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2016 (1) TMI 850 - CESTAT MUMBAI

2016 (1) TMI 850 - CESTAT MUMBAI - 2016 (42) S.T.R. 497 (Tri. - Mumbai) - Territorial Jurisdiction - SCN issued by Mumbai Office of Service Tax Department for whole of India offices - assessee have separate registration for each premises - Import of service - payment made to foreign architects for service of concept design and interior decoration of their Multiplexes. - They also received 'Pouring Fees' and 'Signing Fees' - Held that:- The Commissioner should have refrained from adjudicating and .....

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- Import of services - 'pouring fees' and 'signing fees' - Held that:- clearly the service activity involved is not sale of space and time as contended by the appellant. What is sold is the right to advertise and promote the product of the CCIPL. Similarly right to use the Inox Logo, as contended by the Ld. Advocate is not the right that is under consideration before us. What is under consideration is the right to promote the product of CCIPL for which CCIPL pays fees to the appellant. It is b .....

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fect. This is the settled legal position. - Decided partly in favor of assessee. - Appeal No. ST/258/11 - Final Order No. A/85095/2016-WZB/STB - Dated:- 4-1-2016 - P S Pruthi, Member (T) And Ramesh Nair, Member (J) For the Appellant : Shri Dinesh Kumar Agarwal, Adv For the Respondent : Shri B Kumar Iyer, Superintendent (AR) ORDER Per P S Pruthi M/s. Inox Leisure Ltd. (hereinafter referred as appellant) run Multiplexes throughout the country. They had made payment to foreign architects for se .....

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s (BAS) in respect of 'Pouring Fees' and 'Signing Fees' and duty of ₹ 4,98,988/- for the period 1.1.2005 to 31.3.2006 demanded in the show cause notice dated 6.10.08 for Architect services. The amount deposited alongwith interest for the Architect services was appropriated. Payment of interest and penalties under Section 76, 77 and 78 were also imposed. The appellant are in appeal against the said order of the Commissioner. 2. We find in this case that two show cause notice .....

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Fee/Signing Fee 98,49,600 (10,79,641) 3, 63,04,550 (38,39,984) 4,61,54,150 (49,19,625) SCN DATE Period Service Category Turnover Total demand 6.10.2008 Upto 31.12.2002 Architect Fee 80,50,951 5,68,103 After 1.1.2005 Architect Fee 48,92,040 4,98,988 Total Architect Fees 1,29,42,991 10,67,091 3. Ld. Advocate submits that Service Tax on import of services (Architect services) could be levied only from 18.4.2006 with the introduction of Section 66(A) of the Finance Act, 1994 as held by the Hon'b .....

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f Nokia (I) Pvt. Ltd. vs. Commissioner of Custom [2000 (001) STR 0233 (Tri-Delhi)] relied upon in impugned Order is distinguishable on facts. ON this ground demand of ₹ 38,39,984/- out of the total demand of ₹ 49,19,625/- is beyond the jurisdiction of the Adjudicating authority. 3.2 Next contention is that each activity performed by them under the scope of service for 'Signing fees' is taxable under different categories of services introduced in the Act from a period subseque .....

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beverages from Coca Cola and sell the same from their retail counter in the registered premises. Thus by onscreen advertisement and signage, the appellant is promoting their own goods and not that of any third party and therefore no service is rendered under BAS category. 3.4 Lastly he submits that the transaction is revenue neutral as service tax payable, would be available to them as Cenvat Credit. Therefore no malafide intention can be attributed to invoke the extended time period. 4. Ld. A.R .....

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iate to reproduce the salient clauses of the Agreement dated 18.2.2003 as below:- 2. Grant of beverage availability and advertising and promotional rights. 2.1.1 INOX hereby grants to CCIPL the right to make Beverages available as listed in Schedule 5 for consumption by INOX through the Outlets in the premises, either as RGB, PET, Can or as Fountain Beverages, at each of the Premises subject to the terms and conditions hereinafter provided. 2.2 INOX hereby grants to CCIPL the following Promotion .....

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may place such other material for promotion of the beverages within the Outlets and within the Premises as may from time to time mutually agreed. 3.1 In respect of location, INOX shall intimate CCIPL well in advance of the expected date of opening, for commercial operations, of the Multiplex Cinema Theater therein, and provide to CCIPL the plans showing the location and the size of the Outlets within the premises thereof. Both parties shall arrive at an agreed number and type of equipments requi .....

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ommissioning it shall be the obligation of INOX to provide supply of power at appropriate points. 4. RIGHTS AND OBLIGATIONS OF PARTIES DURING THE OPERATING PERIODS: 4.2.1 CCIPL shall at its own cost in all respects, subject to the proper handling of the equipments by INOX, in terms of operating instructions as specified by CCIPL, maintain the Equipment in good running condition and order, at all times, and wherever and whenever necessary shall provide temporary or permanent replacement thereof, .....

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er screen, per Location, per year. INOX agrees to give, on a weekly basis (Friday-Thursday), the name of the movie in which The Coca-Cola Company advertisement is going to run, two days prior to the commencement of the week. 4.3.4 INOX shall pay to CCIPL, or such other company as may be designated by it, for the supplies of Beverages and/or Concentrates in accordance with the provisions contained in Schedule 7. 4.3.6 INOX shall not within any part of the Premises, sell, stock, display, promote o .....

