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Sourav Ganguly Versus Union of India & Others

2016 (7) TMI 237 - CALCUTTA HIGH COURT

Challenge to the Show Cause Notice (SCN) - Maintainability of writ petition - Business Auxiliary services (BAS) - The petitioner is a cricketer and is a former captain of the Indian Cricket Team - Amount received for brand endorsement/brand promotion - amounts received for writing articles in sports magazines as well as fee received for anchoring TV shows on Zee Bangla. - extended period of limitation - allegation of suppression of facts - Held that:- if it is finally decided that the extended p .....

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my opinion, it cannot be said that the writ petition is not maintainable at all and should not be entertained for adjudication. - the preliminary issue of maintainability of the writ petition is decided in favour of the petitioner. - Invocation of extended period of limitation in the SCN - Held that:- the petitioner was prompt and diligent in responding to all the notices issued by the Department and in his replies, the petitioner clearly explained the nature and scope of his activities. Sub .....

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me is ‘based on records made available’. On a plain reading this means that the notice was issued on the basis of records and materials submitted by the petitioner. Hence, there does not seem to be any basis in the Department’s contention that the petitioner suppressed material facts with intent to evade payment of service tax. Suppression of fact in the context of this case can only mean non-disclosure of correct information deliberately to evade payment of service tax. - The impugned show .....

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er of interpretation of the provision must go in favour of the assessee. - Writing articles for newspapers or sports magazines or for any other form of media cannot by any stretch of imagination be said to be amounting to rendering business auxiliary service within the meaning of Sec. 65(19) or business support service under Sec. 65(104c) of the Finance Act, 1994. - For similar reasons, the remuneration received by the petitioner for anchoring TV shows cannot be brought within the servi .....

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able service during the period of time for which the tax demand has been raised, such demand cannot be sustained. Such service rendered by the petitioner could not be taxed under the head of business auxiliary service as has been sought to be done. - As regards the remuneration received by the petitioner for playing IPL cricket, in my opinion, the service tax demand raised on such amount under the head of ‘Business Support Service’, is also not legally tenable. - The petitioner was under ful .....

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ness support service. He was simply a purchased member of a team serving and performing under KKR and was not providing any service to KKR as an individual. - Validity of circular / clarifications issued by the CBEC - Held that:- if such circulars/instructions/clarifications are contrary to or inconsistent with the statutory provision in question or seek to create a liability which the statute does not contemplate, such circular/instruction is liable to be struck down. A misconceived and leg .....

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red by limitation. - Show cause notice quashed - Decided in favor of assessee / petitioner. - WP 3137 (W) of 2013 - Dated:- 30-6-2016 - The Hon ble Justice Arijit Banerjee For the Petitioner : Mr. J. K. Mittal, Adv. Mr. Paritosh Sinha, Adv. Mr. Amitava Mitra, Adv. Ms. Dolon Dasgupta, Adv For the Respondents : Mr. R. Bharadwaj, Adv. Mr. K. K. Maiti, Adv JUDGMENT Arijit Banerjee, J. (1) In this writ application the petitioner challenges the instruction/circulation bearing No. 42/Comm(ST)/2008 date .....

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et tournament held in India as a member of the Kolkata Knight Rider Team. At all material times he acted and still acts as brand ambassador for various products. He also acted as anchor in television shows and particularly on Zee Bangla Channel. The petitioner is also engaged in writing articles for Sports Magazines. (3) Service tax was introduced in India for the first time in the year 1994 under Chapter V of the Finance Act, 1994 which has been amended from time to time. More and more categori .....

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ide notification No. 7/2003 dated 20 June, 2003. After this amendment, taxable service came to include any service provided or to be provided to a client by any person in relation to business auxiliary service. Section 65 (19) of the said Act defines Business Auxiliary Service as follows:- S. 65(19). Business auxiliary service means any service in relation to, - (i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) Promotion or marketing of servi .....

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r auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, And includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods. Explanation._ For the removal of doubts, it is hereby declar .....

