service tax

Ram P Saraswat (Querist) 18 February 2009 This query is : Resolved
Sir,
We are running schools under charitable trust. Trust name is Citizens Welfare Asso. And school name is Billabong High International School. We are using Brand name of (school name) another party and for the same we entered into an frenchise agreement. According to agreement we will pay some percentage of fee collected from students to our frenchise i.e. to owner of the brand name/School name.
Now the matter is this that they(owner of brand name/school name) are charging service tax on their frenchise commission, so are we (the trust) liable to pay service tax to them?

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Rajesh Kumar (Expert) 20 February 2009
Yes. Service Tax is to be paid on franchise service. Whether you will pay the tax, or the service provider will bear the cost on his own depends upon your private agreement.

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