TaxTMI 
TaxTMI 
2026 (3) TMI 1204
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....tner Agreement' with World Gold Council (WGC) to work jointly to promote the sale of 22 karat, gold jewelry by means of advertisement in the media. WGC agreed to share a part of payment obligation in respect of the activity on condition that the activity is in accordance with WGC strategy and incorporates the WGC element as Strap-line, Logo. Visuals, Film, Script, Soundtrack and Ad Design and is personalized in such a way that it does not interfere with the WGC advertising campaign and is otherwise in accordance with the terms of the said Agreement. The WGC contribution will be made on media expenses which will include Print, TV and to the extent of 25% of the 'Total Spends', as approved by WGC. WGC has given GRT a nonexclusive right to use the marks in connection with the promotional advertising of gold jewelry. GRT is to submit the supplier's invoice for the activity to WGC for making its contribution. 3. The department was of the view that the services provided by the appellant to WGC, by incorporating the logo and the name of the council in the advertisement in terms of the aforesaid agreement, appears to be classifiable under 'Sponsorship Service' vide section 65 (99a) ....
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....ted. 5. The Ld. Counsel further submits that, without prejudice to the earlier submissions, that the expenses incurred in the course of their arrangement is partly borne by the appellant and partly reimbursed by WGC. Such reimbursements being in the nature of cost sharing are not a consideration for services rendered. Section 67 indicates that service tax is leviable only on the gross amount charged for the services provided and the advertisement expenses reimbursed by WGC do not form part of the consideration for providing taxable service. It is submitted that the show cause notice, the OIO and the OIA accepts that the amounts have been reimbursed in terms of the agreement. For the proposition that reimbursement of the cost/expenses cannot be regarded as consideration, reliance was placed on the decisions in Commissioner of Central Goods and Service Tax, Navi Mumbai Vs Hindustan Construction Company Ltd (2025) 27 Centax 300 (S.C.), Hindustan Construction Company Ltd. Versus Commissioner of Central Goods and Service Tax, Navi Mumbai (2025) 27 Centax 299 (Tri-Bom), Gujarat State Fertilizers and Chemicals Vs Commissioner 2017 5 SCC 198, and Union of India Vs. Intercontinental Cons....
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....ation to such sponsorship. 10. At the outset, the relevant statutory provisions as it existed during the subject period is reproduced below: a) Section 65(99a) of the Finance Act, 1994 as amended defines 'sponsorship' as under: "Sponsorship includes naming an event after the sponsor displaying the sponsor's company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition, but does not include any financial or other support in the form of donations or gifts, given by the donors subject to the condition that the service provider is under no obligation to provide anything in return to such donors". Section 65(105)(zzzn) as it stood upto 30.06.2010, defined 'taxable service' from 2006 as under: "Taxable service" means any service provided or to be provided to any body corporate or firm, by any person receiving sponsorship in relation to such sponsorship, in any manner, but does not include services in relation to sponsorship of sports events". From 01.07.2010, Section 65(105)(zzzn) defined taxable service" as under: "Taxable service" means any....
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....smissed as conditions that are normally imposed by any service receiver. 13. It is elementary that for a transaction to attract service tax, there must be an identifiable service provider and a service receiver. The transaction between the two should reflect a provision of a taxable service as defined under the Finance Act by the service provider to the service recipient and that too for a consideration. 14. When we examine the admitted facts pertaining to the arrangement between the Appellant and WGC what is discernible is an understanding to collaborate and work jointly to promote the sale of 22 karat gold jewellery by means of advertisement in the media. The fact that the expenditure incurred is being shared between both the parties at a specified percentage as can be gleaned from the agreement fixing the contribution of WGC to the extent of 25% of the 'Total Spends' is indicative only of a cost sharing in a joint effort at promotion of such jewellery that is intended to pay dividend to both parties to the agreement. The fact that the Appellant is required to provide the invoice of the vendor who undertakes the activity of such promotion advertising in order for WGC to par....