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ces; or (iv) Undertakes any activity relating to such sale or purchase of such goods or services; (b) excisable goods has the meaning assigned to it in clause (d) of Section 2 of the Central Excise Act, 1944 (1 of 1944). (c) manufacture has the meaning assigned to it in clause (f) of Section 2 of the Central Excise Act, 1944 (1 of 1944). (5) Section 73 of the Act relating to recovery of service tax was introduced with effect from 10 September, 2004 providing a limitation period of one year for r .....

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hargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any service tax has not been levied or paid or has been short-paid or short-levied or erroneously refunded by reason of- (a) Fraud; or (b) Collusion; or (c) Willful mis-statement; or (d) Suppression of facts; or (e) Con .....

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as the case may be. 2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. ………………………… …………… .....

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oresaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder; (ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof; (iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of s .....

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f business or commerce, in any manner. Section 65 (104c) of the Act defines Support Services of Business or Commerce as follows:- S. 65 (104c). Support service of business or commerce means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customers relationship management services, account .....

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t. After such amendment taxable service came to include any services provided or to be provided to any person, by any other person, through a business entity or otherwise, under a contract for promotion or marketing of a brand of goods, service, event or endorsement of name, including a trade name, logo or house mark of a business entity by appearing in advertisement and promotional event or carrying out any promotional activity for such goods, service or event. The explanation to sub-Clause (zz .....

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t sponsorship of any sports event, since IPL in itself is not a sports event but an entity of franchisee teams and therefore it is taxable. On the same analogy the sponsorship received by a player or a Team would be independent of sport event and hence taxable. (2) The activity of the franchisee subserves the business of BCCI IPL and would fall within the scope of Business support services which is a taxable service under the service tax law. (3) The players provide taxable service when they wea .....

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articipating in promotional activities the component of promotional activities should be segregated for charging service tax and if it cannot be done then service tax should be leviable on the total composite amount. The Commissionerate having jurisdiction on the address of the players should issue show cause notice to the players for rendering service to the franchisee. In case, the address of the players is out of India, the liability to pay service tax would fall on the franchisee under the r .....

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the game of cricket for the country. Under cover of letters dated 14 December, 2009 and 15 March, 2010, the petitioner submitted all documents sought for by the office of the respondent no. 4 including the copies of agreements entered into with various companies and corporate entities. The petitioner received a summon dated 12 January, 2011 from the office of the respondent no. 4 to appear on 19 April, 2011 for making statements and producing documents about the details of income received by the .....

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(10) The respondent no. 4 issued a show cause-cum-demand notice dated 26 September, 2011 to the petitioner demanding service tax (including cess) of ₹ 1,51,66,500/- on the amount received by the petitioner during the period 1 May, 2006 till 30 June, 2010 by invoking the extended period of limitation of five years under the proviso to Section 73 of the Finance Act, 1994 on the ground of suppression of facts with the intent to evade payment of service tax by the petitioner. (11) The petition .....

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r quashing of the show cause notice and the order dated 12 November, 2012 as also the instruction/circular dated 26 July, 2010 referred to above. Contention of the petitioner:- (13) Appearing on behalf of the petitioner Mr. Mittal, Ld. Counsel submitted that the demand of service tax to the tune of ₹ 1,51,66,500/- is on the total receipt of ₹ 13,56,54,639/-. This total receipt and service tax demanded on the same can be broken up into two parts. Firstly, service tax of ₹ 53,02, .....

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n demanded on receipt of fee from KKR for playing cricket in IPL amounting to ₹ 8,70,87,857/-. This demand is made on account of business support service under Section 65 (105)(zzzq) of the Finance Act, 1994. The amount of ₹ 8,70,87,857/- includes ₹ 4,37,00,000/- received for playing IPL in South Africa the tax effect on which is ₹ 51,50,442/-. (14) Ld. Counsel submitted that brand endorsement/brand promotion was made taxable with effect from 1 July, 2010. Undisputedly, t .....

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4 November, 2009 clearly disclosed his activities and sources of receipts and denied that his activities are covered under business auxiliary services. Further, under cover of letter dated 14 December, 2009 the petitioner submitted copies of agreements and audited accounts for five years. On 28 January, 2011 a statement of the petitioner s representative was recorded by the Department. Further, by letter dated 20 August, 2011 the petitioner submitted the complete date wise details for all receip .....

