TaxTMI 
TaxTMI 
2016 (5) TMI 748
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....rbhajan Singh and Shri Zaheer Khan as per agreements, but had not paid service tax on the taxable value received for advertising services. A show cause notice bearing F. No. V/STS/GR. IX/DN-II/1479/2004, dated 26-10-2004 was issued to the appellant on the ground that they had failed to pay service tax of Rs. 27,46,030/- on the taxable value of Rs. 5,26,70,587/- received by them during 1-4-2000 to 30-6-2003 for advertising services. The said show cause notice had been adjudicated vide Order-in-Original dated 30-12-2008 wherein it was held that the tripartite agreements between the appellant, M/s. Hero Honda Motors Ltd. and the cricket players was for endorsing the products and brand of M/s. Hero Honda Motors Ltd. by the cricket players as models and advertised by the appellant through various mediums e.g. television, radio, displaying the product on the cricket bats etc. throughout the contract territory during the contract period only. It was also held that the appellant even if they claim they are not known as an Advertising Agency, had provided services connected with display of advertisements during 1-4-2000 to 30-6-2003 as per definition under Section 65(3) of the Act, and not ....
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.... Diebold Systems Pvt. Ltd. v. Commissioner of Service Tax [2008 (9) S.T.R. 546 (Tri.-Chennai)]. (e) Glaxo Smithkline Pharmaceutical Ltd. v. Commissioner [2006 (3) S.T.R. 711 (Tri.) = 2005 (188) E.L.T. 171 (Tribunal)]. With regard to limitation he submits that show cause notice for the period 1-4-2000 to 30-6-2003 has been issued on 26-10-2004 i.e. after more than one year, therefore show cause notice is time bar. He submits that appellant was already registered under the head of "Event Management Service" way back in 2002 and the BAS was included in the registration and they started paying service tax from 1-7-2003 therefore appellant was very much registered and the activity was known to the department. Therefore there is no suppression of facts on the part of the appellant; hence extended period could not have been invoked. In his support he placed reliance on following judgments : (a) Essel Packaging Ltd. v. CCE [2000 (117) E.L.T. 466 (Tri.)]. (b) Polymers & Transmission Products v. CCE [2000 (117) E.L.T. 119 (Tri.)]. He further submits that the issue in the present case involves interpretation of la....
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....mercial concern engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising concern. "Taxable Service" means any service provided, - (a) --- (b) --- (ba) --- (c) --- (d) to a client, by an advertising agency in relation to advertisement in any manner. In the instant case to conclude whether the service of advertising services or otherwise, it is necessary to go through the relevant clauses of the tripartite agreements between appellant, M/s. Hero Honda Motors Ltd. and Cricket players. Relevant paras of said agreements are extracted below : Agreement of Shri Sourav Ganguly This agreement made this day of 21st June, 2002 at New Delhi between M/s. Hero Honda Motors Limited, a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi (hereinafter as "Hero Honda", which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the first part. And M/s....
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....vice tax and all other taxes applicable and also the deduction of Income Tax under the Indian Income Tax Act, 1961. Each payment shall be made in favour of "Percept D'Mark (India) Pvt. Ltd.". Agreement of Shri Virender Sehwag This agreement is made on March 5th, 2002 by and between M/s. PERCEPT D'MARK (INDIA) PRIVATE LIMITED, a company incorporated under the Companies Act, 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai - 400013 (hereinafter referred as "Percept D'Mark", which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the First Part. Mr. Virender Sehwag, residing at RZ-145, Laxmi Garden, Nazafgarh, New Delhi-43 (hereinafter referred to as the "Model") of the Second Part. M/s. Hero Honda Motors Ltd., a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi, 110057 (hereinafter as referred to as "Client", which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the THIRD PART. And Collage....
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....nt" by Demand Draft drawn on such Indian bank account as may be designated by "Collage Sports Management"/"Model" in the manner and at the times set forth herein, and as stipulated in clause 3 & 4 of this Agreement. Time is of the essence in relation to all payments under this Agreement. 5. SERVICES OF THE MODEL The Model agrees to be available for Ten(10) days during the Contract Period for the purpose of conceptualizing, creating and producing advertising campaigns covering Television, Prizes, Outdoor and Point of Purchase Material in relation to the Products, Public appearances, Celebrity dinners, Trade promotions, Consumer promotions, Plant Visits, staff motivation seminars in relation to the Products and to perform his obligations under this Agreement as set out in schedule hereto (the "Services"). - Services to be provided by the Model will take place on mutually convenient dates and in mutually convenient locations to be agreed in the light of the Model's professional and other commitments, provided the Model shall co-operate with the Client to in the co-ordination of his schedule with the Client's need for his Services, and subject to the Client provided for all tr....
