TMI Blog2020 (6) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... st payment of agreed consideration - there are no doubt in holding that FSE was in the business of supplying recruiting and providing the players to the sport events organizers like appellant. Hence the services provided by such companies as FSE will be classified as Manpower Recruitment and Supply Agency Services as defined by the Finance Act at relevant times. In case of fees paid for secondment of employees of IMC DBA New York, USA for Lakme Fashion Week, an event organized by appellants we find that nothing has been placed on record that during the period of secondment, these employees of their USA counterpart worked in manner so as to create employer employee relationship between the appellants and those persons. These people continued in employment with the USA company and nothing like salary or remuneration was paid either in Indian or Foreign Currency, to these people by the Appellant - there is no hesitation in holding that the USA company has provided Manpower Recruitment and Supply Services to the Appellant. Intellectual Property Service - HELD THAT:- Appellants in the present case undertook to register the trademark of their USA counterparts in India for organiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the appellants that certain payments were received by them towards the sponsorship of sports event, or from the service recipient located outside India, or from service recipients located in India who were located in India, Commissioner should have recorded the finding in terms of the above provisions of the Finance Act, 1994 and the clarification as above issued by the Joint Secretary (TRU). If the claims made are justified these amounts should be deducted from the taxable value - Since the Commissioner has failed to consider these submissions in the light of the above referred clarification issued by the Ministry, the matter needs to go back to the commissioner for consideration of these. Appellants have submitted that demand in respect of the three taxable services received by them against foreign currency expenditure has been made collectively without specifying the quantum of expenditure that can be attributed to each of the services separately - we are setting aside the entire demand made in respect of Foreign Currency Expenditure and remanding back the matter to the Commissioner for determination of value of taxable services in respect of which demands are to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. Commissioner should in remand proceedings cause a verification of the same and record a proper finding. Interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. Penalty - HELD THAT:- Since matter is being remitted back to the commissioner for redetermination of the quantum of demand, the amount of penalty are to be redetermined in accordance with the duty demand confirmed in remand proceedings. The matter is remanded back to the adjudicating authority for consideration of the show cause notices in accordance with the observations made in this order. Since matter is pertaining to demand notices issued from the year 2009 onwards, in de novo proceedings Commissioner should adjudicate the matter within six months of receipt of this order, after following the principles of natural justice - Appeal allowed by way of remand. - Service Tax Appeal No.60379/2013-CU(DB) WITH ST/60380 to 60383/2013-CU(DB) - FINA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Section 75 of the Finance Act, 1994 from the due date till the date of actual deposit of the said amount. (v) I hereby order for recovery of Cenvat credit amount as above along with interest at applicable rates on the delayed payment of Service Tax including from M/s. International Merchandising Corporation under the provisions of Section 73/75 of the Finance Act, 1994 read with Rules 14 of CCR 2004 from the due date till the date of actual deposit of the said amount. (vi) I impose a penalty of ₹ 10000/- under Rules 15 (3) of Cenvat Credit Rules 2004 read with Section 77 of the erstwhile provisions of Finance Act, 1994 upon M/s. International Merchandising Corporation for various commissions and omissions made by them. (vii) I impose a further penalty of ₹ 5000/- under Rules 15A of Cenvat Credit Rules 2004 upon M/s. International Merchandising Corporation who contravened the provisions of these rules for which no penalty has been provided in the rules. (viii) I impose penalty on M/s. International Merchandising Corporation under the provisions of Section 76 of the Act ibid which shall not be less than two hundred rupees for every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, under proviso to Section 73(1) of the Finance Act, 1994 as amended. (iii) I hereby order for recovery of interest on service tax amount as above at applicable rates on the delayed payment of Service Tax including EC and SHEC from M/s. International Merchandising Corporation under the provisions of Section 75 of the Finance Act, 1994 from the due date till the date of actual deposit of the said amount. (iv) I hereby order for recovery of Cenvat credit amount along with Interest at applicable rates on the delayed payment of Service Tax including Education Cess from M/s. International Merchandising Corporation under the provisions of Section 73/75 of the Finance Act, 1994 read with Rules 14 of CCR 2004 from the due date till the date