TaxTMI 
TaxTMI 
2020 (12) TMI 534
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....y, from the date of deposit till the date the amount was transferred to the account of the Registrar General of the Calcutta High Court. 2. BAS has been defined under section 65 (19) of the Finance Act 1994 [The Finance Act] to mean inter-alia, any service in relation to promotion or marketing or sale of goods produced or provided by or belonging to the client; or any service in relation to promotion or marketing of service provided by the client. This service is taxable under section 65(105) (zzb) of the Finance Act which defines "taxable service" to mean any service provided or to be provided to a client by any person in relation to BAS. 3. Section 65(104c) of the Finance Act defines BSS to mean services provided in relation to business or commerce. It is taxable under section 65 (105)(zzzq) of the Finance Act. 4. It needs to be noted that w.e.f. July 1, 2010, 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 logo of a business entity by appearing in advertisement and p....
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....uly 1, 2010 in the following terms: "The difference between the services classifiable under "BUSINESS AUXILIARY SERVICE"(effective from 1-7-2003 & 10-92004) i.e., BAS and newly introduced service of "PROMOTION OF 'BRAND' OF GOODS, SERVICES, EVENTS, BUSINESS ENTITY ETC SERVICES" (effective from 01-7-2010) is that the latter has a wide coverage in the sense that mere promotion of a brand would attract tax under this service even if such promotions cannot be directly linked to promotion of a particular product or service. Many companies/ corporate houses (for example Sahara, ITC or Tatas) are associated with a range of activities including production/ marketing/ sale of goods, provision of services, holding of events, undertaking social activities etc. If the brand name/ house mark etc is promoted by a celebrity without reference to any specific product or services etc, it is difficult to classify it under BAS. Such activities like mere establishing goodwill or adding value to a brand would fall under this newly introduced service as above." 9. In regard to BSS relating to IPL, the show cause notice mentions that prior to the F....
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....04c) read with Section 65(105)(zzzq) of the Finance Act 1994. ******** 5.2. It is admitted position on record that the Shri Ganguly (the Noticee) obtained service tax registration only on 03-8-2010 relating to the service of 'Promotion of 'Brand' of Goods, Services, Events, Business Entity etc Services'- but did not discharge his service tax liabilities before that under the "BAS" (Business Auxiliary Services) that appears to be lawfully due from him with appropriate interest as detailed herein above. Similarly, Shri Ganguly did not obtain service tax registration under BSS (Business Support Services) relating to service charges received from M/s Knight Riders Sports Pvt. Ltd and thus did not discharge his service tax liabilities that appears to be lawfully due also with appropriate interest. In view of the fact that Shri Ganguly (the notice) had rendered two taxable services namely, 'Business Auxiliary services' (ref: Table-I) and 'Business Support services' (Ref: Table-II), it appears Shri Sourav Ganguly (the noticee) stands liable to pay the service tax due in respect of service charges received from 1.5.2006 (09-5-2006) to 30-6-2010 (20-3-2010). But the ....
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....ecovered from Shri Sourav Ganguly invoking the extended period of time limit as envisaged under first proviso to the Sub-Section (1) of Sec. 73 of the Finance Act, 1994 as amended. (ii) Interest at the appropriate rate as applicable during the material period should not be charged/demanded and recovered from him under section 75 of chapter V of the Finance Act, 1994, as amended for the delayed payment of Service Tax including Education Cess and S&H Edu. Cess as in [i] above; (iii) Penalty should not be imposed upon the Noticee in terms of Section 76, 77 and 78 of Finance Act, 1994 as amended for willful non-payment of the amount of Service Tax including Education Cesses and for contravention of the provisions of Sec. 68,69 and 70 of Chapter V of the Finance Act, 1994." 13. The receipt from the various activities performed by the appellant, on which service tax has been computed in Tables I and II attached to the show cause notice, are as follows:- Sl No. Nature of Receipts Gross Amount received in Rs. Service tax demand in Rs. (01.05.2006 to 30.06.2010) Category/Section 1....
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....absolute owner of the brand 'Sourav Ganguly'. (ii) Except the absolute ownership of the brand 'Sourav Ganguly',- he did not have any active role or organization or infrastructure for doing any business or offering any business services." 16. It was, accordingly, stated in the reply that the appellant as an 'entity' had only allowed the 'brand Sourav Ganguly' to be the 'content' for purpose of brand endorsement or like purpose. 17. In regard to BAS, the appellant stated: "The basic nature of the entity as discussed in paras-10 and 11 can never be said to be any "Auxiliary" to any main business activity- what actually the entity could do only to become a 'content' (as Sourav Ganguly) for the purpose endorsement of any 'brand'- and nothing else. One has to be actively engaged with a normal and reasonable degree of regularity for the provision of any auxiliary service to any main business services (function) of promotion or marketing or sale and there has to have a direct link to the business process involved in promotion or marketing or sale (of goods or service). Therefore, it is clear that Mr. Sourav Ganguly had not performed any Business Au....