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....damages, claims, suits, actions, judgments and costs and expenses whatsoever, (including reasonable legal fees) arising out of, or in any way connected with (i) acts or omissions of "the Client" in relation to the advertisement, promotion or sale of the Products (ii) loss of damage to property, personal injury or, death resulting from the use of the Products (including, but not limited to Percept D'Mark/"The Clients" breach of clause 3 above) or (iii) advertising or promotional material provided by or on behalf of Percept D'Mark/"The Client" in relation to the advertisement or promotion of the Products. Agreement of Shri Yuvraj Singh This agreement made this day of 1st Sep., 2002 at New Delhi between M/s. Hero Honda Motors Limited, a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi-110057 (hereinafter as "Hero Honda", which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the first part. And M/s. Percept D'mark (India) Private Limited, a company incorporated under the Companies Act, 1956 and having its registered office at Pe....
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....er the provisions of the Agreement shall be made in Indian Rupees and shall be subject to service tax and all other taxes applicable and also the deduction of Income Tax under the Indian Income Tax Act, 1961. Each payment shall be made in favour of "Percept D'Mark (India) Pvt. Ltd.". Agreement of Shri Yuvraj Singh This agreement is made on 1st September, 2002 by and between M/s. PERCEPT D'MARK (INDIA) PRIVATE LIMITED, a company incorporated under the Companies Act, 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai - 400013 (hereinafter referred as "PDM", which expression include its successors and assigns) of the First Part. And Mr. Yuvraj Singh, an individual residing at 5904, Duplex Houses, Modern Housing Complex, Mani Majra, Chandigarh-160101 (hereinafter referred to as "The Model") of the Second Part. And M/s. Hero Honda Motors Ltd., a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi - 110057 (hereinafter as referred to as "Client") of the THIRD PART. WHEREAS "PDM" has been appointed by "the Client" as one of the agencies,....
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....er the provisions of this agreement will be made in Indian Rupees, and will be paid to PDM on behalf of "The Model" by Demand Draft favouring Percept D'Mark (India) Pvt. Ltd. or any other name as may be advised by "The Model" from time to time, and drawn on such Indian Bank account as may be designated by PDM or any other party in whose favour the DD will be made, as the case may be, in the manner and at the times set forth herein, and as stipulated in clause 3 & 4 of this Agreement. Time is of the essence in relation to all payments under this Agreement. 7. SERVICES OF THE MODEL (a) "The Model" agrees to be available for Six (6) days during the Contract Period for the purpose of conceptualizing, creating and producing advertising campaigns covering Television, Outdoor and Point of Purchase Material in relation to the Products, Public appearances, Celebrity dinners, Trade promotions, Consumer promotions, Plant Visits, staff motivation seminars in relation to the Products. (b) These Services to be provided by "the Model" will take place on mutually convenient dates and in mutually convenient locations to be agreed in the light of "the Models" professional and ot....
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....HIRD PART. And M/s. PERCEPT D'MARK (INDIA) PRIVATE LIMITED, a company incorporated under the Companies Act, 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai - 400013 (hereinafter referred as "PDM", which expression include its successors and assigns) of the FOURTH PART. WHEREAS "PDM" has been appointed by "the Client" as one of the agencies the agency in connection with the promotion or sales and publicity of their products namely Hero Honda motorcycles. AND WHEREAS the model through the agent has agreed to act as a model in connection with the promotion of the Endorsed Products (as defined herein below) on terms and conditions hereinafter appearing. NOW IT IS HEREBY AGREED as follows : 1. DEFINITIONS : In this Agreement the following words shall have the following meanings : (a) "The Model Identifications" shall mean any words and/or symbols and/or photographic and/or graphic representations, which identify the "the Model" and/or his name and likeness, in connection with the Endorsed Product, and shall include, without limitation, audio recordings, visual recordings, ima....
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....nt". 5. MODE OF PAYMENT Payment of the amounts payable by the Client under Clauses 3 and 4 of this Agreement shall be made in Indian Rupees in the manner provided hereunder. Payments under this Agreement or pursuant thereto shall be made by the Client to PDM by Demand Draft favouring Percept D'Mark (India) Ltd. or in any other names as may be advised by PDM from time to time and drawn on such Indian ---- the DD will be made, as the case may be the manner and at the times set form herein, and as stipulated in Clauses 3 and 4 of this Agreement. PDM shall, within fifteen days from receipt of payment from the client as provided in Clauses 3 and 4 hereinabove, make payment of the said amounts to the Agent on behalf of the Model by way of Demand Draft drawn in favour of Sporting Frontier [ ] Limited or in any other name as may be advised by the Agent/Model from time to time, and drawn on such Indian bank account as may be designated by the Agent/Model or any other party in whose favour the DD will be made. Time is of the essence in relation to all payments under this Agreement. 6. SERVICES OF THE MODEL (a) "The Model" agrees to be available for e....
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...., Mumbai - 400013 (hereinafter referred as "PDM", which expression include its successors and assigns) of the First Part. And Mr. Zaheer Khan, Son of Mr. Bakhtiar Khan residing at 46, Revenue Colony, Shrirampur - 413709, District Ahmednagar, Maharashtra (hereinafter referred to as "The Model") of the Second Part. And M/s. Hero Honda Motors Ltd., a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi - 110057 (hereinafter as referred to as "Client") of the THIRD PART. AND WHEREAS "The Model" has agreed to act as a model in connection with the promotion of the Products of "The Client" as defined herein on terms and conditions hereinafter appearing. NOW IT IS HEREBY AGREED as follows : In this Agreement, the following words shall have the following meanings : (a) "The Model Identifications" shall mean any words and/or symbols and/or photographic and/or graphic representations, which identify "the Model" and/or his name and likeness, in connection with the Product. (b) "Product" shall mean any model of two wheelers manufactured by "The Client". (c....
