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2016 (9) TMI 1024

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..... t tenable in terms of clear wordings of the agreement and intention of the contracting parties as clearly manifested therein. The revenue sharing model which was discussed in Board's circular dated 23/2/2009 was w.r.t. movie distribution. In any case the said circular was further clarified vide Circular dated 13/12/2011 wherein it was mentioned that revenue sharing arrangement by itself does not preclude service tax liability. We find that the appellant are only pleading on the principle of revenue sharing without actually elaborating on the nature of agreement as already indicated hereinabove. The agreement in the present case gives no room for doubt regarding the obligation of the appellants to render various services in terms of ICD operations owned and controlled by RSIC. The nature of financial dealings or payment of consideration for services rendered by itself will not decide the tax liability of the service. In the present case there is a taxable service rendered by the appellant. Admittedly the considerations received by appellants are for services. These are taxable services. RSIC paid service tax on the gross income and out of that income they have paid some amoun .....

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..... ability. As such, to impute motivation to the appellant for intention to evade payment of duty is not sustainable. In the facts and circumstances of this case, we find that the demand for extended period is not sustainable. We have also perused the reasons recorded by the Original Authority for invoking extended period of demand. He recorded that but for the Department's investigation the non-payment of tax would not have come to the notice. Further, the balance sheet for certain years have not been furnished in time by the appellant which was obtained from Registrar of Companies. As such, it was held that the appellants willfully suppressed material facts. We find that the service tax demand against the appellant was sought to be confirmed mainly on the basis of the terms of agreement between the appellant and RSIC. The gross receipt of RSIC and service tax payment thereupon is available with the Department. A portion of that receipt is now being taxed under BIS at the hands of the appellant. The service tax liability is as such on the arrangement based on agreement which is also the basis for payment of full service tax by RSIC. In other words, the service tax liability of bot .....

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..... s placed on decision of Hon'ble Kerala High Court in CCE vs. Cochin International Airport Limited reported in 2011 (24) S.T.R. 20 (Ker.), Hon'ble Chhattisgarh High Court decision in Sew Infrastructure Ltd. vs. CCE CUS, Raipur reported in 2015 (37) S.T.R. 984 (Chhattisgarh) , decision of the Tribunal in Centre for Development of Advance Computing vs. CCE, Pune reported in 2016 (41) S.T.R. 208 (Tri. Mumbai), J.M. Financial Services Pvt. Ltd. vs. CST, Mumbai - 1 reported in 2014 (36) S.T.R. 151 (Tri. Mumbai), India Gateway Terminal (P) Ltd. vs. CCE, Cochin reported in 2010 (20) S.T.R. 338 (Tri. - Bang.), and JAC Air Services Pvt. Ltd. vs. CST, Delhi reported in 2013 (31) S.T.R. 155 (Tri. - Del.). Reliance was also placed on Board Circular dated 23/2/2009 to contest the service tax liability ; (b) RSIC have discharged service tax on the gross amount collected from the importers and exporters. A portion of this amount is now being sought to be taxed again at the hands of the appellant. This is not legally sustainable as the said amount suffered service tax fully ; (c) the demand is hit by limitation. The show cause notice dated 13/10/10 was for demanding se .....

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..... thin the scope of BAS ; (c) the cost/revenue sharing model as agreed upon is only a methodology of payment of consideration by RSIC to the appellants. This by itself does not determine the tax liability of the appellant. When the agreement is clear regarding rendering of service by the appellants the mode of receipt of consideration will not alter the tax liability. The Board's further clarification dated 13/12/2011 regarding revenue sharing arrangement has been correctly relied upon by the Original authority ; (d) the appellants were not registered with the Department and have not been filing the statutory returns for the consideration received in terms of these agreements. In such situation, the demand for extended period can be justified. Accordingly, the penal action also is legally sustainable. 4. We have heard both the sides and examined the appeal records. The point for decision is whether or not the appellants rendered any taxable services under the category of BAS and if so whether the demand has been made within the permissible time limit in terms of Section 73. A careful perusal of one of the agreements dated 13/6/2007 w.r.t. ICD at Jodhpur reveals that the .....

