TaxTMI 
TaxTMI 
2024 (6) TMI 1595
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....iary Service and were not discharging service tax 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 dema....
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....ing portion of collection to the restaurants / retailer outlets 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 th....
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....om the said revenue etc. is of no avail. Separate activities can get taxed separately. 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. (Pre- negative 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 s....
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....emporary or a permanent structure on land. It is perhaps for this reason that exclusion (c) uses the term 'land' instead of the term 'vacant 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 Ju....
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....o the credit of the holder and also has expiry date within which the amount has to be utilized. This arrangement is not and will not come within the scope of the service. The same can be taxed only with effect 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&#....
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....7.6 Business Auxiliary Service 7.6.1 The appellant has neither paid service tax on the income earned and booked in their scheduled of income as commission or other income which is taxable under the category of Business Auxiliary Service nor filed ST-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' pe....
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.... Infinity Infotech Vs. UOI - 2014 (36) STR 37 have been relied upon. The appellant has regularly been filing its half yearly returns in respect of three services and all the levies proposed in the Show Cause Notice pertain to interpretation of law wherein the appellant genuinely 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 ....
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....t, 1994. Brother Member (Technical) has upheld the demand raised under the category of 'Business Support Service'. So also, the penalty imposed under Section 76 of the Finance Act, 1994. I agree with the findings and conclusions on the issue of time bar. 2. I will first deal with the 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 ....
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....Net sales the licensor and licensee will share the revenue in the ratio of 15 : 85 between licensor and licensee, the licensor will be entitled to 15% and the licensee will be entitled to 85% on the net sales as per the statement of accounts furnished by the licensor. The payment shall be effected by the 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, Me....
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....rt services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telécom facilities, pantry and security." 5. From the above definition, it can be seen that only when services are provided in relation to business or commerce 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 bu....
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....consideration in the agreement was to be paid as under : "5. Consideration 5.1 In consideration of SPE Films agreeing to grant to the Exhibitor, the License to exploit the Theatrical Rights of a Motion Picture, the Exhibitor shall pay to SPE Films, such revenue share (the "Revenue Share") in respect of the Motion Picture, as is set out 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 .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 ....
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....ce Act, 1994. Brother Member (Technical) has set aside the penalties imposed under Section 77 & 78 of the Finance Act, 1994 and upheld the penalty imposed under Section 76 of the Act ibid. 12. After appreciating all the facts and also taking note of the fact that the issue in regard to Mandap Keeper Services, BSS etc. has several ramifications of interpretation of law, I am of the view that the appellant has established reasonable cause for not paying service tax. I am of the view that it is not a fit case for invoking Section 80 of the Finance Act, 1994. The penalty imposed under Section 76 therefore requires to be set aside, which I hereby do. 13. I agree with the other findings made in the order recorded by brother Member (Technical). The appeal is disposed of accordingly. Sd/- (SULEKHA BEEVI C.S.) MEMBER (JUDICIAL) POINTS OF DIFFERENCE In view of difference of opinion between the Members, the following questions arise for resolution by the third Member : (1) Whether the demand raised under "Business Support Service" is to be sustained as held by Member (Technical) ? (OR) Whether the demand raised under "Business Support Service" i....
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....licensor shall be responsible for providing necessary power backup facilities at the area and the cost for running of the said facilities shall be borne on proportionate basis by the licensee. c) Support: The licensor shall promote this venture wherever possible and will also ensure freedom of operation for the licensee with regard to the business prospects agreed to herein. 4. Duties of Licensee: The licensee hereby agrees as follows: a) Nature of Business: The licensee shall be responsible for Beverages Operations, eg: preparing and serving of Beverages to the customers, guests and visitors at the concession counter as per the menu card or the booklet prepared in this behalf. b) Statutory Obligations: The licensee shall be responsible for the compliance of all statutory formalities with respect to the persons employed by them or hired by them and the licensor shall in no way responsible or liable for the said payment including any claims from such persons. c) Indemnify the Licensor: The licensee agrees to indemnify the licensor against all losses and damages, which the licensor may incur due to the act of the licensee or its employees,....
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....ffected by the licensor exclusively. There will not be sharing of revenue for the sales thus affected. c) Tax liability on Income: Neither party shall be liable for taxes on the income of the other party. d) Mode of payment: All transactions between the parties hereto shall be through crossed cheques or demand drafts with official receipts. e) Maintenance and Goodwill: Both parties agree to maintain the premises in good condition and shall not do any act, which shall cause damage to the area or reputation of the other party. f) Special preference: The licensor shall give the first preference for rendering (above mentioned services) in the event of the licensor organizing any special events outside the Entertainment Centre and within the licensor's premises i.e. Mayajaal Entertainment Centre. The commercials for such services will be worked out mutually. (eg: Catering to special parties). g) Promotion and Sponsorships: The licensee shall carry promotion boards and pamphlets of the licensor in all its outlets. The license shall provide sponsorship to events and other activities conducted by the licensor to improve sales or other market....
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.... the taxable service category of "renting of immovable property"; while an alternative view is that such activity falls under the category of 'Business Support Service'. 2. The matter has been examined. Normally a producer of a movie sells the rights of showing the movies in a region to a distributor. The distributor in turn enters into agreement with theatre owners. This agreement can be of different types. Thus it is necessary to examine different types of arrangements under which a movie is screened, in order to determine whether any tax liability arises on the activities undertaken by a theatre owner and a distributor. Typical types of arrangements normally entered into between a theatre owner and a distributor are as under :- 2.1 Under one type of arrangement, the distributor leases out the hall for screening of the movie. Here, the theatre owner gets a fixed rent from the distributor. The profit or loss from exhibiting the film is borne by the distributor. In such a case, the theatre owner provides the taxable service of 'Renting of immovable property for furtherance of business or commerce' and is accordingly liable to pay service tax. ....
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.... screening of a movie is not a taxable service except where the distributor leases out the theatre and the theatre owner get a fixed rent. In such case, the service provided by the theatre owner would be categorized as 'Renting of immovable property for furtherance of business or commerce' and the theatre owner would be liable to pay tax on the rent received from the distributor. The facts of each case and the terms of contract must be examined before a view is taken. 4. All pending cases may be disposed of accordingly. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned. 5. Please acknowledge receipt. 6. Hindi version follows. 21. From the aforesaid agreement, it is clear that the licensee had been allotted space in the premises belonging to the appellant for a period of 12 months for carrying out the business of sale of food items, beverages etc. Besides allowing the space to carry out the business, the appellant also agreed to provide uninterrupted power supply, employ a person for billing purposes and to promote the business of the licensee and also ensure a hassle-fre....