TaxTMI 
TaxTMI 
2023 (8) TMI 1724
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....for the period from April 2005 to September 2011. Investigations conducted by the officers of Service Tax Department revealed that the appellant had not paid/short-paid service tax on services provided by them. On scrutiny of records and documents of the appellant, it was revealed that the appellant is engaged in various taxable services without payment of appropriate service tax on the income earned by them from their clients. Hence four Show Cause Notices were issued proposing to demand the short-paid / non-paid service tax along with interest and for imposition of penalties. Details are as per the Table below:- S. No. Appeal Nos. Show Cause Notice / Data Period Amount of Service Tax OIO / OIA No 1. ST/466 & 631/2012 686/2010 dated 20.10.2010 April 2005 to Sept. 2009 1,49,56,824/- OIO No. 11/2012 27.3.2012 2. 3. ST/42028/2016 171/2011 dated 8.4.2011 Oct. 2009 to Sept. 2010 39,77,353/- OIA No 378 & 379/2016 30.6.2016 4. ST/42029/2016 87/2012 dated 4.4.2012 Oct. 2010 to Sept. 2011 30,40,599/- After due process of law, the authorities below confirmed the demands as proposed in the Show Cause Notices along wit....
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.... at fixed intervals. Revenue is of the view that the above activity of infrastructural support provided by the appellant for a consideration by way of revenue sharing agreement, is covered under the definition of 'Business Support Service'. 7.1.3 CBEC Circular No. 109/3/2009-ST dated 23.2.2009 is a clarificatory one. In fact, the Circular itself ends by stating that the facts of each case and the terms of the contract must be examined before a view is taken. Board has subsequently clarified vide Circular no. 148/17/2011-ST dated 13.12.2011 that every revenue sharing arrangement is not outside the service tax net. The real nature and substance of the transaction and not merely the form of the transaction or the label given to it should be the guiding factor for deciding the classification. 7.1.4 In the instant case it is seen from the agreements entered into by the appellant (licensor) with the restaurants / retailer outlets (licensee's) [see para 3.3.1 of OIO No 39&40/2014 dated 16/06/2014], that the appellant is providing a host of services to the licensees. These services support the activities of the licensees in the furtherance of their business. The mere reason that the ....
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....ely. Hence the impugned order needs no interference. 7.2 Renting of Immovable Property 7.2.1 The only dispute in this category is regarding the premises rent out as a car park. The appellant has leased out their parking premises to one M/s. Smart Parking India Pvt. Ltd. (Car Park Manager) under an agreement to operate, organize, advice, alienate and run the premises as a car park together with other related services. The demand is for the period October 2009 to September 2010. (Prenegative list) 7.2.2 Section 65 (105) (zzzz) of the Finance Act, 1994, introduced with effect from 01.06.2007, reads as follows: "(zzzz) to any person, by any other person, by renting of immovable property or any other service in relation to such renting, for use in the course of or, for furtherance of business or commerce. Explanation 1.--For the purposes of this sub-clause, "immovable property" includes- (i) building and part of a building, and the land appurtenant thereto; (ii) land incidental to the use of such building or part of a building; (iii) the common or shared areas and facilities relating thereto, and (iv) in case of a building l....
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....cant land' as used in exclusions (a) and (b). In the circumstance a building or its part put up on land and which is used for car parking will get the benefit of the exclusion from levy of service tax under Section 65 (105) (zzzz) as it then stood. 7.3 Sale of Space or Time for Advertisement 7.3.1 The appellant had provided space for advertisement and collected an amount for the display of advertisement and hoardings by various companies. In their letter dated 23.2.2009, the appellant has stated that they have collected and paid service tax under the heading 'Renting of Immovable Property'. In view of the CBEC Circular No. 58/07/03-ST dated 25.3.2003, if a payment has been remitted under the wrong head, the same is to be sorted out by the Pay & Accounts Officer and the appellant is not required to pay tax again. However, demand of payment has been confirmed in respect of the same receipts again under a different head. The demand is for the period May 2006 to September 2009. Appellant has paid the applicable tax from 1st June 2007 and contesting the demand only for the period from May 2006 to June 2007 as being barred by limitation. Further, on the question of adjustment, the ....
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....ffect from 1.4.2011 in view of the amendment under Finance Act, 1994 to Section 65(25aa) and section 65(105)(zzze). Hence the entire demand under the head 'Membership of Club or Association' is liable to be quashed. The demand relates to the period April 2005 to September 2010. 7.4.2 We find that the appellant has taken two stands. They initially disputed that they run a Club or Association and have submitted that the registration under the head 'Membership of Club or Association' was obtained due to abundant caution. After the Hon'ble Supreme Court judgment in the case of Calcutta Club Ltd. [State of West Bengal and Ors. vs. Calcutta Club Limited, [MANU/SC/1367/2019], they have taken the view that demand under the head 'Membership of Club or Association' service is ultra vires and is liable to be quashed. Anyway, we find that the impugned order has sought to collect tax for the impugned activity under the head 'Membership of Club or Association'. Further in the case of non-members taxability would only arise after the words 'or any other person' was inserted in section 65(105)(zzze) on 8.4.2011. This being so no tax can be demanded on the impugned activity during the said p....
