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2021 (9) TMI 546 - AT - Service TaxDemand of tax liability - Levy of penalty and interest - non-payment of service tax - Franchise service - grant of ‘representational rights’, inherent in the contract so awarded, to the de facto operator - period between October 2006 and March 2010 - extended period of limitation - HELD THAT:- Franchise is a business model that affords access to market by riding on the back of a product or offering that is well-entrenched in the minds of consumers and for which the franchisor is entitled to recompense from the franchisee. Many national jurisdictions have special laws for governing such commercial engagement but we do not and remedies are enforceable only within the generality of Indian Contract Act, 1872. The expression is evocative of congruity of intent between two parties with stipulations that obligate, along with indebtment of, the beneficiary in exchange for specific offering from the benefactor. The range of contract is, thus, too vast for encapsulation within the confines of a statutory definition. It is the contents of the agreement that unveil the ‘franchisor-franchisee’ engagement by the congruity of intent to assign ‘representational rights’ of product, service or process by one to the other. The relationship intended by the agreement between the appellant and M/s Shri Sai Transport and Courier Pvt Ltd must find fitment within the framework of the definition for establishing that franchise was intended - brief overview of bus services in India would not be out of place as, unlike goods transport, ‘stage carriage’ of passengers was of sufficient import to ‘public policy’ even before representational governance was made fully operational and, in the infancy of the Republic, a national enactment, viz,. The Road Transport Corporations Act, 1950, enabled the federating states to participate in servicing of the travelling public. Chapter IV-A, comprising section 68-A to section 68-J was engrafted in 1956 in the Motor Vehicles Act, 1939 to further empower state governments to nationalize bus routes. The offering of M/s Shri Sai Transport and Courier Pvt Ltd to its customers are the services associated with Maharashtra State Road Transport Corporation to which they obtain rights by their agreement with the appellant who are delegates of the Corporation. The transport is effected by Maharashtra State Road Transport Corporation and it is that service which the appellant has enabled M/s Shri Sai Transport and Courier Pvt Ltd to offer to users. This ‘representational right’ is intended to be taxed by the ‘taxable service’ and the consideration thereof is liable to tax. The decision in COMMISSIONER OF SERVICE TAX, AHMEDABAD. VERSUS M/S. GUJARAT STATE ROAD TRANSPORT CORPORATION. [2012 (12) TMI 673 - CESTAT, AHMEDABAD] that was based upon the clarification issued by Central Board of Excise & Customs is of no relevance to the present dispute which does not pertain to tax leviable on the State Road Transport Corporation. Extended period of limitation - HELD THAT:- Neither does the claim for discard of extended period; as the ‘taxable service’, incorporating essential elements of the service, did not offer an alternative even if subsequent introspection may have suggested otherwise. Mere correspondence does not evince absence of suppression or misrepresentation. Consequently, the plea for limiting the demand to the normal period lacks support. Appeal dismissed.
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