TMI Blog2020 (1) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... retail agents through which the company shall provide such payment collection services may be appointed as the agent of the company. This objective in itself is sufficient for us, when looked into in relation to the definition of franchise service and the meaning of representational right as discussed above, to hold that the agreement is to appoint someone who may undertake to collect the impugned bills payment not absolutely on his own but who undertake to collect the same on behalf of the Appellant. Mere use of word principle to principle basis cannot be read for the impugned arrangement between appellant and his agents to be called as franchise service - Perusal of the terms of the agreement give us a clarity to hold that the payment of ₹ 15000/- is not at all the consideration towards the purchase of Representational Rights by the agent from the Appellant. Contrary thereto the arrangement herein is that payment to be made by the Appellant to the agent per Bill basis. This particular term of agreement is absolutely against the intent of what can be called as franchise service. The adjudicating authority below have committed an error while giving interpretation to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,00,040/- 50562/2017 116/2016-17 31.10.2016 3. 1689-1693 23.08.2011 01.04.2010 to 31.03.2011 1,65,799/- 50562/2017 116/2016-17 31.10.2016 4. 340/2012-13 21.05.2013 April, 2011 to March, 2012 1,48,44,500/- 50562/2017 116/2016-17 31.10.2016 The recovery of aforesaid amounts alongwith appropriate interest and the proportionate penalty at the respective was proposed vide the aforesaid show-cause notices for the respective period. The proposal was confirmed vide the orders as mentioned above (the entire period is post year 2005). Being aggrieved thereof the appellant is before this Tribunal. 3. It is submitted on behalf of appellant that the appellant has entered into Retail Agent Agreement, as the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified with any other per [CBE C. Circular No. 59/8/2003-ST dated 20.06.2003] 5. It is submitted that one-time fee of ₹ 15,000/- as sign up fee to the Appellant is agreed to be paid by the agent as per Section 4.1 of Article 4 of the impugned agreement. Learned DR has also laid emphasis on section 5.1(d) of Article 5 thereof where the agent is restricted to have the control on the Appellant's apparatus/the terminal in this case. Under article 5.2 thereof the agent was made duty bound to allow the company, its affiliates and auditors access to the premises to enable the Appellant to monitor the retail agents' compliance with the agreement and to enable it to accesses its rights or perform its obligations under this agreement. Section 5.6 is also impressed upon which burdens the agent to take all precautions to protect the intellectual property rights owned by the Appellant. Training was also agreed to be provided to the employees of the agent by the appellant company in furtherance of Article 6.1 of the Agreement. Finally impressing upon article 9 Section 9.1 that the agreement is entered on principle to principle basis, learned DR has impressed upon that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading thereof, is sufficient for us to form an opinion that the most important characteristics for any service to be called as Franchise Service is the right of representation given by one company to another business company against the consideration paid by the later (franchisee) to the former (franchisor) for the same. Representational right has been defined by the Hon'ble High Court, Delhi in the case of Delhi internal airport Pvt. Ltd. Vs. Union of India 2017(50) S.T.R 275 (Delhi) the meaning thereof in following words : The term representational right would necessarily qualify all the three possibilities i.e. (i) to sell or manufacture goods, (ii) to provide service, and (iii) undertake any process identified with the franchisor. A representational right would mean that a right is available with the franchisee to represent the franchisor. When the Franchisee represents the franchisor, for all practical purposes, the franchisee loses its individual identity and would be known by the identity of the franchisor. The individual identity of the franchisee is subsumed in the identity of the franchisor. In the case of a franchi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the franchise service with four of these ingredients stands amended. Many of the erstwhile requirement i.e. prior 16.06.2005 for a transaction to constitute Franchise were done away with the amended definition. However, the authorities below are of the opinion that the agreement between the Appellant and its agent because of the contents therein amounts to an agreement as that of franchise service. 12. Now reverting to the facts of this case, specifically, the agreement which is the part of the record (The copy thereof has also been made available by the Counsel for the Appellant and has been acknowledged). Perusal thereof shows that the agreement is titled as Retail Agent Agreement which has been executed by the Appellant with an intention to provide an efficient and easily assessable payment collection services for the bill issuers (as defined in the agreement itself) for the collection of the payments from the customers ( who are also defined in the agreement itself), who wish to settle their Bills from the Bill issuer over the country. All such persons who wish to become the part of the company's network of retail agents through which the company shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and the retail agent. Thus we are of the opinion that mere use of word principle to principle basis cannot be read for the impugned arrangement between appellant and his agents to be called as franchise service. More so for the reason that Section 9.2 of the same article categorically restricts the agent to acquire any representational right in the following words: Nothing contained in this agreement shall authorise the retail agent to make representations or incur any liability on behalf of the company . 15. Perusal of the above discussed terms of the agreement give us a clarity to hold that the payment of ₹ 15000/- is not at all the consideration towards the purchase of Representational Rights by the agent from the Appellant. Contrary thereto the arrangement herein is that payment to be made by the Appellant to the agent per Bill basis. This particular term of agreement is absolutely against the intent of what can be called as franchise service. 16. In view of entire above discussion, we hold that the adjudicating authority below have committed an error while giving interpretation to the word 'franchise service'. The authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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