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purview of taxable service. However, it was stated that if the players are engaged in promotional activities as well as playing cricket and if there is no segregation, the service tax will be charged on the total composite amount. Relying on such instruction/letter which is illegal, the impugned demand has been raised on the petitioner. No levy exists on the activities of the petitioner during the relevant period of time and the entire proceeding against the petitioner including the demand is wi .....

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ffect from 1 July, 2010, the demand raised on the petitioner for brand endorsement for the period 1 May, 2006 till 30 June, 2010 under business auxiliary service under Section 65 (105)(zzb) of the Finance Act, 1994 is illegal and without jurisdiction. The respondent no. 3 in his order dated 12 November, 2012 has admitted that the aforesaid receipt is towards Brand Endorsement fees. Since during the relevant period of time there was no levy of service tax on brand endorsement fees, the demand of .....

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prior thereto. In this connection Ld. Counsel referred to a decision of the CESTAT, Principal Bench, New Delhi in the case of Commissioner of Service Tax, Delhi-vs.-Shriya Saran, 2014 (36) STR 641, where on similar facts the Tribunal held that the services provided by the assessee for brand promotion were covered by Section 65 (105)(zzzzq) of the Finance Act, 1994 which had come into force with effect from 1 July, 2010 and hence, during the period prior to 1 July, 2010 the assessee s activities .....

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entry covering the said services. Therefore, prior to introduction of entry (zzzzj), the services rendered by the assessees were not taxable. Creation of new entry was not by way of amending the earlier entry. It is not a carve out of the earlier entry. Therefore, the services rendered by the assessees cannot be brought to tax under that entry. (18) As regards the receipt of amount of ₹ 23,05,000/- by the petitioner on account of writing articles in sports magazines, Ld. Counsel submitted .....

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or writing articles is bad under the law. (19) As regards the amount of ₹ 2,00,00,000/- received as fee for anchoring TV show, the same also does not attract service tax under any entry. However, the service tax demanded on the said amount is ₹ 20,60,000/-. This demand is also illegal and bad in law. (20) As regards the impugned instruction/letter dated 26 July, 2010, Ld. Counsel submitted that an instruction/letter issued by the Ministry cannot expand the scope of law or cannot crea .....

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utes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the Circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Govt. and/or the State Govt. are not concerned they represent merely their understanding of the statutory provisions. They are not binding upon the Court. It .....

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ar Pradesh Trade Tax Act, 1948. The High Court relied on a circular issued by the Commissioner of Trade Tax and held that the appellant was a manufacturer and was thus liable to pay trade tax. While setting aside the order of the High Court, the Hon ble Apex Court held that the Commissioner s circular could not have created a liability by drawing inference that the purchasers from farmers who have grown, cut or sawn timbers, ballis, bamboos will bring them within the umbrella of the expression m .....

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d. Counsel submitted that when the statutory provisions do not so prescribe, there was no basis or logic for the instruction dated 26 July, 2010 that if there is no bifurcation, the entire composite fee will be taxable. The allegation that the petitioner s agreement with KKR is both for playing cricket as well as for promoting and the fee received is a composite fee is influenced by the instruction dated 26 July, 2010 and is not the truth nor based on any material but has been made on the basis .....

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lied on a decision of the Hon ble Supreme Court in the case of Suchitra Components Ltd.-vs.-Commissioner of Central Excise, Guntur, 2007 (208) ELT 321, wherein it was held that a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively. Thus, when a circular is against the assessee, he has the right to claim enforcement of the same only prospectively. (22) Ld. Counsel submitted that the proceeding under challenge was instituted on the bas .....

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. Ld. Counsel also referred to a judgment of the Hon ble Apex Court in the same case reported in 2003 (154) ELT A240 wherein the aforesaid judgment of the Delhi High Court was affirmed. Mr. Mittal also referred to a decision of the Delhi High Court in the case of Indian Aluminium Co. Ltd.-vs.-UOI, 1983 (12) ELT 349, wherein it was held that it is not open to the Board of Central Excise and Customs in its administrative capacity to issue directives to various subordinate authorities exercising qu .....

