â€œ Franchise â€ 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 other symbol, as the case may be, is involved.
â€œ Franchisor â€ means any person who enters into franchise with a franchisee and includes any associate of franchisor or a person designated by franchisor to enter into franchise on his behalf and the term â€˜franchiseeâ€™ shall be construed accordingly.
In this context the details for taxability are â€“
Date from which such service is taxable â€“ 1st July, 2003
Service provider â€“ A franchisor
Service receiver â€“ A franchisee
Scope of taxable services â€“ Any service provided or to be provided to a franchisee, by the franchiser in relation to franchise.
Services covered â€“
- Licensing to produce or sell under brand name â€“ The service of license to produce goods or to provide service in the names of franchisor will be taxable under service tax.
- Vocational training provided through franchisee â€“ If vocational training is provided through franchisee, the service tax will be taxable under â€˜franchisee serviceâ€™.
- Courier services through franchisee â€“ If courier services are provided through franchise, the franchisee will not be eligible for exemption available to small service providers as he is providing service under brand name of other. The franchisor courier will be liable for service tax on amounts received from the franchisee.