TMI Blog2017 (6) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... settled law that no service tax is leviable in cases where goods have been sold on payment of VAT/ Sales tax. Consequently, we conclude that no Service Tax is leviable on the amounts received for manuals and certificates. Levy of tax - Royalty Charges - Held that: - such amounts have been charged for transfer of technical know-how on running of Play School by franchisees - service not taxable. There is no justification for levy of service tax on the amounts received by the assessee towards royalty, cost of manuals and certificates as well as advertisement reimbursement charges - the demand of service tax for the entire period from 01.07.2003 till 30.06.2012 is required to be set aside - appeal allowed - decided in favor of appellant. - ST/58724/2013-Cu(DB), ST/53103-53105/2014-CU(DB) - ST/52996-52999-CU(DB)-CU[DB] - Dated:- 23-2-2017 - Shri Ashok Jindal, Member (Judicial) And Shri V. Padmanabhan, Member (Technical) Sh. Sudhir Malhotra, Sh. A.S. Harija, Advocate for the Appellant Sh. Amresh Jain, DR for the Respondent ORDER Per V. Padmanabhan M/s S.K. Education Pvt. Ltd. (assessee) has two units namely Height Institute of Fashion Technology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services or process, identified with any other person. Section 65(48) Franchisor means any person who enters into franchise with a franchisee and includes any associate of franchisor or a person designated by franchisor to enter into franchise on his behalf and the term franchisee shall be constructed accordingly. Section 65(105)(zze) Taxable Service means any service provided to a franchisee, by the franchisor in relation to franchise. The Section 65(47) was substituted vide Finance Act, 2005 with effect from16.06.2005 by which sub-clause (ii) to (iv) were deleted. Prior to 16.06.2005, all the four conditions specified therein were required to be cumulatively satisfied. The CBEC vide Circular no.59/8/2003 dated 20.06.2003 have clarified that unless all the ingredient mention at (i) to (iv) of Section 65(47) are satisfied, the agreement cannot be called franchisee agreement. 7. The Bachpan Unit allowed their brand name Bachpan to be used by the licencee and also provided know-how for functioning of play school. Assessee claimed that the Bachpan Unit did not satisfy the conditions of Section 65(47) prior to and after 16.06.2005, accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder-in-Original dated 31.01.2014 passed by the Commissioner Central Excise, Delhi, it has been held that such amounts are not required to be included and the entire Service Tax demand raised for the periods 01.10.2008 to 30.06.2012 has been dropped. Wherever, Service Tax demands stand upheld, the assessee is in appeal before us and wherever the Service Tax demands have been dropped, the Revenue is in appeal before us. All these appeals are being disposed of by this common order. 10. With the above background, we heard Shri Sudhir Malhotra and Shri Rajeev Gupta, ld. DR for the appellant as well as Shri Amresh Jain, ld. DR for the respondent. 11. As already extracted above, the definition of Franchise Service under Section 65(47) was amended with effect from 16.06.2005. For the period prior to this date four conditions have been specified, which are required to be cumulatively satisfied for levy of Service Tax under Franchise service. The assessee has claimed that the brand name Bachpan is allowed to be utilized by the licensee and also the necessary know-how for functioning of play school is provided to the licencee as per the agreement. The claim of the assessee is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) (Del.) . In view of the above, there is no justification for including reimbursable expenditure in the taxable service tax. 16. Next, we consider the issue of the amounts received by the assessee towards cost of manuals and certificates supplied. The allegation raised is that such costs recovered are to be considered as part of the gross value for charging Service Tax. However, we note that the invoices raised for supply of manual and certificates indicate that the assessee has paid VAT for such sales covering the value of manual and certificates supplied. It is settled law that no service tax is leviable in cases where goods have been sold on payment of VAT/ Sales tax. Consequently, we conclude that no Service Tax is leviable on the amounts received for manuals and certificates. 17. The Revenue has also disputed dropping of demand of Service tax on the Royalty Charges i.e. Royalty recovered by the assessees in respect of Bachpan . Revenue was of the view that service tax will be payable on such consideration which have been received towards allowing the license to use the trade name of Bachpan. However, the assessee has argued that such amounts have been charged for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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