement examined by Audit and by DGCEI were different. The DGCEI authorities having examined the distribution agreement and on being satisfied did not proceed ahead in the year 2005. As such, the issuance of show cause notice in 2009 invoking the longer period of limitation cannot be said to be a valid show cause notice. As such, we are of the view that the appellants have a good case on limitation also. Apart from the above, the appellants have deposited a part amount - By treating the same as sufficient for the purpose of Section 35, we dispense with the condition of pre-deposit of balance amount of duties and penalties imposed upon the applicant-appellant - Stay granted.
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