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....cricket will be taxable under business support service, and said statement has been relied upon by the Department, while issuing the show cause notice. It was also submitted that no allegations have been made in the show cause notice regarding amount received for writing article on sports and also no allegation have been made in the show cause notice regarding the amount received for anchoring the TV show on Zee Bengla, therefore, service tax on the same has been wrongly computed, and in any case not taxable under business auxiliary service. It was also submitted that so far the amount received for the brand promotion activity is concerned, same is taxable w.e.f 01.07.2010, same is taxable w.e.f 01.07.2010 , under separate category, under which the Appellant already registered and paying service tax, and demand in the present case, only upto 30.06.2010." 20. The Commissioner, however, did not accept the submissions made by the appellant in the reply filed to the show cause notice and, as noted above, confirmed the demand of service tax. 21. The relevant portion of the order passed by the Commissioner in regard to BAS is reproduced below:- ....
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....; From above it can be clearly seen that Mr. Sourav Ganguly during the material period while under contract with various organizations provided certain taxable services and they are classifiable under Business Support Services. Thus, the demand of Rs. 9863839/- made in this regard is proper." (emphasis supplied) 23. The Commissioner also imposed penalty under section 78 of the Finance Act and the relevant portion of the order dealing with this aspect is reproduced below:- "I find that the show cause notice has proposed penal action in terms of section 76, 77 and 78. In his submission made after the personal hearing the notice himself asserted that he had obtained registration under service tax legislation for the provision of Brand Promotion Services only with effect from 01.07.2010. It is also very much evident from the facts of the case that the noticee failed to comply with the formalities like getting themselves registered in accordance with the provisions of section 69 and paying due service tax. Thus, the noticee is liable to be penalized in terms o....
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.... received for anchoring TV shows. The Commissioner, however, has confirmed service tax demand of Rs. 20,60,000/- on fees received for anchoring TV show. The demand is, therefore, liable to be set aside. Brand Ambassador Fee (iii) The show cause notice mentions that the appellant rendered his celebrity image as 'Brand Ambassador for promotion, marketing/sale of various products'. It alleges that the said service prior to July 1, 2010 was taxable under BAS and w.e.f July 1, 2010, the said service was separately placed under section 65(105)(zzzzq) of the Finance Act. The Commissioner has given a finding that the appellant accepted that he had received 'brand endorsement fees', but service tax on brand promotion was levied w.e.f July 01, 2010, when section 65(105)(zzzzq) was incorporated in the Finance Act. Thus, the alleged service was not taxable prior to July 01, 2010. In this connection reliance has been placed on the decisions of the Tribunal in Commissioner of Service Tax, Delhi vs. Shriya Saran , [2014 (36) STR 641 (Tri. Del)] Indian National Shipowners' Association vs. Union of India , [2009 (14) STR 289 (Tri. Bom.)] Hanuman Coal Compan....
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.... deposit on February 26, 2014 and on Rs. 50 lacs from the date of deposit on March 21/26, 2014 till February 16, 2017, when the said amount was deposited by the Government with the Registrar General of the High Court. 26. Shri Manish Mohan, learned authorized representative of the Department, however supported the order passed by the Commissioner and made the following submissions. (i) The Commissioner has correctly held that the appellant provided BAS and BSS services during the period May 1, 2006 to June 30, 2010; (ii) The Commissioner was justified in imposing penalty under section 78 of the Finance Act for the reason that all that ingredients mentioned in the section for imposing penalty were satisfied; (iii) The Commissioner (Service Tax) CBEC, New Delhi by a letter dated July 26, 2010 clarified that remuneration paid to players for promoting or marketing of logo/brands/marks of the franchisee/ sponsorers would fall under BSS and would be chargeable to service tax and that in case it was not possible to segregate the fee paid for playing matches and for participating in promotional activities, service tax should be le....