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panels promoting Products shall be illuminated at all times, where applicable, during which the outlet is operational and shall bear the cost of electricity consumed in respect of such lighting of the signages. 5. ADVERTISING, MARKETING AND SALES PROMOTION: 5.1 It is hereby agreed by and between the Parties that the expenses for all the business and promotional campaigns shall be met by CCIPL from the annual budget earmarked for such purpose, and shall be incurred by CCIPL after the same is mutu .....

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Multiplex Cinema Theatre at each such Location at the following rates. 7.3 CCIPL shall provide advertising and marketing support to each of the locations by spending a sum upto ₹ 26 lacs per location as provided in Cluase 5. Supplementary Agreement was signed on 13.12.2005. The significant change is addition of clause 7A. "7A. PAYMENTS FOR OUTLETS SPECIFIED IN SCHEDULE I PART - I(B) 7A.1 In consideration of the premises herein mentioned, CCIPL agreed to extend a fund equivalent to  .....

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lex Cinema Theatre at outlets specified in Schedule 1 part 1(B). Such advertising, marketing and sales promotion campaigns and the expenditure thereof shall be jointly decided by CCIPL and INOX. The balance amount of ₹ 55/- shall be accumulated in a Fund titled "Signage and Screening Fund". The fund shall be maintained by CCIPL and shall be released every quarter against claims made by INOX for the Operating Period. From the record, it is apparent that the appellant were providin .....

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ax, Mumbai demanding service tax on the fees collected from each location. It is not disputed that each of the locations had separate Service Tax registration. It is also not disputed that the services were provided by the appellant from a Multiplex in each location individually. Therefore there is merit in the contention of the Ld advocate that the Commissioner of Service tax has no jurisdiction to adjudicate the case in respect of services received beyond jurisdiction. The finding in the impug .....

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, the fact remains that, as admitted in the Order by the Commissioner, it was disclosed by the appellant's authorized representative Mr. Rajesh Parte vide his statement dated 27.4.07 that revenues coming from different locations were accounted as 'Pouring Fees' in the balance sheet. The Commissioner held that appellant did not inform that discharge of service tax liability was left to each individual location and that they were not maintaining centralized accounting. In our view, the .....

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had taken centralized registration. In fact the Service Tax registration number itself shows that centralized registration was not taken. The Commissioner has erred in mixing the issue of centralized accounting and centralized registration. The Commissioner of Service Tax is appointed under a notification which authorizes him to exercise powers under Service Tax within the jurisdiction of Mumbai. There is no notification which authorizes him to exercise powers in respect of cases originating out .....

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should have written to the Central Board of Excise and Customs seeking power to adjudicate the case of services rendered pan India just as DGCEI has the power to issue the show cause notice on pan India basis. 8. The Commissioner's reliance on the case of Nokia (India) Pvt. Ltd. (supra) is misplaced. In the case of Nokia, the facts were different. There it was held that, on being show caused, a person could not insist that they be issued show cause notice from all the various places from whe .....

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e of extra territorial jurisdiction the Apex Court in the case of Kiran Singh (Supra) held that: It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that is invalidity could be set upon whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject matter .....

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t reading of Sections 2(34) and 28 of the Act, it is manifest that only such a customs officer who has been assigned the specific functions of assessment and re-assessment of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act is competent to issue notice under Section 28 of the Act. Any other reading of Section 28 would render the provisions of Section 2(34) of the Act otiose in as .....

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Preventive Collectorate, would be "proper officers". In our view therefore, it is only the officers of customs, who are assigned the functions of assessment, which of course, would include re-assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act. In view of the above, w .....

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he appellant by way of signage and panels (clause 4.3.9 of the agreement). Further the appellant were prohibited from selling, stocking, displaying any other soft/aerated drinks that other than those manufactured by CCIPL (Clause 4.3.6). The entire furniture, fixtures and fittings were installed by the CCIPL. As per clause 2, the appellant granted CCIPL the promotional and advertising rights in respect of beverages in the multiplexes and to have prominent signage. All these clauses indicate that .....

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ing services for marketing of goods provided by the client. It is not necessary that to promote the product, the goods have to be owned by the client. Therefore the contention that the appellant is promoting or marketing its own goods because it has purchased the beverages from CCIPL, does not hold good. The words used in the definition are "goods produced or provided by or belonging to the client" In the present case the appellant were marketing the goods provided by CCIPL. The consid .....

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t is sold is the right to advertise and promote the product of the CCIPL. Similarly right to use the Inox Logo, as contended by the Ld. Advocate is not the right that is under consideration before us. What is under consideration is the right to promote the product of CCIPL for which CCIPL pays fees to the appellant. It is beyond doubt, therefore, that that the services provided are covered under BAS. 9.2 Another right granted in terms of clause 4.2.8 is entitlement to CCIPL for total of 500 minu .....

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owards enhancing the sale of the products of CCIPL through the outlets in the Multiplexes. The second supplementary agreement also reflects payment of ₹ 55 on every physical case sold of mix syrup to the appellant which shall be placed in a fund titled, 'signage' and screen fund". The fund shall be released every quarter to the appellant against the claims of sale made by the appellant. The appellant is raising periodical invoices on CCIPL for the 'pouring fees'. There .....

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