TaxTMI 
TaxTMI 
2026 (1) TMI 1519
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....al languages. The appellants are also providing taxable services under various categories such as Broadcasting services, Video production agency/video take production service, Advertising agency services, Copyright Service, Business Auxiliary Service, Renting of Immovable Service, Cable operator services, Sponsorship services etc. and for this purpose, they got themselves registered with the jurisdictional service tax authorities under Service Tax Registration No. AAACZ0243RST001. 2.2 The appellant's primary business is related to broadcasting and operation of various TV Channels, for which they earn subscription income from consumers through cable operators/MSOs and such income is accounted under the head 'advertisement and cable operation service', on which they duly discharge the service tax liability. During the disputed period, the appellants had entered into agreements with the producers, registered copyright holders, individual artists, etc., (hereinafter referred as the "assignors") who are the owners / copyright holders of various songs in movies / albums, single songs. In terms of the agreement entered with such persons, the appellants receive the rights to distribute/....
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.... service tax leviable on the aforesaid activities, investigation was initiated by the department by calling for various documents and recording of statements of Shri Kishor Bhagwandas Parmar, Senior Vice President of the appellants company on 11.10.2021 and 13.10.2021. 2.5 On the above basis, the department had interpreted that the appellants had not paid service tax on amount recouped/recovered from assignors/FPCs and on the expenses incurred towards marketing and promotion of music rights. Accordingly, show cause proceedings were initiated against the appellants, proposing for confirmation of the service tax demand along with interest and for imposition of penalties on the appellants. The Show Cause Notice (SCN) dated 18.10.2021 issued in this regard had alleged that the taxable service of advertising and marketing has been provided to assignors for consideration under the agreements for music rights procured by the appellants; and that they had received the value of such taxable service by recouping the expenses against the income/revenue received from the said music rights. The matter arising out of the SCN dated 18.10.2021 was adjudicated by the learned Commissioner, Centra....
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....erables and delivery schedules; Places of public performances etc. Since these activities are agreed to be undertaken as permitted activities in respect of the assigned rights of music and song videos for certain consideration as mentioned in such agreements, and is not providing any service for the FPCs/assignors, in any manner, they submitted that such activities of the appellants cannot be considered as service rendered for the FPCs/assignors. In this context, he relied on the clarification issued vide Central Board of Indirect Taxes & Customs (CBIC) vide Circular No. 178/10/2022-GST dated 03.08.2022 which had clarified in the context of service tax that an agreement to do an act or abstain from doing an act or to tolerate an act or a situation cannot be imagined or presumed to exist just because there is a flow of money from one party to another. Unless there is an express or implied promise by the recipient of money to agree to do or abstain from doing something in return for the money paid to him, it cannot be assumed that such payment was for doing an act or for refraining from an act or for tolerating an act or situation. 4. On the other hand, learned Authorised Represen....
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....Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. Explanation 1.- For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,- (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. Explanation 2.- For the purposes of this clause, the expression "transaction in money or actionable claim" shall not include- (i) any activity relating to use of money or its c....
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....ative list of services provided under Section 66D of the Finance Act, 1994 and hence, they are taxable. Since, M/s ZEEL had not paid Service tax on the said activity, an amount of Service tax including Swatch Bharat Cess and Krishi Kalyan Cess has been demanded for the period from April, 2016 to June, 2017 as per proviso to Section 73(1) of the Finance Act, 1994. xxx xxx xxx xxx 14.7 Thus, it is seen that the issue under dispute is levy of Service Tax on the promotion and marketing expenses that were mandated to be spend by the noticee as per the conditions of some of the Assignment Agreements. It is seen that the SCN has relied upon Music Assignment Agreement dated 03.01.2017 (hereinafter also referred to "MAA"), executed by M/s. Excel Entertainment Pvt Ltd (Excel) as first part, M/s. Red Chillies Entertainment Private Ltd (Assignor) as second part and M/s. Zee Entertainment Enterprises Ltd (through its Zee Music Company) (Assignee) as third part. As per this agreement it is seen that Excel is the producer and owner of Intellectual Property Rights in the Film named 'Raees' and Assignor is the sole and exclusive owner of the 'Assigned Works' of the Film. As per th....
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....hereof and/or adaptations thereof and exercise the rights of an owner in such future works; and (f) the right to collect all Sound Recording Royalties and Publishing Royalties. For the sake of clarity, all rights, mechanical reproductions and rental rights in the Assigned Works are also part of the present assignment and shall be exclusive to the Assignment throughout the universe for the entire Term subject to the provisions of this Agreement. 10. Consideration 10.1 The Assignors hereby transfer and assign the exclusive copyright in the Assigned Works in favour of the Assignee for which the Assignee agrees to pay to Assignor a consideration in the form of a minimum guarantee of Rs. 12,50,00,000/- (Rupees Twelve Crores Fifty Lakhs Only) ("Minimum Guarantee) (exclusive of indirect taxes which shall be payable by the Assignee) in the following manner. 50% (fifty percent) on the execution of this Agreement; and 50% of the total amount within 7 (seven) working days after the delivery of the Delivery Materials under clauses 9.1.1 to 9.1.6 (intimation on the Delivery Materials being ready for delivery shall be made by Assignor to the Assignee in writin....