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....-3 returns for the period. Hence they are liable to pay the service tax on the commission earned under the category of 'Business Auxiliary Service'. While processing the case for adjudication, the relevant documents produced by the appellant were verified. Accordingly, the P&L account statement duly certified by the Chartered Accountant on the basis of the detailed given to him was verified and found that a huge amount of other income earned was certified. The appellant was requested to submit additional documents from their clients to substantiate the claim of non-realisation. Despite the time given to the appellant, they failed to produce the relevant supporting documents in their claim that other income earned are not taxable. 7.6.2 The appellant states that they have shown 'other income' in their books of account during the period in question. The impugned order proceeds on the assumption that this 'other income' pertains to commission received by the appellant and has brought the same to tax. It was submitted before the authorities below that the appellant does not function as a commission agent and did not receive any amount as commission. The appellant also submitted Char....
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....nuinely and bonafide believe it was not liable to pay service tax. 9.2 We find that the extended time limit has been invoked in SCN 686/2010 dated 20/10/ 2010. There is nothing concrete recorded in the order that followed to show a positive case of suppression or willful misstatement with an intention to evade payment of duty, except to say that the appellant have not declared the actual gross amount realized in the ST 3 return but only mentioned the value on which service tax was paid and that the appellant has also not sought any clarification from the department. There is best a breach of Rules but no allegations of foul play. We find that some genuine confusion initially existed in properly classifying the services rendered by the appellant. The department too after issue of SCN has accepted some of the averments / dropped some of the charges made in the SCN while issuing the impugned orders. It is only the initial Order in Original No. 11/2012 S. Tax/Ch. IV dated 27.3.2012 that has confirmed duty under proviso to section 73(1) of the Finance Act 1994. We hence feel that the extended time has wrongly been evoked in the said order and confine the demand to the normal time per....
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....he issue of demand of service tax under "Business Support Service". The facts are that, appellant had entered into revenue sharing agreement with various restaurants. It is thus contended by appellant that no service tax is leviable on the income received by them as per these agreements as there was no service rendered by the appellant to another. The department is of the view that as per the agreements the appellant has to provide a person for collection of cash and also supply of uninterrupted power back up facilities. That these are services rendered by appellant to support the business of the licensee, and taxable under 'Business Support Services'. 3. Undisputedly, these agreements are revenue sharing agreements. The relevant part of show cause notice dt. 20.10.2010 reads as under : "3.0 ... MEL have entered into Revenue Sharing Agreements with various restaurants/retailers and provided space in the multiplex to Marry Brown, Ponnusamy Hotel, Arusuvai, etc. to run their chain of restaurants and to Sree Sai Pearls and Handicrafts, etc. to sell their products. The core constituent of the agreement with all the restaurants/retailers remains identical but there is minor ....
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....licensor on monthly basis after proof of remittance of sales tax is submitted by the licensor on monthly basis after proof of remittance of sales tax is submitted by the licensee. f) mutually agreed that the licensee shall deposit with the licensor a refundable interest fee deposit of Rs.10,000/- g) The licensee agrees to pay Electricity charges of Rs.1000/- per month to the licensor every month. 3.1 As per the agreement with their clients, (MEL) is to provide a person for collection of cash at the cash counter and supply uninterrupted power facilities for their client's operations. A person, who is in MEL's pay roll is being provided for the collection of cash and to prepare billings at the counter of the restaurant/retailer and for such purpose a computer network with necessary software to raise bills is provided by Mel. From such collection, Mel retains an agreed percentage as per the agreement and pays the remaining portion of collection to the restaurants/retailers at the fixed intervals." 4. From the above, it can be seen that the appellant has entered into revenue sharing agreement with restaurants/retailers. The conditions of the agreement show....
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....mmerce of the service recipient the levy under 'Business Support Service' would be attracted. Thus, the principal activity is to be undertaken by the service recipient while only some assistance or support is provided by the service provider. In other words, the service provider will not have any role or interest in the business run by the service recipient. In the instant case, it cannot be said that the restaurants / retailers are by themselves to the exclusion of the appellant herein, conducting the business. In fact, the appellant is providing some resources in the nature of space, labour (employee for collection), electricity and back up facilities (in the space provided by the appellant) etc. These resources cannot be said to be assistance or support given by the appellant to the licensee. In fact, there is mutual understanding to promote the business and it is not in the nature of providing some infrastructural facilities for conduct of business of another. The Board in circular dt. 23.02.2009 has explained this aspect of revenue sharing regarding film exhibitor and distributor which reads as under : "2.5. The matter has been examined. By definition 'Business Suppor....
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.... hereinunder. The Revenue Share shall be computed on the Net Collections received by the Exhibitor from the exhibition of the Hindi Motion Pictures produced and/or distributed by SPE Films across all the Multiplexes, as the case may be : 5.1.1 1st Exhibition Week : 50% of the Net Collections 5.1.2 2nd Exhibition Week : 42.5% of the Net Collections 5.1.3 3rd Exhibition Week : 37.5% of the Net Collections 5.1.4 4th Exhibition Week onwards till the last Exhibition Week : 30% of the Net Collections. 5.2 This Revenue Share shall be applicable for all the Motion Pictures that are granted by SPE Films to the Exhibitor for exploitation during the Term. This Revenue Share shall be maintained throughout the Term of this Agreement and for all Motion Pictures and Multiplexes. xx xx xx" 8.1 After analyzing the agreement and following the decision in the case of Mormugao Port Trust (supra) as well as the circular dt. 23.02.2009 issued by the Board, the demand under the category of 'Business Support Service' was set aside. The department filed an appeal before the Hon'ble Supreme Court wherein it was held that the Tribunal has taken an absolutely....