Does granting of 'Land Development Rights' by a franchisor, constitute as service to the franchisee?

Last updated: 20 April 2021

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Quick Summary

This case examines whether a franchisor granting 'Land Development Rights' to a franchisee constitutes a taxable service. The tribunal reviewed a demand for service tax raised against Mahanagar Telephone Nigam Limited (MTNL) concerning development compensation charges and Point of Projection charges. MTNL had entered into a joint development agreement for a land parcel, and the revenue authorities sought to levy service tax on amounts received from the selected development partner.

Court :
CESTAT Delhi

Brief :
This appeal is directed against the order dated August 29, 2014 passed by the Commissioner of Central Excise and Service Tax, New Delhi , by which the demand of service tax amounting to Rs.5,94,76,320/- not paid on the amount received against development compensation charges and for recovery of same under section 73 ofthe Finance Act 19943 by invoking the extended period of limitation, has been confirmed. The impugned order also holds that the appellant had wrongly availed and utilized CENVAT credit of Rs. 4,99,32,736 /- against the capital goods falling under chapter 73.

Citation :
SERVICE TAX APPEAL NO. 52342 OF 2015

Daily Limit Reached