TMI Blog2015 (11) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... on - Held that:- Appellant has not disclosed the advertising services to the department and despite possessing the registration they have not disclosed to the department, the provisions of services and collection of amount there against. In such a situation it is clear case of suppression of facts on the part of the appellant. Moreover in some of the agreements, the clause related to payment terms contains the liability of payment of Service Tax. Therefore the larger period of demand was rightly invoked. Since there is suppression of facts, the appellant was legally liable for penalties under Section 76 and 78. - Decided against assessee. - APPEAL NO. ST/289/10-MUM - - - Dated:- 8-7-2015 - Mr. P.K. Jain, Member (Technical) And Mr. Ramesh Nair, Member (Judicial) Shri R. Sundaran, Advocate : For the Appellants Shri R.K. Das, Dy. Commissioner (A.R.) : For the Respondent ORDER Per : Ramesh Nair This appeal is directed against Order-in- Appeal No. SB(24) 24/STC/2010 dtd. 3/4/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone -1, wherein Ld. Commissioner (Appeals) upheld the Order-in-Original No. 15/STC/AC/08-09 dated 30/12/2008 and rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... da Motors Ltd., and therefore they are not carrying out any services of advertising. He submits that main object of the contract is to grant endorsement right to use and exploit the players identification therefore as far as services of the appellant, they themselves are not providing any advertising services. He submits that their services were rightly classifiable under Business Auxiliary Services (BAS) which became taxable only w.e.f. 1/7/2003 therefore on the BAS, since there was no tax liability prior to 1/7/2003 no demand can be raised since the services admittedly covered under BAS and they have been paying service tax under such head w.e.f. 1/7/2003, it cannot be said that services prior to 1/7/2003 was covered under advertising services. He submits that advertising agency basically prepares content of the advertising material for publicity as per the requirements of the client. In the present case appellant is not engaged in preparation of any content of advertisement material for publicity. Appellants job is only to introduce or make available the celebrities to the client. Since the appellant is not engaged in preparation of content of the advertisement they cannot be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not providing advertising agency and they are only arranging or introducing aforesaid celebrities to M/s. Hero Honda Motors Ltd. which does not fall under the advertising Agency which is not correct for the reason that it is composite contract under tripartite agreement between appellant, M/s. Hero Honda Motors Ltd. and above named cricket players. Under contract the ultimate services which is provided through cricket celebrity is to promote and publicise the brand of M/s. Hero Honda Motors Ltd., therefore it involves advertising services only and nothing else. He submits, in terms of the agreements also it is very clear that the services of celebrities made available by the appellant to M/s. Hero Honda Motors Ltd. is for promotion of the products and brand of M/s. Hero Honda Motors Ltd., therefore it is clearly the services of advertising. 5. We have carefully considered the submissions made by both sides. 6. The issue to be decided by us is that services provided by the appellant to M/s. Hero Honda Motors Ltd. through Cricket Celebrities namely Shri. Saurav Ganguly, Shri. Virender Sehwag, Shri. Yuvraj Singh, Shri. Harbhajan Singh and Shri Zaheer Khan is advertising servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te this Agreement, subject to such terms and conditions appearing hereunder. 1. SCOPE OF SERVICES: SOURAV shall render his services to Hero Honda by using Hero Honda logo on the bat for every match/series and perform his obligations under this agreement as provided for by Hero Honda as per ICC regulations. SOURAV shall make himself available and render his Services and perform obligations mentioned in this agreement subject to any other prior bonafide professional commitments of SOURAV and provided that SOURAV shall endeavor to co-operate with Hero Honda in the co-ordination of his schedule with Hero Hondas need for his services. 4. RETAINER FEES: In consideration of the services to be rendered by SOURAV through Percept and the obligations undertaken by SOURAV as set out hereunder. However, Hero Honda will not be liable to pay any amount in eventually of termination of agreement between SOURAV and Percept/authority given by SOURAV to Percept. 