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2017 (11) TMI 1406 - AT - Service TaxBusiness auxiliary services - process of operating the lottery business which includes promotion, marketing and all auxiliary and incidental support services like selling, billing, collection, remitting, evaluation of prospective customers etc - Held that: - The fact that appellants are engaged in promotion and marketing of lottery of the State Governments cannot be disputed. Services in relation to promotion or marketing of a service of client is liable to tax. We are not able to accept the proposition of the appellant that the State Governments are not their client. The terms of the agreement are clear that the State Governments authorized the appellants to organize and promote the lotteries. The nature of consideration that will accrue to the appellant for their services will not by itself decide the tax liability. The consideration is determined by mutual consent in terms of the agreement. In the present case on the overall receipts by sale of lottery, the State Government gets certain percentage as their share. For organizing, promoting and marketing the lottery the appellants get the consideration (retained amount) as per the terms of the agreement - tax liability upheld. Valuation - Held that: - the provisions of Section 67 (2) are very clear to the effect that gross amount charged by the service provider should be inclusive of service tax payable, to consider such amount for backward calculation. In the absence of any evidence to the effect that the amount of consideration now taken up for tax liability is inclusive of service tax in terms of an arrangement or documentation, we note that the findings of the Original Authority is correct in this regard. Penalties - Held that: - the Original Authority has imposed penalty only under Section 76 and 77 and not under Section 78. On perusal of the impugned order, we find no reason to interfere with the findings. Appeal dismissed - decided against appellant.
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