of actual deposit of the said amount. (v) I impose a penalty of ₹ 2500/- under Rules 15 (3) of Cenvat Credit Rules 2004 read with Section 77 of the erstwhile provisions of Finance Act. 1994 upon M/s. International Merchandising Corporation for various commissions and omissions made by them. (vi) I impose a further penalty of ₹ 5000/. under Rules 15A of Cenvat Credit Rules 2004 upon M/s. International Merchandising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commencing with the first day after the due date till the date of actual payment of the outstanding amount of service tax. (iv) l impose a penalty of ₹ 10000/- (rupees ten thousand only) under Section 77 of the erstwhile provisions of Finance Act, 1994 upon M/s. International Merchandising Corporation for various commissions and omissions made by them as referred hereinabove. Such amount of penalty will however not exceed the service tax amount. (IV) In respect of SCN C.No. D-IIVST/R II/SCN/IMC/79/09/1735 dated 23.03.12 :. (i) I confirm the following demands of service tax of rupees - S.No. Figure in Numbers/Rs. Figure in words 1. 26,26,061 Rupees twenty six Iac twenty six thousand sixty one only including education cess/SHEC 2. 12,97,526 Rupees twelve lac ninety seven thousand five hundred twenty six only including education cess/SHEC 3. 5,81,002 Rupees five Iac eighty one thousand two only including education cess/SHEC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising Corporation under proviso to Section 73(1) the Finance Act, 1994 as amended; (ii) I hereby order for recovery of interest on service tax amount as above at applicable rates on the delayed payment of Service Tax including EC and SHEC from M/s. International Merchandising Corporation under the provisions of Section 75 of the Finance 1994 from the due date till the date of actual deposit of the said amount. (iii) I impose penalty on M/s. International Merchandising Corporation under the provisions of Section 76 of Act ibid which Shall not be less than two hundred rupees for every day during which such failure continues or at the rate of two percent of such tax per month whichever is which such failure continues or at the rate of two percent of such tax per month whichever is higher, commencing with the first day after the due date till the date of actual payment of the outstanding amount of service tax. (iv) I impose a penalty of ₹ 10000/- (rupees ten thousand only) under Section 77 of the erstwhile provisions of Finance Act, 1994 upon M/s. International Merchandising Corporation for various commissions and omissions made by them as referred hereinabove. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notice for the subsequent periods cannot be issued invoking extended period again as per decisions in case of- ■ DSM Anti Infectives India Ltd [2017 (4) GSTL 280 (T)] ■ Nizam Sugar Factory [2006 (197) ELT 465 (SC)] ➢ Demand of Service Tax has been made on a reverse charge basis in respect of the services classifiable in three different categories, without quantifying the value of services and service tax payable against each category separately. Such an approach to confirm the demand by taking the value of foreign exchange expenditure yearly for quantifying the demand, rather than determining the expenditure made for each of taxable service is contrary to the decision in the case of Dharambir Singh Co [2018 (8) GSTL 440 (T)]: ➢ Demand under the category of Manpower Recruitment and Supply Services ○ Demand under this category has been made in respect of payments made to players like Vijay Amritraj for appearance in Chennai Open Tennis Tournament, and paid for secondment of employees of IMC DBA New York, USA for Lakme Fashion Week event organized by them. ○ Demand made in respect of the Fees paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has in following cases held that such a sale is of right to broadcast, is not a service but the activity of sale and service tax is not leviable: ○ BCCI [2007 (7) STR 384 (T)] ○ Royal Western India Turf Club Ltd [2015 (38) STR 811 (T)] ➢ Further sale of right was made a separately classifiable service under the category as defined by Section 65 (105) (zzzzr) with effect from 01.07.2010. It is settled by the decisions as follows that when a separate category is made taxable from a particular date, without amending any taxable category that existed prior to that date, then it has to be interpreted that earlier entries did not covered the activities now taxable under new category:- ○ Balaji Telefilm Ltd [2016 (46) STR 498 (T)] ○ BBC World Services India Pvt Ltd.[2018-TIOL-607- CESTAT DEL] ○ Radaan Media Works India Ltd [2018-TIOL-2266- CESTAT DEL] ○ CBEC Letter issued under F.No 334/1/2010-TRU dated 26.02.2010 ➢ They organize various events for which they also procure sponsorships. Such sponsorships are covered by the definition of Sponsorship services as per Section 65 (105)(zzzn) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is shows that the manpower supplier is into the business of supply of persons at various events world over. ○ The participation or appearance of player in the instant case is similar to that of an employee who may be taken in for employment temporarily or otherwise by a client. ○ It does not make any difference, whether the person is taken for a temporary period or a longer period. ○ In the instant case the word Player has replaced the word Manpower and the event