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.... for marketing, promotions, publicity, advertisement and packaging, in TV promos, posters, radio point of sale material, Assignee's website, etc, shall be limited to the purpose of the sale of audio devices granted by Assignors to Assignee, without any additional charge or royalty, 14.9 On going through the above terms and condition, it is observed that the Assignor as the owner, has transferred and assigned to the Assignee, all copyrights in respect of each and all of the Assigned Works along with right to make adaptations in lieu of and subject to the entire Consideration in accordance with the terms of the MAA. It is further seen that as per the MAA, the entire consideration has two components. The first component of consideration is in the form of a minimum guarantee of Rs. 12,50,00,000/- which is payable by the noticee to the Assignor in the manner set out in the MAA. The second component of consideration requires the Assignee to spend an amount of Rs 2,50,00,000/- ('Marketing and Promotion Cost') for the purpose of marketing and promotion of the Assigned Works as per the Marketing and Promotion Plan. "Agreeing to the obligation to refrain from an act, or....
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....ase of Revenue is by treating the various expenditures incurred by the appellants for marketing, as consideration, it is interpreted that the appellants have rendered service to the FPCs. 9.2 We have perused the relevant clauses of the aforesaid agreements which have been discussed by the learned adjudicating authority in the impugned order as extracted in the paragraph 8 above. From plain reading of the aforesaid agreement entered into by the appellant assessee, it transpires that the said arrangement between the appellants and Film Producer Companies (FPCs)/assignors for a specified period, and the scope of activities or work to be performed by the appellant is provided in the Article 2 - Assignment of Rights; Article 10 - Consideration and Article 14 - Marketing/Promotion/Publicity, clearly brings out the rights that have been offered to the appellants defined under clause 2.1 which relate to only songs and song videos of the film; whereas the rights retained by FPCs/assignors include all other rights in exploiting the film for various purposes including merchandising, gaming, animation films, remaking etc.; Intellectual Property Rights (IPR) including copyrights of the produ....
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.... to the FPCs/assignors, as their client. 9.4 We find that in order to qualify that the activities undertaken between the appellants and the FPCs amounting to service for levy of service tax, such activities are to fulfil the definition of service as provided under Section 65B(44) ibid. In terms of such definition the activities shall be carried out by a person for another for consideration. From the agreement entered into between the appellants and FPCs, it is clearly spelt out that the marketing of music and song video rights are undertaken for the cause of appellants and not for the cause of FPCs. The finer distinction of music or song in a film and the film by itself is more distinguishable in the present day context, as consumers hear the music through various mediums such as internet/web, mobile devices such as mobile phones, ipad, laptop etc. and other audio devices; and similarly view song videos through You Tube, dedicated channels of singers, music albums etc., internet etc. However, when the consumers have to view the movies they either may view the movie in theatres, home webcast, other online service providers including TV channels, telecom dish service providers, in....
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.... certainly to be treated as taxable services and service tax has to be collected. Clause (e) of this section includes 'an agreement to refrain from an act or to tolerate an act'. It has been held by this Tribunal in a catena of orders that this clause would apply only if there is an agreement to tolerate an act, i.e., if the purpose of the agreement was to tolerate an act. If the purpose of the agreement is not tolerate an act but any amount is paid as compensation for default (such as delayed payments in this case), such amounts cannot be called as amounts collected to tolerate an act under section 66E (e) of the Finance Act. Therefore, the demand on this count also cannot be sustained." 10.2 We also find in another case of Oil & Natural Gas Corporation Limited Vs. Commissioner of Central Goods and Service Tax, Dehradun - (2025) 29 Centax 193 (Tri.-Del.) by referring to various decisions taken on the issue of levy of service tax under Section 66E(e) had passed the orders in favour of appellants. The relevant paragraphs are as follows: "4. In the case of South Eastern Coalfields 2021(55) G.S.T.L. 549 (Tri.- Del.), the Principal Bench of this Tribunal after consi....
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.... orderin- original No.KKD-EXCUS-JC-52/16-17 dated 15.09.2016, whereby the Joint Commissioner had dropped the demand of service tax proposed on account of receipt of amount in the nature of Liquidated damages, fine and penalty, etc from the contractors. 7. There is no reason to differ with the settled principles of law as enunciated by the decision in the case of South Eastern Coalfields Ltd. We, therefore, hold that the amount recovered by the appellant towards penalty is not a consideration for any activity which has been undertaken by the appellant and as a result there is no 'service' in terms of Section 65B(44) of the Act. The facts of the present case do not suggest that there is any other independent agreement to refrain or tolerate, or to do an act between the parties hence the issue is decided in favour of the appellant. The other issues related to invocation of extended period of limitation, penalty and interest are not required to be gone into as the issue on merits stands decided in favour of the appellant." 10.3 We also find that the dispute in respect of the services provided by the appellants as taxable service under 'Business Auxiliary services' f....