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2016 (10) TMI 958 - AT - Service TaxLevy of tax - Franchise Service - imparting training in graphic animation - obligation not to share the services provided by the appellant with any other person - Held that: - the appellant has provided service to M/s Digital Puppet Animation Studio in regard to right to use of course material in imparting training in graphic animation for indicating computer education in training programme in Graphic Animation and Cinematics as per the agreement, the service recipient as per the agreement the “Franchise” i.e. service recipient is under an obligation not to share the services provided by the appellant with any other person, therefore the condition of the definition of “Franchise” also stand fulfilled. As regards the submission of the appellant that the said condition is not fulfills for the reason that the “Franchise” has liberty to provide the training in graphic animation for indicating computer education on their own. In this case it is clear that course material provided by the appellant is “Franchise” cannot be used for providing services to any other person on their own. The “Franchise” can provide service other than MAAC brand course materials this should not affect to “Franchiser”. Therefore in our considered view the service of the appellant clearly covered under the “Franchise Service”, hence the same is taxable. Imposition of penalty u/s 78 - Held that: - the data of the services value was taken from the Balance Sheet of the appellant which shows that the appellant has no intention to hide the service value. The issue involved is of interpretation of definition of the “Franchise Service”, therefore for this reason also malafide intention cannot be alleged. - the appellant has been able to show the reasonable cause for non-payment of Service Tax in time. - No penalty The appellant’s service is chargeable to Service Tax under the category of “Franchise Service” - However the quantification of Service Tax has been disputed by the appellant therefore the same needs to be examined by the adjudicating authority. The appeal is disposed of by way of remand to the adjudicating authority to reconsider the issue of re-quantification of Service Tax afresh, after following the principles of natural justice.
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