is the place where workforce is required. ○ From above it emerges that FSE has caused availability and presence of the players from outside India. ○ They have been paid an agreed amount. ○ The appellants have not placed on record to suggest that players have participated on their own. But as per the agreement, FSE has caused their participation as per requirement of IMG. ○ Similar scenario involved in the case with regard to appearance and participation of other players/ manpower supplied by outside agency, namely, SFX Sports Group of Texas, USA ○ Similarly, the appellants have paid fee for appearance of fashion experts from outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b. Intellectual Property Right Service (Reverse Charge) c. Management and Business Consultant Services (Reverse Charge) d. Programme Producer Services e. Sponsorship Services II. Limitation III. Natural Justice IV. Jurisdiction I. Demand of Service Tax 4.3 Appellants are engaged in organizing various sports and fashion events. One of the Sport Events organized by them was the Chennai Open Tennis Tournament. For this event they availed the services of Vijay Amritraj (renowned tennis player) to participate in the opening and closing events of the tournament and also play a charity match to be organized during the course of the tournament. At page 33 of the order, the adjudicating authority has placed on record a certified copy of an invoice attached to the agreement with First Serve Entertainment (FSE) relating to the appearance and participation of Vijay Amritraj (a renowned tennis player) in Chennai Open Tennis Championship 2007. The relevant portion of the agreement is as under : Appearance and participation: IMG hereby engages FSE for appearance and participation of Amritraj of First Serve in connection with Chennai Open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere are agreements entered into with the clients for recruitment and supply of manpower. We have perused these agreements. As per the agreement entered into with M/s ABG Shipping Ltd, vide agreement dated 1.4.2002, the responsibility of the appellant was for providing the necessary competent, certified and experienced personnel so as to ensure efficient running and maintenance of the vessel and the appellant, as Manning Contractor, agreed to provide to the owner of the such vessel such personnel for the said purpose on the terms and conditions mutually agreed upon. Clause 3.1 of the said agreement makes it absolutely clear that the appellant was required to provide certified and experienced officers/crew to the owner of the vessel and the charges were collected for the various categories of crew deployed on per man per day basis as provided in clause 3.12 of the agreement in addition to a consolidated sum of ₹ 4.64 lakhs per calendar month towards supply of 8 officers and 8 crews in terms of clause 5.1 of the agreement. Clause 6.1 also makes it clear that the crews engaged in the ship are the employees of the appellant, who has to ensure payment of wages and other statutory d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d participation of Vijay Amritraj in a tournament organized by the appellant against payment of agreed consideration. Hence we have no doubt in holding that FSE was in the business of supplying recruiting and providing the players to the sport events organizers like appellant. Hence the services provided by such companies as FSE will be classified as Manpower Recruitment and Supply Agency Services as defined by the Finance Act at relevant times. Similarly position exists in respect of services received from SFX Sports Group of Texas. 4.8 In case of fees paid for secondment of employees of IMC DBA New York, USA for Lakme Fashion Week, an event organized by appellants we find that nothing has been placed on record that during the period of secondment, these employees of their USA counterpart worked in manner so as to create employer employee relationship between the appellants and those persons. These people continued in employment with the USA company and nothing like salary or remuneration was paid either in Indian or Foreign Currency, to these people by the Appellant. On the contrary, USA company has charged a fees or consideration, from the appellant for providing their employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company had provided any Intellectual Property Service as defined above to the appellant. Hence we are not in position to sustain the impugned order in respect of this demand. 4.10 Service Tax has been demanded in the category of Management and Business Consultant Services, in respect of certain usage charges paid by the Appellant s to their USA counterpart in respect of common software and SAP facilities created by them. Before addressing the issue in relation to the taxable category, the question which needs to be addressed is whether such payments made by the Appellant to their USA counterpart can be considered as payment towards provision of any service. Appellants is part of a group of companies located in India and elsewhere. Certain common facilities are created for usage of all the group companies. In this case, USA company created software and SAP facilities and incurred expenditure for the same. This expenditure has been distributed amongst all the group companies on a proportionate basis depending upon the usage. It is a settled position that the payments made