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is without jurisdiction, illegal and non-est as the levy itself was not in existence during the relevant period i.e. 1 May, 2006 to 30 June, 2010. He further submitted that in any event, even going by the impugned circular dated 26 July, 2010, the fee charged for playing matches will fall outside the purview of taxable service. Mr. Mittal then referred to the agreement between the petitioner and KKR and in particular Clause 2.1 thereof which provides that the petitioner was being engaged as a pr .....

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r from engaging in any promotional activities. The allegation of the Department that the petitioner apart from playing cricket, also engaged in promotional activity is completely without basis and perverse. Thus, the amount of ₹ 8,70,87,857/- received as fee for playing cricket professionally in the IPL for KKR does not fall within the service tax net. As per the terms of the agreement with KKR the petitioner was under full control of KKR and he had no choice but to follow the directions g .....

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ount for the same, it is not taxable under any provisions of the Finance Act, 1994. In this connection, Ld. Counsel relied on an order dated 6 June, 2014 passed by the Commissioner of Central Excise (Appeals), Delhi-III in Appeal No. 330- 332/SVS/RTK/2014 wherein under similar circumstances it was held that the appellant (another cricket player) was in the employment of IPL and was not an independent worker and that an employee working for and under the instruction of the employer cannot be said .....

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t provide any service to CSK as an individual. (24) Ld. Counsel then submitted that the total fee of Rs. 8,70,87,857/- received from KKR includes an amount of ₹ 4,37,00,000/- for playing IPL outside India (South Africa) on which tax effect is ₹ 51,50,443/-. He submitted that the provisions of Finance Act, 1994 are not applicable for services rendered outside India as Section 64 of the Act specifies that the Act applies to the services rendered within the territory of India except the .....

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formation was furnished by the petitioner in the year 2009 regarding the activities of the petitioner along with copies of agreement and audited records. Even thereafter, as and when any other information was called for, the same was provided. In his letter dated 24 November, 2009, the petitioner clearly stated that his activities are not covered under the Finance Act, 1994. It is also significant that the respondent no. 2 in its impugned instruction/letter dated 26 July, 2010 admitted that ther .....

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ipur, 2013 (288) ELT 161 (paras 12, 14 and 16) & Commissioner of Central Excise, Aurangabad-vs.-Bajaj Auto Ltd., 2010 (260) ELT 17 (paras 12 and 16) in support of his submission that the extended period of limitation is not applicable just for any omission on the part of the assessee unless it is a deliberate attempt to escape from payment of duty/tax. Where the facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not cons .....

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ally and arbitrarily. Ld. Counsel referred to S. 78 of the Finance Act, 1994, and submitted that the facts of this case do not by any stretch of imagination attract the provisions of S. 78. Once it is held that the extended period of limitation cannot be invoked in the present case, the levy of penalty becomes unsustainable. In this connection, Ld. Counsel relied on a decision of the Hon ble Supreme Court in the case of Commissioner of Sales Tax, UP-vs.-Sanjiv Fabrics, 2010 (258) ELT 465, in sup .....

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eriod of limitation is not invokable as there was no suppression of facts or other fraudulent act on the part of the assessee, the normal period of limitation of one year would not stand extended and the question of penalty would not arise. (27) Mr. Mittal finally submitted that during the pendency of the writ petition, the petitioner has paid the entire demand of ₹ 1,51,66,500/- in terms of the court s order dated 12 February, 2013 and has deposited a further sum of ₹ 50 lacs in ter .....

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sum of ₹ 1,51,66,500/- and ₹ 50 lakhs to the petitioner along with interest at the rate of 12 per cent per annum from the date of payment of the said sums till the date of refund. Contention of the respondents:- (28) Appearing on behalf of the respondent authorities, Mr. Bharadwaj, Ld. Counsel primarily urged the point of availability of an alternative remedy. He submitted that the order challenged in the present writ petition is an appealable order and the petitioner has adequate al .....

