TMI Blog2017 (9) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... ent all the four ingredients of the definition of Franchise are fulfilled accordingly the service was classified as franchise service. There was no doubt regarding the classification of service as franchise service therefore there was no reason to interpret differently by the appellant - penalty upheld - appeal dismissed - decided against appellant. - ST/323/11 - A/89219/17/STB - Dated:- 21-8-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri R. S. Samria, C.A. for appellant Shri B.Kumar Iyer, Supdt. (A.R) for respondent ORDER Per : Ramesh Nair The fact of the case is that the appellant are engaged in providing franchise service which is taxable w.e.f. 1.7.2003. They were not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 76,77 78 were also wrongly imposed as there is no malafide intention on the part of the appellant. He placed reliance on the following judgment: (i) Chief Commissioner of Income-Tax Vs. St. Peter's Educational Society [2016] 385 ITR 66 (SC) (ii) Delhi Public School Society Vs. Commr. of Service Tax, New Delhi - 2013 (32) STR 179 (Tri.-Del.) 3. Shri B. Kumar Iyer, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that both the lower authorities have given a detailed finding explaining that the service of the appellant it clearly covered under the franchise service as provided under Section 65(47) of the Finance Act. He further submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to education under the trademark of the appellant therefore the clause (i) is clearly exist. As per sub-clause (ii) the franchisor provides the concepts of business operation with the franchisee, including know-how method of operation etc. In the facts of the present case the appellant have indeed provided the know-how and method of teaching technique to the franchise. However the ownership of know-how under the brand name of Podar Jumbo Kids was not passed on to the franchise accordingly the sub-clause (ii) also stands complied with. As per clause(iii) the franchisee is required to pay with the franchisor fee which is not under the dispute as in the present case the franchise has paid the fees to the franchisor on which the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the definition of franchise in Section 65(47)], the services provided by the petitioner satisfy the ingredients of franchise as defined. As earlier adverted to, franchise is defined during the period (1-7-2003 to 15-6-2005) as comprising four ingredients : (a) The franchisor granting representational to the franchisee to provide service or undertake any process identified with the franchisor; (b) The franchisor providing concepts of business operation to the franchise including know-how, method of operation, managerial expertise, marketing techniques or training and standard of quality control except passing on ownership of the know-how, to the franchisee; (c) The franchisee having to pay a fee to the franchisor, dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the motto and the logo of the assessee, the holder of the brand associated therewith. Further the assessee provides its established concepts of imparting education; its managerial expertise and operational techniques and standards of imparting education to the other party to the agreements. On this view of the matter the first and second ingredients of franchise are also fulfilled. The fourth ingredient enjoins that the franchisee should be under an obligation not to engage in providing services or processes, identified with any other person. This ingredient indicates that the other party to the agreements should be obligated not to establish or administer an English Medium School identified with any other person. In clause 8(h) [of the rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the above conclusion drawn by the Tribunal it was rather held that as per the agreement all the four ingredients of the definition of Franchise are fulfilled accordingly the service was classified as franchise service. As per above discussion, we hold that the appellant service is correctly classifiable as franchise service which is liable for service tax. We accordingly uphold the demand of service tax. As regard penalties imposed under Section 76, 77 78 of the Finance Act, we find as per the nature of service there was no doubt regarding the classification of service as franchise service therefore there was no reason to interpret differently by the appellant. Accordingly, the penalty imposed by the lower authority is also in orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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