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2022 (12) TMI 471 - CESTAT NEW DELHIInvocation of extended period of limitation - Demand of service tax with interest - tri-partite agreement - granting rights or permitting commercial use or exploitation of any event including an event relating to art, entertainment, business, sports or marriage - levy of penalty. Whether the amount paid by IMGR to ZEEL as termination fee as per tripartite agreement entered into between the appellant, ZEEL and IMGR can be taxed and if such tax has to be paid by the appellant under the category of “permitting commercial use or exploitation of any event service” under section 65 (105) (zzzzr)? - HELD THAT:- It is undisputed the rights were originally granted to ZEEL at which time they were not taxable. Had ZEEL continued to use the rights for the full 10 years no tax would have been payable. Had an agreement been reached whereby the rights were returned by ZEEL to the appellant for a consideration that could have been a consideration for termination of the original contract. Thereafter, had the appellant sold the rights to IMGR or to any other entities, it would have been taxable under section 65 (105) (zzzzr). The tripartite agreement which has been entered into has effectively circumvented this situation by transferring the rights from ZEEL to IMGR directly with the concurrence of the appellant for a consideration known as the termination fee paid by IMGR to ZEEL. The appellant has not rendered any service in this agreement, but has concurred to the agreement whereby the rights were transferred from ZEEL to IMGR. The amount paid by IMGR to ZEEL on behalf of the appellant cannot be considered as an amount paid to the appellant for any service - Demand set aside - appeal allowed.
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