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before the authorities concerned. Ld. Counsel also relied on a decision of the Gujarat High Court in the case of Inox Air Products Ltd.-vs.-UOI, 2014 (35) STR 307. In that case also the writ petitioner had challenged a show cause notice demanding service tax in the region of ₹ 2.32 crores. The High Court held that when an alternative remedy is available to the aggrieved party, it must exhaust the same before approaching the writ court. The High Court further referred to a decision of the H .....

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y services under Section 65(19) of the Finance Act, 1994. (30) In addition, the petitioner received substantial remuneration from IPL franchisee for rendering promotional activities and the services rendered by the petitioner are classifiable under the taxable head of business support services under Section 65(19)(zzzq) of the Finance Act, 1994. He submitted that prior to obtaining service tax registration on 3 August, 2010 in relation to the service of Promotion of Brand of Goods, Services, Eve .....

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d service charges/remunerations as per the agreement with various corporate clients and as per the provisions of S. 65 (19)(i) of the Finance Act, 1994, such activity of the petitioner is taxable under the category of Business Auxiliary Services . Some of the clauses of the agreement between the petitioner and the Corporate Houses categorically mentioned the term Brand Endorsement Fees . Anchoring in the TV show and writing articles by the petitioner was meant to promote the activity of the orga .....

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onditions of the agreement dated 21 August, 2008 between Knight Riders Sports Pvt. Ltd and the petitioner makes a categorical reference to this aspect. Against point no. 4 of the agreement under the column sponsorship, media and promotional activities, it is mentioned that the player grants to the franchisee (for the benefit of both the franchisee and IPL with the right to the franchisee and IPL to sub-license such rights) the right during the term to photograph the player both individually and .....

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sel submitted that in terms of S. 65(105)(zzzzq) of the Finance Act, 1994, taxable service means any service provided or to be provided to any person, by any other person, through a business entity or otherwise, under a contract for promotion or marketing of a brand of goods, service event, or endorsement of name, including a trade name, logo or house-mark of a business entity by appearing in advertisement and promotional event or carrying out any promotional activity for such goods, service or .....

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of Service Tax, Calcutta. All the three were issued strictly in accordance with law and on a proper interpretation of relevant provisions of the Finance Act, 1994. Ld. Counsel prayed for dismissal of the writ petition. Court s View:- (35) Ld. Counsel for the respondents has taken a preliminary objection as to the maintainability of the writ petition in view of there being an alternative statutory remedy of appeal available to the petitioner. He has submitted that generally a show cause notice i .....

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ed person. Where an order has been passed by a statutory authority and the statute provides for a procedure to challenge such order before a higher authority, the Writ Court normally requires the aggrieved party to exhaust such alternative remedy before the court entertains his grievance in the exercise of writ jurisdiction. This is, however, a rule developed by the courts themselves and has no bearing on the jurisdiction of the court to entertain a writ petition. It is settled law that existenc .....

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ion of an authority is challenged on the ground of lack of jurisdiction or on the ground of violation of the principles of natural justice, the Writ Courts have interfered in spite of an alternative remedy being available to the writ petitioner. However, no rigid formula can be laid down regarding cases where the Writ Court may interfere in spite of there being an alternative remedy and nor is it desirable to do so. The discretion should be left to the court to be exercised in accordance with so .....

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period of limitation is erroneous and such error goes to the jurisdiction of the authority issuing the show cause notice. (38) Having considered the submissions of the Ld. Counsel, I am of the opinion that if it is finally decided that the extended period of limitation was wrongly invoked by the authority in issuing the impugned show cause notice, the logical conclusion that would follow is that the show cause notice was issued without jurisdiction. In that event, this court would be justified .....

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ce the petitioner has challenged the jurisdiction of the authority to issue the impugned show cause notice, in my view, the writ petition cannot be rejected at the threshold. Whether or not the petitioner will ultimately succeed on merits is a different question altogether. However, in my opinion, it cannot be said that the writ petition is not maintainable at all and should not be entertained for adjudication. (40) In this connection one may refer to the decision of this Court in the case of Si .....

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e Court held that no authority, much less a quasi- judicial authority, could confer jurisdiction on itself by deciding the jurisdictional fact wrongly. The question of whether the jurisdictional fact had rightly been decided or not was a question open to examination by the High Court in an application under Article 226 of the Constitution of India. (46) In the aforesaid case, the Supreme Court held that where the Income Tax Officer had assumed jurisdiction by deciding a jurisdictional fact erron .....