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....; or ***** ***** ******" 30. BAS is taxable under section 65 (105)(zzb) of the Finance Act and this section is reproduced below: "65(105)(zzb)- "taxable service" means and service provided or to be provided to a client, by any person in relation to business auxiliary service." 31. It has been pointed out by the learned counsel of the appellant that brand endorsement/brand promotion services were made taxable w.e.f July 1, 2010 by introducing sub-clause (zzzzq) in section 65(105) of the Finance Act and the appellant sought registration for the above mentioned activity which was granted on August 3, 2010, where after the appellant paid service tax from July 1, 2010 for the services relating to brand endorsement/brand promotion. The contention, therefore, is that no demand could have been made or confirmed for this service for the period May 1, 2006 to June 30, 2010 under BAS. 32. This submission of learned counsel for the appellant deserves to be accepted. 33. Paragraph 4.1 of the show cause notice, which has been reproduced above, mentions that the appellant had r....
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...., marketing and endorsement of the products under the trade mark CHIRAG. The appellant was required to participate in the promotional campaigns to be launched by CHIRAG in respect of the products and act as an ambassador of CHIRAG during all his public appearances and endorse the products. The contract with Vibgyor Allied Industries Ltd. indicates that Vibgyor was in search of a celebrity suitable for advertising their retail products under the company name "M/s Vibgyor Gold Ltd." and the appellant had communicated his willingness to act as a "model/brand ambassador" for the Company in connection with the promotion of the products. The appellant, therefore, granted the right and license to use the "Player Identification" in connection with the advertisement and promotion of the business of the Company. The contract with BMA Stainless Ltd. indicates that BMA was desirous of engaging the services of the appellant and the appellant had agreed to provide services in connection with the advertisement, promotion, marketing and endorsement of the products under the trade mark "CAPTAIN" or "BMA". The contract also mentions that the appellant will act as a brand amba....
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....ar brand name or house name) usually by using a celebrity (such as sportsperson, film stars, etc.) to associate him/her with the brand. The intended impression that is created in the minds of customers or users is that the products and services of that brand have the level of excellence comparable to that of the celebrity. Unlike in case of advertisements using models, a brand ambassador works under a contract of a reasonably long period, where under he is not only required to advertise the goods or service in different media but also to attend promotional, product launching events, make appearances in public activities related to the brand or the brand holder or use such goods or services in public. The contractual amounts are substantial and it may not only involve an individual celebrity but a group of celebrities such as a cricket team or the actors of a successful film. 4.2 It is important to note that promotion or marketing sale of goods produced, provided or belonging to a client and promotion or marketing of services provided by the client are already covered under Business Auxiliary Services (BAS). Such activities would continue to remain classified under B.....
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....t of an existing taxable service, then can it be said that the activity which is attributable to a new service can also be attributable to a preexisting service. 42. This issue has been settled by the Bombay High Court in Indian National Shipowners' Association. The High Court held that introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said service. The portion of the judgment on this aspect is reproduced below: "37. Entry (zzzzj) is entirely a new entry. Whereas entry (zzzy) covers services provided to any person in relation to mining of mineral, oil or gas, services covered by entry (zzzzj) can be identified by the presence of two characteristics namely (a) supply of tangible goods including machinery, equipment and appliances for use, (b) there is no transfer of right of possession and effective control of such machinery, equipment and appliances. According to the members of the 1st petitioner, they supply offshore support vessels to carry out jobs like anchor handling, towing of vessels, supply to rig or platform, diving support, fire fighting etc. Their marine constructio....
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....also section 65(105)(zzzzq) of the Finance Act and observed that, notwithstanding the language used in the contract, the services provided by the assessee would be covered under section 65(105)(zzzzq) of the Finance Act. This is for the reason that an activity would not be leviable to service tax under a pre-existing category, if that activity was brought under a tax net from a later date. The Tribunal, after noticing the difference between promotion of a brand and promotion of a particular product, concluded that the assessee was promoting a brand and not marketing a particular product. The relevant portion of the decision is reproduced below: "9.2 Brand endorsement is a form of brand promotion or advertising campaign that involves a well known person using his or her fame to help promote a product or a service. Examples of such brand endorsements are manufacturers of perfumes, cosmetics and clothing using the services of well known film actors or fashion models for promoting their brand by the appearance of such celebrities in advertisements in audio-visual media, product launch events. Such promotional activity for the goods produced or being traded by a person under a ....
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.... (c) In fact, the respondent's activity is Celebrity endorsement which is a form of advertising campaign for brand promotion that involves a well known person using his/her fame to help promote a product or service and such endorsement confers on the brand of the product/service, a larger than life image - the more famous the Celebrity endorser, the more impact it can have on enhancing the brand value. Though clause (i) and (ii) of Section 65 (19) also cover marketing or promotion of goods produced/provided or services provided by a client, when such marketing or promotion of branded goods/services is by Celebrity endorsement which involves promotional events being carried out by the Celebrity or advertisements by the Celebrity in audio visual or print media, this activity becomes brand promotion. (d) The contracts of the respondent with her clients have all the features of the contracts for Celebrity endorsement, the purpose of which is promoting a brand and not merely marketing or promoting some particular goods or services. 12.1 Therefore, notwithstanding the language of the respondents contracts with her clients that she was to provide the....
