TMI Blog2016 (2) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to the overseas franchisee is 35.5% is the royalty fees is paid to the producer. Therefore, prima facie, we do not find any merit in the appellant's claim that they have already paid service tax on the consideration received from other distributors and only remitted the amount after the payment of service tax. The appellants are registered under training and coaching service in India for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the appellant had remitted an amount of ₹ 1,68,23,658/- towards franchisee and royalty fee to their US based franchiser M/s. Crest Com International Ltd. USA. The adjudicating authority confirmed the service tax demand of ₹ 20,84,270/- along with interest and imposed equivalent penalty under section 78 and also imposed penalty under section 77 of the Finance Act, 1994. On a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax on the total amount received as a consideration and only thereafter the amount was remitted to the overseas franchiser. He drew attention to Commissioner (Appeals) order at para 5.4 and submits that the Commissioner (Appeals) has rejected their contention only on the ground that no documentary evidence was produced to substantiate their claim. He also submits that even otherwise it is rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... franchisee service. 5. After hearing both sides and on perusal of the agreement dated 6.10.2001, we find that as per clause 6 of the agreement, compensation that is consideration between producer and master distributor shall be entitled to share the compensation received in the nature of fees and royalty from the distributors as per Exhibit B. The franchisee fee is paid on the ratio of 40:60 (4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranchisee service which is clearly established as per the agreement. Accordingly, the appellants are liable to pay service tax on the amount remitted to the overseas franchisee as per the agreement. Accordingly, we direct the appellant to predeposit an amount of ₹ 2,00,000/- (Rupees two lakhs only) within a period of eight weeks from today and report compliance on 6.1.2016. Upon such deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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