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2024 (5) TMI 936
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....nt Venture/Partnership, with the understanding that this appellant shall set up the bill boards as it had license for such activity from the local authority, and IMPL would do the marketing and / or sale of time slots and the revenue so generated will be shared in agreed ratio. The opening recital of the agreement reads as follows: 'FMPL intends to outsource the selling of timeslots on these Five screens to corporate clients to IMPL, on the following terms and conditions as agreed upon between the parties hereto'. Further, IMPL is given exclusive rights to sell advertisement time on the LED screens to corporate clients. Clause-1 further provides that IMPL was to finalise the sale agreement for corporate clients and be responsible for the recovery of revenue from them, for FMPL. Further, provided - 'other clients who have market only in Hyderabad/Secunderabad such as (Meena Bazar, Mochi, Apollo Hospital etc) Educational Institutions based out of Hyderabad/Andhra Pradesh, live performance in the city, Film Promos and such other local activitIES would be handled by Flytech. In other words, as a thumb rule, clients who have market in Hyderabad/Secund....
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....15.04.2009, which was implemented and shares allotted to IMPL, and appropriate return in Form-II under Section 71 of the Companies Act was filed. 7. Pursuant to enquiry and investigation, during which the statement of Shri Venugopal Jambavat, Director of FMPL was recorded on 14.11.2008. It appeared to Revenue that the service of advertising, time and space in bulk, has been provided by appellant to IMPL, notwithstanding the fact whether IMPL would not sell the space and time, as provided. Hence, the amount of Rs. 1,29,48,897/- can only be considered as remuneration received by FMPL for 'advertising time and space' provided to IMPL. This fact is also supported by the statement of Shri J.V.Mohan, Director of IMPL. It further appeared that the amount of Rs. 1,50,00,000/- is the amount received by appellant for serviced to be provided to IMPL, which appear to be supported by the statement of Shri Aniruddha Kumar, CFO for IMPL, who had interalia stated - the amount of Rs. 1.5 crores is paid by IMPL to FMPL as an advance, and the said payment is as per the terms of the agreement. Thus, undisputedly total amount of Rs, 2,85,45,897/- is paid by IMPL to FMPL, and the same is in con....
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....xclusive right of selling Advertising time to corporate clients.. to IMPL". Grant of exclusive right to sell is quite distinct and different from selling/providing space or time. In other words, by the agreement, FMPL has in no way sold space/time (or any specified share or part thereof) to IMPL for advertising, "but has only granted a exclusive marketing right. To fall under the taxable service of 'Sale of space or time for advertisement', FMPL should have sold/provided space/time to IMPL, which is not there in the instant case. By virtue of the exclusive marketing right granted to it, IMPL per se has not been given a defined share/part in the space, whether in bulk or whole or otherwise." 19. The relationship between the two have to be ascertained from the agreement entered and the various correspondences between them. I have carefully perused the said agreement and after having perused the same, we have no doubt in our mind that the aforesaid agreement is a sort of partnership agreement where two persons have come together and pooled their resources for their mutual benefit. The agreement is revenue sharing agreement and the revenue earned by such partnership is to be s....
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....nd such other focal activities would be handled by Flytech. As a thumb rule, clients who have market only in Hyderabad/Secunderabad would be handled by Flytech and all other clients would be handled by IMPL. 22. Clearly, IMPL would be handling corporate clients who would be putting up their advertisements on the bill boards. The agreement is in the nature of partnership business contract of pooling their resource for common good. It is in no way be interpreted that the FMPL has sold space to IMPL in bulk who in turn will sell it in retail. The agreement is not for providing taxable service by the service provider to service receiver. The relationship between them is that of partners and not of a provider of service and recipient of service. That the agreement is for sharing of revenue is further clear from the condition 2, 3 & 4 which defines the commercial terms of their relationship as under: Commercial Terms: 2. IMPL guarantees a minimum consideration to M/s FMPL by mode of minimum guarantee to the tune of rs. 1,25,00,000/- (Rupees One Crore Twenty Five Lakhs only) per screen per annum payable monthly. 3. The minimum guarantee amount shall be ....
