Tribunal junks Rs 20 cr service tax demand on Jaypee for F1
Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand of ₹20.36 crore from Jaypee Sports International Limited (JSIL) in connection with the Formula One race.
It said the race promotion contract between Formula One World Championship (FOWC) and JSIL was not a franchise agreement and that no service tax was leviable. «It is not possible to hold that the race promotion contract is a franchise agreement, under which FOWC provided franchise service to JSIL and consequently the demand of service tax of₹20.36 crore is clearly not sustainable,» the bench of PK Choudhary, member (judicial), and Sanjiv Srivastava (technical member) said on Monday.
The court said 'franchise' means an agreement by which the franchisee is granted representational right to sell or manufacture goods or to 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.
The court was hearing an appeal on whether the transaction between the FOWC and JSIL under the race promotion contract dated September 9, 2011, amounted to franchise service under the amended definition of franchise. -Our Bureau
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