5. TAXES: All payments to be made under the provisions of the Agreement shall be made in India Rupees and shall be subject to service tax and all other taxes applicable and also the deduction of Income under the Indian Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich will be advertised or promoted in connection with the Player Identification. 2. GRANT OF ENDORSEMENT RIGHTS. The model grants to the Client, subject to and on the terms of this Agreement, the right and license to use and exploit the Player Identification throughout the Contract Territory during the Contract Period in connection with the advertisement and promotion of the product, including but not limited to, by way of television, radio, posters, hoarding, newspapers, magazines and other form of printed or visual material, including Player Identification in connection with advertisement on the internet. 3. PAYMENT In consideration for the grant of the rights by the Model, the Client/Percept DMark shall pay to the Model, retainer fees as set out hereunder:- (b) All payments under this Agreement will be made in Indian Rupees and subject to the deduction of taxes as required under law, from time to time. Payments made under this Agreement or pursuant thereto shall be made by Percept DMark/the client to Collage Sports Management by Demand Draft drawn on such Indian bank account as may be designated by Collage Sports Management/ Model in the manner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvertised, associated, added or depicted (in part or whole or in any combination) as part of the services, endorse his signature or initials, it being understood that the signature line shall be engraved on the services to be promoted and marketed[ and the Company may affix or attach the Player Identification in any manner to the Products themselves or to the associated packaging or any promotional material in relation thereto) (d) Upon expiry or sooner termination of this Agreement, Percept D Mark/the Client shall immediately cease to advertise, promote, distribute or sell any item whatsoever in connection with the use name, likeness, design, logo, trademark or trade name of the Player Endorsement. Furthermore Percept D Mark/The Client undertakes to ensure that all Point-of- Sale Material, billboards, hoardings, etc. shall be removed from their place of display upon termination or expiry of this Agreement. 13. IDEMNITY Percept D Mark/The Client agrees to protect, indemnify and save harmless The Model from and against any and all damages, claims, suits, actions, judgments and costs and expenses whatsoever, (including reasonable legal fees) arising out of, or in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is agreement as provided for by Hero Honda as per ICC regulations. YUVRAJ shall make himself available and render his Services and perform obligations mentioned in this agreement subject to any other prior bonafide professional commitments of YUVRAJ and provided that YUVRAJ shall endeavor to co-operate with Hero Honda in the co-ordination of his schedule with Hero Hondas need for his services. 4. RETAINER FEES: In consideration of the services to be rendered by YUVRAJ through Percept and the obligations undertaken by YUVRAJ as set out hereunder. However, Hero Honda will not be liable to pay any amount in eventually of termination of agreement between YUVRAJ and Percept/authority given by YUVRAJ to Percept. Subject to other terms conditions in this agreement, the above fee is payable to PERCEPT on behalf of YUVRAJ from the date of this contract irrespective of Hero Honda getting the ICC permission. 5. TAXES: All payments to be made under the provisions of the Agreement shall be made in India Rupees and shall be subject to service tax and all other taxes applicable and also the deduction of Income under the Indian Income Tax Act, 1961. Each payment shall be made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right and license to use and exploit the Player Identification throughout the Contract Territory during the Contract Period in connection with the advertisement and promotion of the product, including but not limited to, by way of television, radio, posters, hoarding, newspapers, magazines and other form of printed or visual material, including Player Identification in connection with advertisement on the internet. 