for creation of common facilities in a group company is not payment towards any service rendered, and hence c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for common facilities cannot be treated as service by one to another in such arrangement. The Tribunal in Old World Hospitality Limited vs. CST, New Delhi 2017 VIL 97 CESTAT DEL ST held as below :- 8. It is clear from the terms of the agreement that IHC and the appellants have undertaken the business activities together and shared the revenue in a fixed proportion. The obligation of each party has been listed out. The dealings are more like co-venture agreement with joint purpose and shared income. This is also emphasized by forming of committee for tariff and quality in which both the contracting parties are representatives. The appellants are providing working capital, staff and management skills to run the facilities. IHC owned the facilities and obtained necessary approvals, licenses, etc. Thus, the pooled resources for a mutual benefit, generated income, which was shared on percentage basis. While discharging one of the responsibilities the appellants reimbursed the expenses on actual basis. We find such arrangement is not liable to service tax under BAS. The overall scope of the agreement indicates that it is not for rendering of service by one to another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for facilities like canteen, transportation within their group companies. There is no promotional activities involved in sharing the expenditure. I note that the impugned order simply recorded that all these services tantamount to provisions of services on behalf of the clients and accordingly, the appellants are liable to tax under Business Auxiliary Services . It is not clear as to what type of service is being provided by the appellant and on whose behalf. There is no third party involved at all, in the whole transaction. Certain common expenditure towards various facilities like canteen, transportation, etc. were shared among group companies. Such arrangement cannot be considered as activities taxable under Business Auxiliary Services . In terms of Section 65(19) of the Finance Act, 1994, there should be either promotion or marketing of service or goods and various other auxiliary support services. In the arrangement, as discussed above, for availing certain facilities, the appellant is sharing expenditure with other group companies. There is no promotion activities in such arrangement. The impugned order did not discuss the legal scope of tax entry applicable to the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 (37) STR J176 (SC)]. In the said decision Tribunal has held as follows: 6. We have carefully considered the submissions made by both the sides. We have also perused the contracts entered into with the service providers. 6.1 The agreement is titled as Television production for international and domestic cricket . As per the recital in the contract entered into with M/s. Nimbus Sport International Pte. Ltd., the appellant has accepted the bid tendered by Nimbus Sport International Pte. Ltd. who has been referred to as the producer in the agreement and has agreed to appoint the producer to produce audio visual coverage of the events on behalf of BCCI and the producer has undertaken to produce the audio visual coverage of the events for broadcasting on the terms and conditions stipulated in the agreement. 6.2 As per clause 2.1, BCCI has appointed the producer to exclusively produce the feed for and on behalf of BCCI and the feed means - the live and continuous clean audio and visual television signal of each match as described in detail in clause 3.2 of the agreement. Clause 3.1 of the agreement deals with production services and reads as - the producer must pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to vision colour correction unit and the same are viewed by the experts and after processing, these images are transmitted to the director s vision desk. 6.4 The nature of activities undertaken by the service provider is as under :- (i) The broadcast control room (BCR) is set up by the company in the stadium. It has various units, viz. vision colour correction unit, Director s vision desk, sound engineer desk, replay desk, graphic desk, hawk eye unit, ball speed machine, other machine routers, commentary unit, monitor wall. (ii) Around 30-32 cameras are fixed around the ground to take image of not only play but also of crowds and other happenings in the stadium. (iii) The images taken by camera are transmitted to vision colour correction unit. Each engineer views the images taken by 4 to 6 cameras. (iv) After processing, these images are transmitted to Director s vision desk and also at action replay unit. Images of all the cameras with their numbers are displayed on monitor wall having various screens supervised by Director. The Director in charge continuously instruct the desk in charge the camera number whose image is to be telecasted. The desk in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarely falls within the definition of programme as defined in Section 65(86a) and the service providers are programme producers as defined in Section 65(86b). 