2016 (1) TMI 850 - AT - Service Tax

Territorial Jurisdiction - SCN issued by Mumbai Office of Service Tax Department for whole of India offices - assessee have separate registration for each premises - Import of service - payment made to foreign architects for service of concept design and interior decoration of their Multiplexes. - They also received Pouring Fees and Signing Fees - Held that - The Commissioner should have refrained from adjudicating and instead could have initiated the process of making show cause notice answerable to the jurisdictional Commissioners or he should have written to the Central Board of Excise and Customs seeking power to adjudicate the case of services rendered pan India just as DGCEI has the power to issue the show cause notice on pan India basis. - the demand of ₹ 38,39,984/- is confirmed beyond the jurisdiction of the Commissioner and, is therefore, set aside as invalid. - Decided in favor of asessee. Import of services - pouring fees and signing fees - Held that - clearly the service activity involved is not sale of space and time as contended by the appellant. What is sold is the right to advertise and promote the product of the CCIPL. Similarly right to use the Inox Logo, as contended by the Ld. Advocate is not the right that is under consideration before us. What is under consideration is the right to promote the product of CCIPL for which CCIPL pays fees to the appellant. It is beyond doubt, therefore, that that the services provided are covered under BAS. Appellant provided BAS to its client CCIPL on which tax is payable. However, we agree with the appellant that the service tax on import of Architect Services attracts levy of service tax only from 18/4/2006 onward. We need not dwell on this issue that service tax on import of services is payable by the recipient of the service under Section 66 (A) only w.e.f. 1/5/2006 when the Section 66(A) was brought into effect. This is the settled legal position. Decided partly in favor of assessee.

Issues Involved:
1. Levy of Service Tax on 'Pouring Fees' and 'Signing Fees' under Business Auxiliary Services (BAS).
2. Jurisdiction of the Commissioner of Service Tax, Mumbai.
3. Levy of Service Tax on 'Architect Services' imported.
4. Invocation of extended time period for demand.
5. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act.

Detailed Analysis:

1. Levy of Service Tax on 'Pouring Fees' and 'Signing Fees' under Business Auxiliary Services (BAS):
The Tribunal examined the agreements between the appellant and CCIPL, noting that the appellant received 'Pouring Fees' and 'Signing Fees' for promoting CCIPL's beverages through signage, on-screen advertising, and other promotional activities. The Tribunal concluded that these activities fall under the definition of Business Auxiliary Services (BAS) as per Section 65(105)(zzb) read with Section 65(19)(i) of the Finance Act, which involves promoting the sale of goods provided by the client. The appellant's contention that the activities fall under different service categories introduced later was rejected. The Tribunal held that the services provided were for marketing CCIPL's goods, and thus, the consideration received was taxable under BAS.

2. Jurisdiction of the Commissioner of Service Tax, Mumbai:
The Tribunal found that the Commissioner of Service Tax, Mumbai, did not have jurisdiction to adjudicate the demand for services rendered outside Mumbai. It was noted that each multiplex location had separate service tax registrations and the services were provided individually at each location. The Tribunal emphasized that the Commissioner should have refrained from adjudicating services rendered outside his jurisdiction and should have referred the matter to the respective jurisdictional Commissioners or sought appropriate authorization from the Central Board of Excise and Customs. Consequently, the demand of Rs. 38,39,984/- for services rendered outside Mumbai was set aside as invalid.

3. Levy of Service Tax on 'Architect Services' imported:
The Tribunal agreed with the appellant's contention that service tax on imported architect services could only be levied from 18.04.2006 with the introduction of Section 66(A) of the Finance Act, 1994. This position was supported by the Bombay High Court's ruling in Indian National Shipowners Association vs. Union of India. Therefore, the demand for service tax on architect services for the period before 18.04.2006 was set aside.

4. Invocation of extended time period for demand:
The Tribunal upheld the invocation of the extended time period for the demand, noting that the appellant's various locations were registered under service tax, and it was their responsibility to furnish details to the authorities and declare the services rendered. The non-payment of service tax was discovered through an investigation by DGCEI, justifying the extended time period under Section 73 of the Finance Act.

5. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act:
The Tribunal upheld the imposition of penalties under Sections 76, 77, and 78 of the Finance Act, citing suppression of facts by the appellant. The penalties were deemed appropriate given the upheld demand for service tax on 'Pouring Fees' and 'Signing Fees' within Mumbai jurisdiction.

Order:
(a) The demand for service tax on 'Pouring Fees' and 'Signing Fees' within Mumbai jurisdiction was upheld, with the quantum to be worked out and intimated by the Commissioner within 15 days.
(b) The demand for services rendered outside Mumbai jurisdiction was set aside.
(c) The demand for architect fees was set aside.
(d) Appropriate interest under Section 75 of the Finance Act was payable.
(e) Appropriate penalties under Sections 76, 77, and 78 of the Finance Act were payable based on the upheld demand.

Conclusion:
The appeal was partly allowed, with the Tribunal setting aside the demands for services rendered outside Mumbai and for architect fees, while upholding the demands and penalties for 'Pouring Fees' and 'Signing Fees' within Mumbai jurisdiction.

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