TMI Blog2006 (11) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... rent categories, namely-(a) commercial training and coaching services and (b) franchise services. The notification only exempts services provided as commercial training and coaching. The ld Advocate's argument that the expression in relation to appearing in the notification is of wide connotation and would include the franchisees services also, cannot be accepted. Even if the said expression in relation to is held to be of wide sphere, the same has to be extended only in relation to the commercial training or coaching being given by the institute. It cannot be extended and stretched to such an extension, so as to hold that any service by training institute would get exempted even though it may be in a different field. The service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orising these parties to use their name for the operation of the centres. With effect from July 1, 2003 service tax was levied in respect of commercial training or coaching services as well as franchise services. However, the commercial training or coaching by a vocational training institute or computer training institute was exempted from payment of whole of service tax vide Notification No. 9/ 2003-ST dated June 20, 2003, as amended by Notification No. 1/2004-ST dated February 4, 2004. The dispute in the present appeal does not relate to the services being provided by the appellant in their own centres as computer training or coaching services. Inasmuch as, the appellant has entered into franchise agreement with other independent parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 lakhs was imposed under section 78 and of ₹ 500 under section 75A of the Act, and penalty of ₹ 2,000 for non-filing of returns under section 77 of the Act. Appeal against the above, did not succeed before Commissioner (Appeals). Hence the present appeal. We have heard Shri V.S. Nankani, learned Advocate appearing for the appellant and Shri P.K. Katiyar, learned SDR appearing for the Revenue. The statutory definition of franchise as appearing in section 65(47) of the Finance Act, 1994 defines franchise as follows: 65(47) 'franchise' means an agreement by which- (i) franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly provides that- Franchisee shall not conduct any other business from the said premises and shall remain an exclusive of the franchisee of the franchisor . The second line of the above clause clearly puts the restraint on the franchisee to enter into any other franchisee agreement, when it says that franchisee shall remain an exclusive franchisee of the franchisor. As such, it is clear that the franchisee is under an obligation not to provide identical services or to enter into franchise with any other person. The taxable service stands defined in section 65(105)(zze) of the Finance Act, as any service provided to a franchisee, by the franchisor in relation to franchise . The franchisor develops the brand name, concept of followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chise as provided under section 65(47) of the Act, and the appellant is liable to pay service tax on the said services. The appellants have also claimed the benefit of Notification No. 9/03-ST dated June 20, 2003, which exempts taxable services provided in relation to commercial training or coaching by a vocational training institute, computer training institute or a recreational training institute, to any person from the whole of the service tax leviable thereon under sub-section (2) of section 66 of the said Act. Reading of the above notification clearly leads to the conclusion that the exemption provided is in respect of services relating to commercial training or coaching. As rightly held by the Commissioner (Appeals) appellant is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the benefit of the said notification is also not to be available to the appellant. In view of the foregoing, we hold that the appellant was liable to pay service tax on the franchise services. However, we agree with the learned Advocate that for the purpose of calculation of duty, consideration received by the appellant before July 1, 2003, when franchisee was brought under the service tax net should not be taken into consideration in full and the same should be taken on pro-rata basis for the period after July 1, 2003. For the said purposes, we remand the matter to the original adjudicating authority for recalculation of service tax. He would also consider the appellants plea of penalty under various sections, depending upon the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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