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2015 (11) TMI 228 - CESTAT NEW DELHI

2015 (11) TMI 228 - CESTAT NEW DELHI - TMI - Leviability of service tax - franchise service - Held that:- With effect from 16.6.2005 and that amount has already been paid along with interest and duly appropriated. Indeed we find that while imposing penalty under Section 78 ibid only the amount of service tax leviable for the period prior to 16.6.2005 has been taken into account and no penalty was levied in relation to the amount of service tax leviable with effect from on 16.6.2005. As is eviden .....

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school". Thus in our view condition No. iv of the definition of franchise quoted above is not satisfied in the present case and consequently the agreement does not fall in the category of franchise agreement as defined under Section 65(47) ibid prior to 16.6.2005 - no service tax is leviable under franchise service prior to 16.6.2005 - Impugned order is set aside - Decided in favour of assessee. - ST/Stay/59200/2013 &, ST/58603/2013-CU(DB) - Dated:- 22-9-2015 - G Raghuram, President And R K Sin .....

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ated. It is seen that the penalty imposed in this case was ₹ 3,17,983/- under Section 78 and this amount represented the difference between the total demand of ₹ 6,60,338/- confirmed and ₹ 3,42,355/- deposited and appropriated. The demand was confirmed under franchisee service. 2. The appellant has contended that: (i) it had entered into a franchise agreement with the franchisee in terms of which it gave right to use the name Shemrock to the franchisee for running a pre-prepara .....

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s identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved; (ii) the franchisor provides concepts of business operation to franchisee, including know how, method of operation, managerial expertise, marketing techniques or training and standards of quality control except passing on the ownership of all know how to franchisee; (iii) the franchisee is required to pay to the franchisor, directly or indirectly, a fee .....

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ble during the period prior to 16.6.2005. 3. The ld. DR, on the other hand, stated that under franchise agreement the franchisee was under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person and therefore service tax was leviable even prior to 16.6.2005. 4. We have considered the contentions of both sides. It is seen that there is no dispute about leviability of service tax under franchise service with effect from 16.6.2005 a .....

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5(47) of Finance Act, 1994 was satisfied in terms of the franchise agreement entered into by the appellant. We find that the condition in this regard in the agreement is as under: "In case this franchise agreement is cancelled, the name of the school and children on rolls will be the exclusive rights of the first party and the school will be taken over by the franchisor. The franchisee will not open any school with any name in the existing premises/building operational area of the school fo .....

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