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..... Explanation - For the removal of doubts, it is hereby declared that for the purpose of this clause, - (a) commission agent means any person who acts on behalf of the another person and causes sale or purchase of goods, or provisions or receipt of services, for consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services ; or (ii) collects payment or sale price of such goods or services ; or (iii) guarantees for collection or payment for such goods or services (iv) undertakes any activities relating to such sale or purchase or such goods or services ; (h) excisable goods has the meaning assigned to it in clause (d) of Section 2 of the Central Excise Act, 1944 (1 Of 1944) ; (i) manufacture has the meaning assigned to it in clause (f) of Section 2 of the Central Excise Act, 1944 (1 of 1944)] . 5. It is clear that the appellants were to market the ICD services, ensure the realization of amount from the users and provide various services to importers and exporters which are to be provided by RSIC as a holder of ICD custom operation licence. .....

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..... f such gross consideration from RSIC and as such no further tax can be levied on them is not supported by any legal provision. As concluded earlier in this order, appellants are providing various services in terms of the agreement with RSIC and are getting consideration in terms of the same agreement. Admittedly the considerations received by appellants are for services. These are taxable services. RSIC paid service tax on the gross income and out of that income they have paid some amount to the appellant and, hence, the plea that the appellants are not liable to service tax is not supported by any legal principle. The fact is that the appellants provided input services (BAS) which enable RSIC to provide overall services w.r.t. ICDs operated under licence by them. Apparently in such arrangement the tax paid by RSIC will be on the total gross value. To render such total service by RSIC to various clients the appellants did provide various taxable services in terms of the agreement. While it is an admitted fact that the appellant service forms part of the overall service rendered by RSIC to various ICD users, payment of service tax by RSIC by itself will not exclude the tax liability .....

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..... her service provider will not alter the taxability of the service provided. 10. The appellants relied on Tribunal's decision in Sunil Hi-Tech Engineers Ltd. vs. CCE, Nagpur reported in 2010 (17) S.T.R. 121 (Tri. - Mumbai) . We find that the said case has been reversed by the Hon'ble Bombay High Court reported in 2010 (20) S.T.R. J118 (Bom.) . It is seen that in respect of same party, the Tribunal in a later case reported in 2014 (36) S.T.R. 408 (Tri. - Mum.) upheld the service tax liability of sub-contractor. We also take note that the Hon'ble Kerala High Court in Furnace Febrica India Ltd. reported in 2016 (43) S.T.R. 175 (Ker.) held in view of the specific clarification regarding input service it cannot be held that the sub-contractor is not liable to pay service tax for services provided by him. 11. Considering the above discussion and analysis the service tax liability on the appellant cannot be contested as invalid. We uphold the findings in the impugned order regarding tax liability. However, the appellants contested the demand on the question of time bar also. It is their case that the full amount collected by RSIC from the importers and exports h .....

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..... investigation the non-payment of tax would not have come to the notice. Further, the balance sheet for certain years have not been furnished in time by the appellant which was obtained from Registrar of Companies. As such, it was held that the appellants willfully suppressed material facts. We find that the service tax demand against the appellant was sought to be confirmed mainly on the basis of the terms of agreement between the appellant and RSIC. The gross receipt of RSIC and service tax payment thereupon is available with the Department. A portion of that receipt is now being taxed under BIS at the hands of the appellant. The service tax liability is as such on the arrangement based on agreement which is also the basis for payment of full service tax by RSIC. In other words, the service tax liability of both RSIC and the appellant has common source agreement. As such, we find the demand for extended period is not sustainable in the present case. 12. In view of the above discussion and findings while holding that the appellants are liable to service tax under the category of BAS for services rendered by them we hold that the same can be confirmed only within the normal peri .....

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