2017 (11) TMI 1572 - AT - Service Tax

Valuation- includibility - reimbursable expenses incurred for producing the programme - pure agent - Held that - In the present case the respondent after producing the programme on their own transferred the copyright in the said programme to M/s Sanvedana Entertainment and M/s Percept Picture Company Limited. Accordingly the respondent was not appointed as a pure agent to incur the expenses on behalf of the M/s Sanvedana Entertainment and M/s Percept Picture Company Limited - the adjudicating authority shall decide afresh all other aspects raised in the show-cause notice and also raised by the respondent which were not considered at all - appeal allowed by way of remand.

Summary

Issues:
1. Taxability of expenses claimed as reimbursement in the context of copyright transfer for TV and radio program production services.
2. Determination of whether the respondent acted as a pure agent in the transactions.
3. Reconsideration of the case based on the ownership transfer of copyrights and the nature of services provided.

The judgment revolves around a dispute where the respondent entered agreements with production companies for TV programs and claimed expenses as reimbursement, arguing non-taxability due to copyright transfer. The adjudicating authority initially dropped the demand, considering the respondent as a pure agent. However, the Tribunal disagreed, emphasizing that the respondent sold the programs and transferred copyrights to the production companies for their own use, not as a pure agent. The Tribunal found the respondent did not qualify as a pure agent since they transferred copyrights post-production. The Tribunal highlighted that the Commissioner solely focused on the pure agent aspect, neglecting other crucial issues like the nature of services provided and the taxability under relevant provisions. Consequently, the Tribunal remanded the case to the adjudicating authority for a fresh decision on all aspects, allowing the Revenue's appeal. The judgment underscores the need for a comprehensive reconsideration beyond the pure agent concept to determine tax liability and service categorization accurately.