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2018 (3) TMI 709

ted by them in India - Department took the view that the gross amounts collected by the appellant including admission fee, course instructor fee, tuition fee etc. would be eligible for service tax under the category of Franchisee Service under section 65(47) of the Finance Act, 1994. - Held that: - As per the definition, the payment to be made by the franchisee to the franchisor is only for the right to sell or manufacture goods or to provide service or undertake any process identified by the franchisor etc. The payment required to be paid for use of the IMA Mental Arithmetic course have been indicated as 25% of the gross fees collected. - As per section 65(105)(zze), the taxable service is that given to a franchisee by the franchi .....

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wever, in appeal, Commissioner (Appeals) vide order dated 9.12.2009 (impugned order) allowed deduction of the amounts relating to sale of course materials / books to the Indian franchisees by the appellant and remanded the matter to that extent to the original authority for requantification of tax liability. The appellant was also given relief from penal provisions under section 80 of the Finance Act. However, the appellants are aggrieved by the confirmation of tax liability on the remaining amounts and have come in appeal. 2. Today, when the matter came up for hearing ld. counsel Shri G. Natarajan for the appellant submitted as follows:- 2.1 The appellants are not disputing the demand of service tax of ₹ 5,432/- on franchisee fee pai .....

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STR 314 (Tri. Mumbai) which has been admitted by the Hon ble High Court of Bombay as reported in 2009 (13) STR J72 (Bom.). The ld. AR submits that the admission fee, tuition fee and competition fee are very much part of the franchisee service and therefore they should form part of the service tax and would also be leviable on them. 4. Heard both sides. 5. The definition of Franchise and Franchisor as given under Section 65(47) and 65(48) of the Finance Act, 1994 are as follows:- Franchise is granted representational right to sell or manufacture goods or provide service or undertake any process 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 Franchi .....

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the appellant therein were in the nature of franchisee service as defined under section 65(105)(zze) of the Finance Act. There is however no dispute on the nature of the service in this appeal. What is only disputed is which amounts would form part of franchisee service, which aspect we have already discussed in the above paragraphs. As per section 65(105)(zze), the taxable service is that given to a franchisee by the franchisor in relation to franchise . This being so, only those amounts directly relatable to the representational right granted by the franchisor to the franchisee and the royalty/franchisee fee towards that right would alone be part of taxable for the purpose of levy under this category. In view of the above, we find favour .....

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