3. RATAINER FEES. In consideration for the grant of the rights by the Model, the Clientshall pay to the Model, a total retainer fees to the tune of ₹ 15.00 lacs as set out hereunder: 5. TAXES All payments to be made under the provisions of this Agreement shall be subject to deduction of Income Tax under the Indian Income Tax Act, 1961 and all other applicable laws. 6. PAYMENT Payments to be made under the provisions of this agreement will be made in Indian Rupees, and will be paid to PDM on behalf of The Model by Demand Draft favoring Percept D Mark (India) Pvt. Ltd or any other name as may be advised by The Model from time ot time, and drawn on such Indian Bank account as may be designated by PDM or any other party in whose favour t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This agreement is made on October28, 2002 by and between M/s. Hero Honda Motors Ltd, a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi, 110057 ( hereinafter as referred to as Client ) of the FIRST PART. And Mr. Harbhajan Singh, Son of Shri. Sardev Singh Plaha residing at Plot No. 22, Daulatpuri behind Railway Goodshed, Jhalander City, Punjab (hereinafter referred to as the Model) of SECOND PART. And Sporting Frontier Pvt. Limited, a company incorporated under the Companies Act, 1956 and having its Registered Office New Bridge Business Centre, No. 40 Ulsoor Road, Banglore-40 (hereinafter referred to as the Agent which expression shall unless repugnant to the context or meaning thereof, be deemed to include its successors) of the THIRD PART. And M/s. PERCEPT D MARK (INDIA) PRIVATE LIMITED, a company incorporated under the Companies Act 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai 400013(hereinafter referred as PDM , which expression include its successors and assigns) of the FOURTH PART. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promotion of the Endorsed product, including but not limited to, by way of Promotional Material television, radio, internet, posters and other forms of printed material. 3. PAYMENT In consideration for the grant of the rights by the Model and in consideration of the services to be rendered by the model under this agreement, the client shall pay to PDM a total sum of ₹ 12,50,000/- (Rupees Twelve Lacs Fifty thousand only) subject to the diction of taxes as required under law, who in turn shall pay such amount, to the Agent for and on behalf of the Model as retainer fees at the times set out herein below and in the manner set out in the Clause 5 herein below. The service tax as applicable shall be paid by The Client . 5. MODE OF PAYMENT Payment of the amounts payable by the Client under Clauses 3 and 4 of this Agreement shall be made in Indian Rupees in the manner provided hereunder. Payments under this Agreement or pursuant thereto shall be made by the Client to PDM by Demand Draft favouring Percept D Mark (India) Ltd. or in any other names as may be advised by PDM from time to time and drawn on such Indian-the DD will be made, as the case may be the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Model shall engrave his signature/initials, it being understood that the signature line shall be engraved on the actual goods and services to be promoted and marketed. The Model shall have the right of approval of the use of his signature and depiction on the signature line of goods or services, such approval not to be unreasonably withheld. Agreement of Shri Zaheer Khan This agreement is made on September 23rd , 2002 by and between M/s. PERCEPT D MARK (INDIA) PRIVATE LIMITED, a company incorporated under the Companies Act 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai 400013 (hereinafter referred as PDM, which expression include its successors and assigns) of the First Part. And Mr. Zaheer Khan, Son of Mr. Bakhitar Khan residing at 46, Revenue Colony, Shrirampur - 413709, District Ahemed-nagar, Maharashtra (hereinafter referred to as The Model) of the Second Part. And M/s. Hero Honda Motors Ltd, a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi, 110057 (hereinafter as referred to as Clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. PAYMENT Payments to be made under the provisions of this agreement will be made in Indian Rupees, and will be paid to PDM on behalf of The Model by Demand Draft favoring Percept D Mark (India) Pvt. Ltd or any other name as may be advised by The Model from time ot time, and drawn on such Indian Bank account as may be designated by PDM or any other party in whose favour the DD will be made, as the case may be, in the manner and at the times set forth herein, and as stipulated in clause 3 4 of this Agreement. Time is of the essence in relation to all payments under this Agreement. 