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....ly termination, M/s IMPL shall retain amounts payable to M/s FMPL towards minimum guarantee and revenues share upto the extent of unadjusted advance. In case the amount payable is less than the unadjusted advance, FMPL shall refund such amount within 15 working days of the termination of the agreement. 8. The revenue share as mentioned aforesaid shall be calculated within seven days of the end of the calendar month and paid after 90th day of the end of calendar month. IMPL shall pay 75% of this amount by way of a LC for 90 days by the 7th day of the following month. All discounting charges shall be to FMPL's account. All revenue share figures shall be streamlined/adjusted on a quarterly basis i.e. any excess/shortfalls on account of Minimum guarantees/revenue shares shall be adjusted from the total amounts payable/paid on a quarterly basis. 9. That the LED Boards would operated at least 18 hours a day and 365 days a year. Any down time exceeding 3 hrs per day would result in pro-rata reduction in Minimum Guarantee amounts. 10. The initial duration of the agreement shall be one year i.e. 01.01.2007 to 31.12.2007 and during this time, IMPL shall be exclusiv....
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....ifferent varieties of mopeds. These amounts allowed to the dealers were clearly trade discount liable to be deducted from the price charged to the dealers for the purpose of arriving at the excisable value of the mopeds. 25. The show cause notice relies on the depositions of Shri Aniruddha Mukharjee and Shri J.V. Mohan. Shri Aniruddha Mukharjee, CFO, IMPL in his statement have submitted that they buy advertising space in bulk on various bill board which they in turn sell in retail to various advertisers and that their agreement with FMPL also falls under this category. The statement of Shri Aniruddha Mukharjee and Shri Mohan run counter to explicit assertion made in the agreement as discussed above. What has been stated by them is their opinion about the nature of agreement. Their opinion cannot be determinative of the exact nature of the agreement. I have already held that for the reasons stated above, the relationship between the two parties is not that of service provider and service receiver. If the agreement was for sell of space in bulk, then surely the agreement would have provided for the amount of time, period and rate of space sold on the bill board. All these in....
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....his letter has been produced before the Joint Commissioner. Again the IMPL vide their letter dated 29.03.2007 requested to treat the amount as security deposit or return the same or convert into equity in FMPL. M/s FMPL vide board resolution dated 03.10.2008 have also agreed to convert the money into equity. Clearly, whatever little doubt one could have about the amount being an advance has also been set at rest by their decision to convert it into equity. Obviously, the question of charging service tax does not arise. 30. The agreement speaks of minimum guarantee amount, which the Show Cause Notice seeks to treat as consideration for the service provided or to be provided. In continuation to the findings discussed above, I find no merit in the above contention in the Notice. By its very nature and description and viewed in the overall scenario, the said amount of 'minimum guarantee' is a sort of security-cum-binding element. To the extent FMPL anticipates business coming through IMPL, its own share of marketing and use of the asset (owned by it) has to be reduced/curtailed or kept in reserve. Thus, this amount is more in the nature of binding liability/penalties on IMPL i....
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....he business were the factors for non-payment of service tax for the last three months (May- July 2007). Accordingly, I am satisfied that there existed reasonable cause for their failure to pay the service tax on time. Accordingly, I refrain from imposing any penalty by invoking Section 80 of the Act. 32. Accordingly, I pass the following Order:" ORDER The proceedings initiated against M/s Flytech Media Pvt Ltd., vide Show Cause Notice F.No. DGECEI/INT/HYRU/12-28/2008 dated 04.12.2008 issued by the Directorate General of Central Excise Intelligence, Hyderabad Regional Unit, Hyderabad are hereby dropped. 9. Pursuant to passing of the afore mentioned Order-in-Original, the Jurisdictional Commissioner reviewed the Order, and pursuant to issue of review notice dated 14.02.2010, took notice of the averments of the assessee, though there has been Novation of the agreement between the appellant and IMPL, and the original agreement is replaced with a new one, and thus the obligations under the original agreement stands discharged and need not be performed. The Commissioner further recorded finding, that in the instant case, there is no concrete evidence o....
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....urged that written agreement has got higher evidentiary value than oral statement. The Revenue have mis-guided itself by giving greater weightage to the statement recorded in the course of the investigation. Such statements are malafide and wrong, given due to on going dispute between the parties. Further, the issue of share in profits is also evident from clause - 9 of the agreement, which provides compensation/rebate for IMPL, for down time on the bill boards for (reasons applicable) to the appellant, evidently FMPL had entitlement for putting 13 screens in Hyderabad/Secunderabad and till the time of entering into the agreement, they are put up only 5 screens. Thus, FMPL had further scope of putting up 8 more screens which needed a considerable investment and also marketing support for sale of slots. Thus, it is evident from the agreement that appellant entered into Joint Venture/Partnership with IMPL for enhancement of the business by that joint effort and to share the increased revenue from the additional 8 boards to be put up in near future in the mutual benefit. It is further evident from the agreement that there was stipulation to refund the deposit to IMPL in 20 equal insta....