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....emand, the said demand could not have been confirmed. THIRD ISSUE 48. The Commissioner has confirmed the demand raised on the amount received by the appellant for article writing under BAS. 49. The contention of leaned counsel for the appellant is that the demand could not have been confirmed in the absence of any charge relating to this aspect in the show cause notice. 50. This contention of the learned counsel for the appellant also deserves to be accepted for the reason stated while dealing with the Second Issue. FOURTH ISSUE 51. The show cause notice alleges that the appellant had received remuneration from IPL franchisee-KKR, in addition to playing skill, for promotional activities to market logos/brands/marks of franchisee/sponsors and the demand has been confirmed under BSS on the assumption that the amount received was a composite fee and, therefore, leviable to service tax in terms of the Instructions dated July 26, 2010 issued by CBEC. In this connection the Commissioner has also referred to the answers given by the appellant to question nos. 4 and 8. 52. The con....
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....rporate clients because of their contractual obligations - and thus, so far as players are concerned, there cannot be twice or repeat taxation on the same service." 54. Question No. 4 requires the appellant to give details of the amount received as cricket playing fees and business promotional service fees. The answer given by the appellant to this question was very specific. The appellant stated that he had received payment from KKR "only for playing cricket in terms of the agreement entered into with them". Question No. 8 required a response from the appellant on the issue as to whether service provided by a cricket player/celebrity for promoting or marketing of logos/brand/ marks of franchisee/ sponsors falls under BSS. The answer given by the appellant is that it would not fall under BSS for the reason that there is a separate classification of service under "Brand Ambassador for promoting brands of goods/ services" and the appellant had obtained service tax registration as a service provider under this category. 55. The appellant had, therefore, categorically stated that the amount received from KKR was only for playing cricket, yet an inference had been draw....
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....r is not correct. In the first instance, as noted above, the appellant had received the fees for playing cricket only and even otherwise, it is a settled principle of law that if no machinery exists to exclude non-taxable service, a composite contract is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal. 59. The confirmation of demand under this head, therefore, cannot be sustained. FIFTH ISSUE 60. The show cause notice dated September 26, 2011 proposed to demand service tax on the fees received by the appellant during the period May 1, 2006 to June 30, 2010 by invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act. Section 73 (1) of the Finance Act, as it stood at the relevant time, with the proviso is reproduced below. "73(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or ....
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....stating that the appellant had not carried out any activity which would be leviable to service tax under BAS and that he had earned income by playing cricket for the country. This was followed by a communication dated December 14, 2009 enclosing copies of the contracts. However, the appellant received a letter dated January 18, 2010 seeking documents/ information to which a reply was submitted by the appellant on March 15, 2010. It is after a gap of about ten months that the appellant received summons on January 12, 2011 for appearance on April 19, 2011. 63. The show cause notice was issued to the appellant on September 26, 2011 in regard to the demand covering the period from May 1, 2006 to June 30, 2010 by invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act as the limitation contemplated under section 73(1) Finance Act was one year from the relevant date. The allegation made in the show cause notice regarding the applicability of the extended period of time limit is as follows: "Shri Sourav Ganguly by way of his act of omission and failure, suppression of material facts with the intend to evade payment of....
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....imitation, for it is only where any service tax has not been paid that the Central Excise Officer can within one year from the relevant date serve notice on the person chargeable with the service tax which has not been paid. The proviso to section 73(1) of the Finance Act, however, permits the notice to be served within five years but the conditions stipulated therein have to be satisfied. 70. Thus, not only should the show cause notice give specific details of willful mis-statement or suppression of facts but should also specify that this was with an intent to evade payment of service tax and the Commissioner has to decide this issue on the basis of the facts brought before him. What is seen in the present matter is that the show cause notice merely reproduces the words of the Statue, without providing any specific factual details regarding the applicability of the proviso to section 73(1) of the Finance Act, nor has the Commissioner recorded any finding regarding the applicability of the said proviso. 71. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) [2018 (12) GSTL 368 (Del.)] had examined at length ....
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....levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where 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 render it suppression." (emphasis supplied) 73. This decision was referred to by the Supreme Cou....
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....ssioner of Central Excise, Chandigarh-I [2007 (216) ELT 177 (SC)] also held: "10. The expression 'suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." 76. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when "suppression' is wilful with an intent to evade payment of service tax. 77. It also needs....