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....ent. Time is of the essence in relation to all payments under this Agreement. 7. SERVICES OF THE MODEL (a) "The Model" agrees to be available for six (6) days during the Contract Period for the purpose of conceptualizing, creating and producing advertising campaigns covering Television, Outdoor and Point of Purchase Material in relation to the Products, Public appearances, Celebrity dinners, Trade promotions, Consumer promotions, Plant Visits, staff motivation seminars in relation to the Products. (b) These Services to be provided by "the Model" will take place on mutually convenient dates and in mutually convenient locations to be agreed in the light of "the Models" professional and other commitments and subject to the Client provided for all travel, meal and accommodation expenses, including business class airfare and five star accommodation/suitable accommodation wherein facility is not available for "The Model". (c) "The Model" shall endeavour to make best efforts and co-operate in every way "The Client" and in the public appearance use of his judgment in choice of language and demeanour to cre....
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....vice which became taxable only from 1-7-2003, we do not agree with this contention for the reason that services of celebrities are nothing to do with the promotion of the sale whether sale is promoted or not, the service of celebrities is confined to display of brand and advertise the product of M/s. Hero Honda Motors Ltd., therefore, services are clearly of 'advertising services' and not of BAS. 6.1 We observed that considering the facts and terms of agreement ld. Commissioner (Appeals) has rightly held that service of celebrities to M/s. Hero Honda Motors Ltd. through appellant is advertising services and accordingly rightly upheld the order-in-original. The findings of the ld. Commissioner (Appeals) are reproduced below : 07. I have gone through all the records of the case including the written and oral submissions made by the Appellant at the time of personal hearing. 08. The issue involved in this Appeal is, whether the Appellant had rendered taxable advertising services, during 1-4-2000 to 30-6-2003. 09. In the instant case the Appellant, had a tripartite agreement with M/s. Hero Honda Motors Ltd. and the cricket players for the endorsement of the prod....
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.... been appointed by M/s. Hero Honda in connection with the promotion or sales and publicity of their products and, as per the said agreement, the cricket players, were required to act as 'Models and work with the Appellant, in conceptualizing, creating, and producing advertising campaigns for the promotion of the endorsed products of Hero Honda, through television, radio, internet and other printed material, for which M/s. Hero Honda were to provide for business class travel and five star accommodation for both the Model and the Appellant. The Appellant had the right/responsibility as well as duty to get all approval of all materials provided, relating to depiction of Hero Honda and any product models/programme under the Hero Honda umbrella. All the payments made under the agreement were to be made to the Appellant in Indian rupees and were subject to service tax. The appellant/Hero Honda were also to indemnify the Models for any damages arising out of any act of the Appellant/Hero Honda in relation to the advertisement, promotion or sale of the endorsed products. Further, upon expiry of these agreements, M/s. Hero Honda would cease to use the Model identification promotional materi....
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.... such advertisement would occupy in the newspaper/periodical/magazine, negotiating the price, forming the general layout of the advertisement that would finally appear in the newspaper then such activity would be liable to service tax under the category of Advertising Agency Services, The Madras High Court, in the case of M/s. ADWISE ADVERTISING PVT. LTD. [2001 (131) E.L.T. 529 (Mad.)], has held that, "selection of a particular print media or a particular electronic media would also be a part of the services because the advertising agency would be expected to advise its clients as regards the media through which such advertisements should be flashed. Thus, locating or selecting a particular media would be a "Service", by the advertising agency "in relation to the advertisements". This applies to the Appellant's case since, as per the said tripartite agreements, they had been appointed by M/s. Hero Honda in connection with the promotion or sales and publicity of their products and were involved in conceptualizing, creating, and producing advertising campaigns, with the Models, in relation to the endorsed products. 15. (i) As per the tripartite agreements, all the payments....
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....mithkline Pharma Ltd. [2006 (3) S.T.R. 711] have held that introduction of a new entry pre-supposes non-coverage by pre-existing entries, is not relevant to the facts of the instant case relating to the taxable advertising services, rendered by them during 1-4-2000 to 30-6-2003. (ii) Further, their contention that they were registered with Service Tax under 'Event Management services' since 2002, and therefore there is no suppression and that, when interpretation of law is involved, penalty cannot be imposed, is not acceptable since the issue involved in the instant case is suppression of facts relating to the taxable advertising services, rendered by them. 'Event Management services' and 'Advertising services' are two distinct services and a person providing both these services has to pay service tax separately on both the services rendered by him, as per service tax law. The instant case is based on facts and not on interpretation of law. Contrary to facts, based on the tripartite agreements, the Appellant by stating that, in their case there was no consideration and the question of payment of service tax did not arise, have admitted that they had suppressed facts relating ....