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2019 (12) TMI 943 - AT - Service TaxClassification of services - Franchisee service or not - Very Small Aperture Terminal Fee (both onetime fee and usage charges) - Board vide Circular No.59/8/2003-ST dated 20.6.03 - suppression of facts - extended period of limitation - HELD THAT:- Nothing in the agreement indicates that the learning Centres have been given a franchise by providing the VSAT at the learning Centres; Nothing is forthcoming from the contracts that appellants gives permission to use their name by providing the VSAT facility. We also find that the appellants are not receiving any royalty towards the alleged franchise. Therefore, it is incorrect to classify the same as ‘Franchise’ service - CBEC circular No.59/8/2003 dated 20-6-2003 clarifies at Para 2.4 that unless the following ingredients are satisfied, the agreement cannot be called as franchise agreement. Nothing related to grant of representational rights present in the instant case and all the ingredients listed above are not present. Therefore, the agreement cannot be termed as ‘franchise’ agreement and hence, Service Tax under that head is not leviable - the coordinate bench of the Tribunal held in the case of IMA Mental Arithmetic Academy Pvt Ltd Vs CST, [2018 (3) TMI 709 - CESTAT CHENNAI] that only those amounts directly relatable to 'representational right' granted by the franchisor to franchisee and royalty/franchise fee towards that right alone be part of taxable value under 'franchise' service; admission fee, tuition fee, competition fee and course instructor fee was not liable for service tax under "franchise service". Supply of tangible goods service - HELD THAT:- As regards VSAT usage fee, as submitted by Senior Counsel, it is in the nature of telecommunication costs apportioned and recovered as reimbursement. Therefore, such charges are not liable to service Tax as held in the case of Indian National Ship Owners Association [2018 (3) TMI 357 - SUPREME COURT]. The impugned order does not survive both on limitation and merits - Appeal allowed - decided in favor of appellant.
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