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2020 (8) TMI 79 - AT - Service TaxLevy of service tax - Franchisee Service - Representational right - receiving and distribution of communication signals. - Sharing of 20% revenue to Siti Cable - amendment made in the definition of “franchise” under section 65(47) of the Finance Act with effect from June 16, 2005 - amendment is for the reason that has persuaded the Principal Commissioner to drop the demand of service tax for the period from July 1, 2003 up to June 16, 2005 - extended period of limitation. Whether the service contemplated under the agreements is a “franchise” service as contended by the Department or a service in the nature of “supply of tangible goods for use” w.e.f. May 16, 2008, as contended by Siti Cable? HELD THAT:- Franchise service has been defined under section 65(47) of the Finance Act to mean an agreement by which the franchisee is granted a representational right to provide service or undertake any process identified with the franchisor, whether or not a trademark, service mark, trade name or logo or such symbol, as the case may be, is involved - what is important to note is that the party should be granted a representational right to provide service or undertake any process identified with the franchisor. In other words, if the condition relating to “representational right” is not satisfied, there can be no “franchise” service. “Representational right” means a right that is available with the “franchisee” to represent the “franchisor” and in that case the “franchisee” loses its individual identity and is known only by the identity of the “franchisor”. It is not possible to hold that the service contemplated under the agreement is a “franchise” service. - Demand with interest and penalty set aside.
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