Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2023 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 171 - CESTAT CHANDIGARHClassification of services - Intellectual Property Service or Franchise Service? - separate agreements with M/s Liberty Shoes Ltd. for transfer of their business of the respective manufacturing units - time limitation. The case of the Department is that various clauses of the agreement leave no doubt that the services received by the appellant are not IPR Services because in addition to the use of intangible property, the transaction under the agreement involves right to sell or manufacture the goods are undertake a process identified with franchisor. HELD THAT:- The agreement itself is settled agreement for transfer of business on franchise basis. We find on going through the various clauses of the agreement are in the nature of Franchise Agreement. The agreement includes conditions for following the concept of business operation, manufacture or technical specifications, marketing etc. in addition to the restriction on selling, producing or providing similar goods or services identified with any other person. The appellants argue that the condition put forth under Clause 7(j) is not absolute as envisaged under condition No.(iv) and it is subject to the written consent of the franchisor. Be it so, the appellants did not submit any proof, whatsoever, to indicate that such permission was sought and given permitting the franchisee to engage him in the business of others or in other goods from the same premises. In the absence of example to the contrary, Clause No.7(j) is akin to the condition laid down under No.(iv). Therefore, there are no hesitation in concluding that the impugned agreement is in the nature of Franchise Agreement wherein the appellants have total control of the business, the process, the product and the premises. Time Limitation - HELD THAT:- It is on record that the appellants have submitted the copies of the agreements to the jurisdictional Central Excise authorities as early as in 2003. They have surrendered their Central Excise registrations and have obtained Service Tax registrations and have discharged the duty under “Intellectual Property Rights”; they have regularly submitted the ST-3 Returns. Therefore, it cannot be alleged that the appellants have suppressed any material fact from the Department with intent to evade payment of duty - there are reasons to believe that the appellants, who have been paying service tax under the Head “Intellectual Property Service”, had a bona fide doubt on the classification of the service. Therefore, the appellants succeed on limitation. The appeals are allowed on limitation.
|