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lcutta Discount Company Ltd. -Vs- Income Tax Officer, Companies District I, Calcutta & Anr. reported in AIR 1961 SC 372, a Constitution Bench of the Supreme Court held that where the action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, would issue appropriate orders or direction to prevent the same. (41) Additionally, I am of the view that once a writ petition is admitted, af .....

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riday Narain-vs.-Income Tax Officer, Bareilly, AIR 1971 SC 33, the Hon ble Supreme Court observed that the High Court was not justified in dismissing as not maintainable a petition which was entertained and heard on merits only because of an alternative remedy is available to the petitioner. (42) For the reasons aforesaid, the preliminary issue of maintainability of the writ petition is decided in favour of the petitioner. In my view, the petition cannot be dismissed in limine. (43) Coming to th .....

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ssessee requiring him to show cause why he should not pay the amounts specified in the notice. Such notice has to be issued within 12 months (now 18 months) from date when such service tax was payable. Any notice issued beyond such period would be barred by limitation. However, the period of limitation stands extended to five-years if non-payment or short- payment or erroneous refund of the service tax is by reason of fraud or collusion or wilful mis-statement or suppression of facts or contrave .....

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as follows:- APPLICABILITY OF EXTENDED PERIOD OF LIMITATION Shri Sourav Ganguly by way of his act of omission and failure suppression of material facts with the intent to evade payment of Service Tax, did not discharge the due Service Tax liability amounting to ₹ 1,51,66,500/- (INR One Crore fifty-one Lakh sixty six Thousand & five Hundred only) during the period from 1.5.2006 to 30.6.2010 on the amount/remuneration of service charges received from various corporate clients under the .....

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mitation for the purpose of issuing the impugned show cause notice. I am of the opinion that a mechanical reproduction of the language of the proviso to Sec. 73 (1) of the Finance Act, 1994 would not per se justify invocation of the extended period of limitation. A mere bald assertion that the assessee wilfully suppressed the material facts with intent to evade payment of service tax, is not sufficient. The notice must contain particulars of facts and circumstances in support of such allegation. .....

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s of the same must be furnished. The person against whom fraud is alleged must know with sufficient certainty of the case that he has to answer. A mere ipse dixit that fraud has been committed or something has been done or permitted to be done with fraudulent motive cannot be taken note of and cannot form the basis of any action on the part of the authorities. Even if, such particulars are not included in the notice, the Department should be in a position to justify and/or substantiate its alleg .....

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stated that he was not rendering any business auxiliary services and had earned income by playing cricket for the country. Thereafter, under cover of letters dated 14 December, 2009 and 15 March, 2010, the petitioner supplied all documents called for by the office of the respondent no. 4 including copies of agreements entered into with various companies and corporate entities. Thereafter, in compliance of summon dated 12 January, 2011, the petitioner through his authorised representative appear .....

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ed into by the petitioner with the corporate entities were also made available to the Department. In my view, there was full and sufficient disclosure of the nature of the petitioner s activities to the Department and it cannot be said that the petitioner suppressed material facts to deceive the Department with intent to evade payment of service tax. (48) It is also be noted that it is stated in the last paragraph of the impugned show cause notice that the same is based on records made available .....

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a non-disclosure simpliciter can be called suppression of facts . In the present case, the petitioner suppressed nothing and maintained all throughout that he did not render any business auxiliary service or business support service and as such was not liable to pay service tax under those heads. Even if, such perception of the petitioner was found to be erroneous subsequently, still the same, would not, in my opinion, amount to suppression of facts. Unless a party deliberately conceals material .....

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eping statement that the petitioner by his act of omission and wilful suppression of material facts with the intent to evade payment of service tax did not discharge the due service tax liability amounting to ₹ 1,51,66,500/- during the period from 1.05.2006 to 30.06.2010 . There is no whisper in the impugned notice of the facts which have been allegedly suppressed. Mr. Mittal has vociferously argued that the vague assertion that the petitioner had wilfully suppressed material facts with in .....