7. SERVICES OF THE MODEL (a) The Model agrees to be available for Six(6) days during the Contract Period for the purpose of conceptualizing, creating and producing advertising campaigns covering Television, Outdoor and Point of Purchase Material in relation to the Products, Public appearances, Celebrity dinners, Trade promotions, Consumer promotions, Plant Visits, staff motivation seminars in relation to the Products. (b) These Services to be provided by the Model will take place on mutually convenient dates and in mutually convenient locations to be agreed in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards advertisement performed by the celebrities are received by the appellant, therefore appellant is legally liable for payment of service tax under the category of advertising services during the period involved in the present case. As regard the contention of the appellant that the services are of promotion of sale of goods of M/s. Hero Honda Motors Ltd. and therefore the same is classified as Business Auxiliary Service which became taxable only from 1/7/2003, we do not agree with this contention for the reason that services of celebrities are nothing to do with the promotion of the sale whether sale is promoted or not, the service of celebrities is confined to display of brand and advertise the product of M/s. Hero Honda Motors Ltd. therefore services are clearly of advertising services and not of BAS. 6.1. We observed that considering the facts and terms of agreement Ld. Commissioner (Appeals) has rightly held that service of celebrities to M/s. Hero Honda Motors Ltd. through appellant is advertising services and accordingly rightly upheld the order-in original. The findings of the Ld. Commissioner (Appeals) are reproduced below: 07. I have gone through all the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person engaged in f providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant. And as per Sec 65(105) (e) taxable service means any service provided, to any person, by an advertising agency in relation to advertisement, in any manner. 12. (i) As per, the tripartite agreements, vide para 10 above, the Appellant had been appointed by M/s Hero Honda in connection with the promotion or sales and publicity of their products and, as per the said agreement, the cricket players, were required to act as 'Models and work with the Appellant, in conceptualizing, creating, and producing advertising campaigns for the promotion of the endorsed products of Hero Honda, through television, radio, internet and other printed material, for which M/s Hero Honda were to provide for business class travel and five star accommodation for both the Model and the Appellant. The Appellant had the right/responsibility as well as duty to gei all approval of all materials provided, relating to depiction of Hero Honda and any producjmodels/programme under the Hero Honda umbrella. All the payments made under the agreement were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board's clarification, vide circular No 64/13/2003-ST dt 28.10.03, that any person engaged in canvassing for advertising will not be covered by the expression 'advertisement', if he is not undertaking any activity of advertisement. However the said circular had also clarified that if canvassing is involving receiving the text of advertisement, estimating the space that such advertisement would occupy in the newspaper/periodical/magazine, negotiating the price, forming the general layout of the advertisement that would finally appear in the newspaper then such activity would be liable to service tax under the category of Advertising Agency Services, The Madras High Court, in the case of M/s ADWISE ADVERTISING PVT. LTD [2001 (131) E.L.T. 111 529 (Mad.)], has held that, selection of a particular print media or a particular electronic media would also be a part of the services because the advertising agency would be expected to advise its clients as regards the media through which such advertisements should be flashed. Thus; locating or selecting a particular media would be a Service , by the advertising agency in relation to the advertisements . This applies to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2000 to 30.06.2003. 16. (i) The Appellant's submission that they are paying service tax w.e.f. 01.07.03. under 'business auxiliary services', in relation to promotion or marketing of goods or services of clients, as per definition under Sec 65(19) of the Act, and that the Tribunal in the case of M/s Diebold Systems Pvt Ltd [2008 (9) STR 546] and M/s Glaxo Smithkline Pharma Ltd. [2006 (3) STR 711] have held that introduction of a new entry presupposes non coverage by pre-existing entries, is not relevant to the facts of the instant case relating to the taxable advertising services, rendered by them during 01.04.2000 to 30.06.2003. (ii) Further, their contention that they were registered with Service Tax under 'Event Management services' since 2002, and therefore there is no suppression and that , when interpretation of law is involved, penalty cannot be imposed, is not acceptable since the issue involved in the instant case is suppression of facts relating to the taxable advertising services, rendered by them. 'Event Management services' and 'Advertising services' are two distinct services and a person providing both these services has to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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