BABA TRADING CO. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appeal and stay petition are directed against order -in -original No. 22/ST/Commr./2013, dated 31 -7 -2013 passed by the Commissioner of Customs, Central Excise and Service Tax, Aurangabad. Vide the impugned order, the adjudicating authority has confirmed a Service Tax demand of Rs. 1,91,91,761/ - along with interest thereon and also imposing equivalent amount of penalty apart from penalties under Sections 76, 77 and Rule 7C read with Section 70 of the Finance Act, 1994. Aggrieved of the same, the appellant is before us. The learned Consultant for the appellant submits that the Service Tax has been confirmed under the category of franchise service. The appellant, M/s. Baba Trading Co. was awarded a contract by the Maharashtra State Road Transport Corporation (MSRTC) for the sole right of transporting parcel, courier and allied services on/in ordinary buses having luggage carrier of the licensor for the entire State of Maharashtra and Inter -State services of Maharashtra for the purpose of above business. The right granted under the contract was for right to book, deliver, transshipment, handling, loading and unloading and transportation of parcels, specified allied services and to carry out the business of courier by the ordinary buses of the licensor from all types of clients including Government, Semi -Government, Banks and Public Undertakings for a period of three years from October, 2005 to September, 2008. In consideration for the right/licence granted, M/s. Baba Trading Company was required to pay to MSRTC a sum of Rs. 3.25 crore, Rs. 3.35 crore and Rs. 3.40 crore respectively for the years 2005 -2006, 2006 -2007 and 2007 -2008. The right granted to the appellant, M/s. Baba Trading Co. was sub -licensed to M/s. Shri Sai Transport and Courier Pvt. Ltd., during the period October 2006 to March 2010. For the sub -licence granted, they charged an amount of Rs. 16,47,44,850/ - from M/s. Shri Sai Transport and Courier Pvt. Ltd. M/s. Shri Sai Transport and Courier Pvt. Ltd. had discharged Service Tax liability on the amount collected from various customers under courier service. The demand from the appellant, M/s. Baba Trading Co. is under the category of franchise service on the ground that M/s. Baba Trading Co. was the franchisor and M/s. Shri Sai Transport and Courier Pvt. Ltd. was the franchisee and they were representing the MSRTC in respect of the courier services undertaken. The only reason to treat the entire service as a franchise service was that in the invoices issued by the appellant for providing the Courier service, they had the names/logo of MSRTC, the appellant and M/s. Shri Sai Transport and Courier Pvt. Ltd.

(2.) THE learned Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the adjudicating authority. He submits that as per the findings recorded by the Commissioner, in the invoices issued by the appellant for providing the courier service, the names of MSRTC, the appellant and the sub -licensee M/s. Shri Sai Transport and Courier Pvt. Ltd. are mentioned. Therefore, it is clear that the appellant is representing MSRTC and that representational right on behalf of MSRTC has been franchised to M/s. Shri Sai Transport and Courier Pvt. Ltd. and therefore, the services rendered by the appellant to M/s. Shri Sai Transport and Courier Pvt. Ltd. comes within the category of franchise service and therefore, the demands are sustainable. Accordingly, he pleads that the appellant should be put to terms. We have carefully considered the submissions made by both the sides.