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l Excise, Chandigarh-vs.-Punjab Laminates Pvt. Ltd., 2006 (202) ELT 578. (51) In this connection it may also be noted that in the case of Commissioner of Central Excise, Chennai-vs.-Chennai Petroleum Corporation Ltd., 2007 (211) ELT 193, the Hon ble Apex Court held in effect that where the department was aware of the activities of the assessee, the extended period of limitation could not be invoked on the basis of the allegation of suppression on the part of the assessee. In the facts of the pre .....

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Excise Act, that in order to make the demand for duty sustainable beyond a period of six months and up to a period of five years in view of the proviso to Section 11A(1) of the Act, it has to be established that the duty of excise was not levied or paid or short levied or short paid or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of d .....

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ne meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. (54) In Commissioner of Central Excise, Aurangabad-vs.-Bajaj Auto Ltd., 2010 (260) ELT 17, the Hon ble Supreme Court referred to its earlier judgments in the cases o .....

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e Central Excise Act or the Finance Act, 1994 as amended, or of any Rules framed thereunder, is not sufficient for invocation of the extended period of limitation. There has to be a positive, conscious and deliberate action on the part of the assessee intended to evade tax, for example, a deliberate misstatement or suppression pursuant to a query, in order to evade tax. A clear fraudulent motive or an element of mens rea on the part of the assessee has to be established before the Department can .....

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ered view and in view of the law as discussed above, the impugned show cause notice is hopelessly barred by limitation. There was no ground or justification whatsoever for issuing such notice by invoking the extended period of limitation. None of the pre- conditions necessary for taking recourse to the extended period of limitation exists in the facts of this case and by wrongfully invoking the extended period of limitation the respondent no. 4 conferred on himself a jurisdiction which he otherw .....

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ity Remuneration received (Rs.) Service Tax (Rs.) Writing Articles in Magazines 23,05,000/- 2,43,595/- Anchoring TV Shows 2,00,00,000/- 20,60,000/- Brand Endorsement 2,62,61,782/- 29,99,066/- Playing Cricket in IPL 8,70,87,857/- 98,63,839/- (61) The aforesaid amounts of service tax have been claimed by the Department under the heads of Business Auxiliary Service or Business Support Service . Business auxiliary service is defined in Sec. 65(19) of the Finance Act which has been set out earlier in .....

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It also encompasses service provided on behalf of the client as also procurement of goods or service which are inputs for the client. Customer care service rendered on behalf of the client also comes within the purview of Business Auxiliary Service . It also includes a service incidental or auxiliary to any of the aforesaid activities and includes services as a commission agent. Thus, what activities amount to business auxiliary service have been defined with precision in the Finance Act, 1994. .....

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n certain activities in relation to business or commerce. The activities mentioned in the definition Section which are perhaps illustrative and not exhaustive, are all meant to enhance some business or commerce. In order to qualify as business support service, in my view, an activity should be one of which primary object is to advance a business or commercial interest. (63) Writing articles for newspapers or sports magazines or for any other form of media cannot by any stretch of imagination be .....

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enture. The articles were meant for information and even entertainment of the general public interested in sports. An article written by a celebrity in an issue of a magazine may to some extent boost the sale of that issue but I do not think it can be said that the object of the author in writing the article or permitting publication thereof was to promote circulation of the concerned magazine. That might be an incidental effect but the same cannot foist service tax liability on the author of th .....

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r business support service. By anchoring a TV show, a celebrity or for that matter any other person does not render service with the object of enhancing any business or commercial interest. No reasonable authority with proper application of mind could classify anchoring of TV show as business auxiliary service or business support service. Hence, in my view, the remuneration received by the petitioner for anchoring TV shows does not attract service tax. (65) As regards the claim of service tax to .....

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ices, the petitioner received considerable amounts of service charges from corporate clients/service recipients. Such services provided by the petitioner were classifiable under the taxable service head of Business Auxiliary Services with effect from 1 May, 2006. Thereafter, with effect from 1 July, 2010 the said services were placed separately under the head of Promotion of Brands of Goods, Services, Events, Business Entity etc. Services , in terms of Sec. 65(105)(zzzzq) of the Finance Act, 199 .....