6.6 As regards the contention that in respect of Hawkeye Innovations Ltd., they were only supplying software programmes for recording, this contention does not seem to be flowing from the contract entered into with Hawkeye Innovations Ltd. A perusal of the agreement with Hawkeye Innovations Ltd. shows that Hawkeye Innovations was required to supply four units in connection with the production by IMG Media for BCCI of the world feed live coverage on the IPL in the seasons 2008, 2009 and 2010. Hawkeye Innovations was also required to supply three engineers for the recording of the events and the consideration was paid for supply of the equipment and the personnel for recording purposes. As already noted by us, any service in relation to programme producer s services would also fall within the definition of taxable service . Therefore, the services provided by Hawkeye Innovations by way of supply of equipment and personnel for recording the live programme and actually participating in such programme would also fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession audio or visual matter can be read as audio and visual matter . Therefore, we do not find any merit in the contention raised in this regard by the appellant. 6.9 As regards the contention that since the programme is produced on behalf of BCCI, there should be a third person, which is lacking in the present case, this contention is also not tenable. The statutory definitions of programme and programme producer services do not envisage the presence of a third party. Whether the programme is produced for BCCI or on behalf of BCCI, the transaction is complete. In any case, the programme is produced for dissemination by way of broadcasting to the general public and it is for the BCCI who has the rights over the programme, to decide and entrust the task of broadcasting to a third party. Thus the third party involved would be the broadcaster who will actually undertake dissemination of the programme produced by the non-resident service providers. This is evident from clause 2.1 of the agreement with Nimbus wherein it is stated that BCCI appoints the producer to exclusively produce the Feed for and on behalf of BCCI. For the purpose of such appointment, BCCI hereby auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn to such donors. (Section 65 (99)(a) of Finance Act, 1994 as amended) Taxable service means any service provided or to be provided to any person, by any other person receiving sponsorship, in relation to such sponsorship, in any manner; (Section 65(105) (zzzn) of Finance Act, 1994 as amended) 4.16 In the present case undisputedly Appellant have received certain amounts from sponsor s towards sponsoring the various events and matches organized by them. Appellants do not dispute that the services so provided by them fall in the category of sponsorship services. However they dispute the confirmation of demand, for the reason that, in certain cases the service tax liability was on the service recipient, sponsorship was in respect of a sports event, or the service qualified as export of services. Show Cause Notice wise they submitted as follows: Show Cause Notice dated 20.10.09 20.04.10 20.04.11 23.03.12 Value on which Demand made 9802787 12979364 38938902 5640794 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has failed to consider these submissions in the light of the above referred clarification issued by the Ministry, the matter needs to go back to the commissioner for consideration of these. 4.17 Appellants have submitted that demand in respect of the three taxable services received by them against foreign currency expenditure has been made collectively without specifying the quantum of expenditure that can be attributed to each of the services separately. We are in agreement with the submissions made by the Appellants, because as has been discussed in earlier paragraphs, we have upheld that on merits the demand is tenable in respect of one of the services and cannot be sustained in respect of the other two. How do we determine the portion of demand that is upheld. The approach of the Commissioner stating that since the rate of tax on the three services is the same so he can take the entire value of foreign currency expenditure together for determining the total demand is fallacious. Hence we are setting aside the entire demand made in respect of Foreign Currency Expenditure and remanding back the matter to the Commissioner for determination of value of taxable services in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mply a statement of demand made in terms of Section 73 (1A). Section 73 (1A) inserted in Finance Act, 1994 by Finance Act, 2012 reads as follows: (1A) Notwithstanding anything contained in sub-section (1) except the period of thirty months of serving the notice for recovery of service tax), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement, containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent period, on the person chargeable to service tax, then, service of such statement shall be deemed to be service of notice on such person, subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices. Thus in cases of statement of demands issued in terms of this sub section, the jurisdiction will immediately at the time of issuance itself be vested with the officer adjudicating the earlier show cause notices. There may not be any need to confirm separate jurisdiction in respect of such a statement of demand, because as per the provision in terms of which such statement of deman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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