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TMI Blog2016 (10) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14,24,506/- on the "Franchise Service". The "Franchise Service" included in Service Tax net w.e.f. 01.07.2003, as per Section 65(105)(zze) of Chapter V of the Finance Act, 1994. The appellant entered into a business partner agreement with M/s Digital Puppet Animation Studio for providing Computer Education and Training Programmes in Graphic Animation and Cinematics recognizing the benefits to be derived from being associated with MAAC and technical assistance rendered by MAAC' and using MAAC course materials for the purpose, has requested to be associated with MAAC and the right to use MAAC course materials as covered in this agreement for all the MAAC course offerings for the training programme in computers, graphics & animat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of "Franchise Service", "Taxable Services" and "Franchise" has to be satisfied. In the definition of "Franchise" there are four clauses given and fourth clause is the franchisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person. In the present case clause (iv) is not complied in terms of clause no. 3.7.1 of the agreement. The service recipient undertake to conduct similar course other than the courses offered by the appellant under the same category. In view of this position the service does not qualify as "Franchise Service", hence not taxable. Learned Chartered Accountant alternatively submits that quantification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct or otherwise. The demand was raised holding that the service provided by the appellant is "Franchise Service". For this purpose it is necessary to go through the definition of various terms of "Franchise Service" which are reproduced below:- "(a) "Franchise" means an agreement by which- (i) Franchisee is granted representational rights to sell or manufacture foods or to provide service or to undertake any process identified with franchiser, 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 franchiser provides concepts of business operation to franchisee, including know-ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant that the said condition is not fulfills for the reason that the "Franchise" has liberty to provide the training in graphic animation for indicating computer education on their own. In this case it is clear that course material provided by the appellant is "Franchise" cannot be used for providing services to any other person on their own. The "Franchise" can provide service other than MAAC brand course materials this should not affect to "Franchiser". Therefore in our considered view the service of the appellant clearly covered under the "Franchise Service", hence the same is taxable. As regards the quantification of the Service Tax the appellant submitted the following chart:- MAYA ENTERTAINMENT LIMITE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of the "Franchise Service", therefore for this reason also malafide intention cannot be alleged. It is also evident that the appellant has discharged the Service Tax amount of Rs. 7,90,760/- along with interest. Considering this fact, we are of the view that the appellant has been able to show the reasonable cause for non-payment of Service Tax in time. Therefore, we set aside the penalty under Section 78. As per the above discussion, we hold that the appellant's service is chargeable to Service Tax under the category of "Franchise Service". However the quantification of Service Tax has been disputed by the appellant therefore the same needs to be examined by the adjudicating authority. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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