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and services of that brand have the level of excellence comparable to that of the celebrity. The difference between business auxiliary service (effective from 1 July, 2003) and the newly introduced service of brand promotion (effective from 1 July, 2010) is that the latter has a wide coverage since mere promotion of brand would attract tax under this service head even if such promotion cannot be directly linked to promotion of a particular product or service. If the brand name/house mark is pro .....

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ht within the service tax net with effect from 1 July, 2010. The demand raised for brand endorsement for the period 1 May, 2006 till 30 June, 2010 under the head of Business Auxiliary Service is illegal and without jurisdiction. The respondent no. 3 in his letter dated 12 November, 2012 has admitted that the receipt of ₹ 2,62,61,782/- by the petitioner was towards Brand Endorsement Fees . Brand Endorsement and Business Auxiliary Service are separate categories. If brand endorsement was cov .....

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ed with effect from 1 July, 2010, the logical corollary and inevitable inference is that such category of service was not taxable prior to 1 July, 2010. In this connection I am in agreement with the decision of the CESTAT, Principal Bench, New Delhi in the case of Commissioner of Service Tax, Delhi-vs.-Shriya Saran (supra), and the decision of the Division Bench of the Bombay High Court in the case of Indian National Shipowners Association-vs.-UOI, (supra). Business auxiliary service and brand p .....

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siness auxiliary service as has been sought to be done. (68) As regards the remuneration received by the petitioner for playing IPL cricket, in my opinion, the service tax demand raised on such amount under the head of Business Support Service , is also not legally tenable. According to the Department, the terms of the contract that the petitioner entered into with M/s. Knight Riders Sports Pvt. Ltd. would reveal that the petitioner s obligation was not limited to displaying his cricket skills i .....

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onal activities but the component of promotional activities could not be segregated for charging service tax. Accordingly, service tax is chargeable on the composite amount. For this contention, the Department relied on the letter dated 26 July, 2010 issued by the Central Board of Excise and Customs which is also under challenge in this writ petition. In his order dated 12 November, 2012 the respondent no. 3 has held that the petitioner has received substantial remuneration from IPL franchisee ( .....

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such decision of the respondent no. 3. Sec. 65(105)(zzzzq) pertains to brand promotion whereas Sec. 65(104c) pertains to business auxiliary services. They are two distinct and separate categories. As already indicated above, the taxable head of brand promotion was not in existence prior to 1 July, 2010, hence, reliance on that head for levying tax on the amount received by the petitioner from the IPL franchisee is misplaced and misconceived. This is sufficient to vitiate the order. (69) Further, .....

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nt individual worker. His status was that of an employee rather than an independent worker or contractor or consultant. In my opinion, it cannot be said that the petitioner was rendering any service which could be classified as business support service. He was simply a purchased member of a team serving and performing under KKR and was not providing any service to KKR as an individual. In this regard, I fully endorse and agree with the order dated 6 June, 2014 passed by the Commissioner of Centr .....

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PL) are paid composite fee for playing matches and for participating in promotional activities, the component of promotional activities should be segregated for charging service tax and if it cannot be done then service tax should be leviable on the total composite amount. Having considered the submissions made in this regard and the decisions cited, I am of the view that the Board of Central Excise and Customs in its administrative capacity is not entitled to impose its views on its various sub .....

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tute does not provide for levying service tax on fee received for playing matches, such a liability cannot be created by issuing a letter/instruction/circular. A circular cannot travel beyond the statute. The statute does not provide that if a player receives a composite amount for playing matches and promotional activities and the segregation of the two elements is not possible, then the composite entire amount may be taxed. Such an act on the part of the Department will be de hors the statute .....

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tructions/clarifications are contrary to or inconsistent with the statutory provision in question or seek to create a liability which the statute does not contemplate, such circular/instruction is liable to be struck down. A misconceived and legally untenable interpretation of a statutory provision and/or an erroneous understanding thereof, which if applied by the quasi-judicial authorities will unduly prejudice the citizens of the country, cannot be allowed to stand. Accordingly the impugned ci .....

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