2022 (12) TMI 556 - SC - Service Tax

Demand of service tax under various heads, including manpower recruitment or supply agency service under reverse charge, programme producer service, sponsorship service, and other services - Extended period of limitation - The Commissioner ruled that the consideration paid to FSE for appearance of VA for a sports tournament is taxable under the definition of manpower recruitment or supply agency . The Commissioner observed that the source of supply of skilled manpower is outside India and has been received by the Appellant in India. The Commissioner further ruled that any programme made by a programme producer and then offered for sale to different TV channels or broadcasters for relay is a taxable activity. The Commissioner concluded that the transaction made by the Appellant with Zee Telefilms includes element of service and is taxable. - Tribunal confirmed the order of Commissioner HELD THAT - An employer-employee relationship exists between the agency and the individual and not between the individual and the person who uses the services of the individual. Such cases were held to be governed by the definition of manpower recruitment or supply agency in Section 65(68) and hence liable to service tax. The CBEC circular dated 23 August 2007 deals with a situation where there exists a relationship of employer and employee between the agency which supplies the service and a person whose service is supplied. But it does not postulate that such a relationship must exist for the statutory definition to be attracted. Hence, the fact that there may be no relationship of employment between VA and FSE would not be dispositive for the purposes of the statutory definition in Section 65(68). For the above reasons, we are of the view that the decision of the Tribunal on this aspect of the matter cannot be faulted with. Programme produce - The Tribunal relied upon its decision in the case of Board of Control for Cricket in India 2014 (9) TMI 598 - CESTAT MUMBAI - in terms of the contract, BCCI had appointed the producer to exclusively produce the feed for and on behalf of BCCI for each match. This is the distinguishable feature of the decision of the Tribunal in BCCI which is absent in the present case. Therefore, we are of the considered view that the Tribunal was in error in holding that the decision would apply squarely to the facts of the present case. The view of the Tribunal to that extent would have to be and is accordingly reversed. Extended period of limitation - In paragraph 4.20 of its order, the Tribunal has specifically observed that the present case involves the interpretation of statutory provisions. - We are of the considered view that the Tribunal having come to the conclusion that the issue turned upon an interpretation of the provisions of Section 65(68) and Section 65(86b) of the Finance Act 1994, there was no warrant to allow the invocation of the extended period of limitation and to direct the determination of the penalty following the re-quantification of the demand. Levy of penalty - there was no warrant for the imposition of the penalty as the dispute in the present case essentially turned on the interpretation of the statutory provisions and their inter play with the circular issued by the CBEC. Decided partly in favor of assessee.

Issues Involved:
1. Interpretation of the provisions of Section 65(68) and Section 65(105)(k) of the Finance Act 1994 regarding "manpower recruitment or supply agency" services.
2. Taxability under the category of "programme producer" services.
3. Applicability of the extended period of limitation for the first show cause notice.
4. Imposition of penalties on the Appellant.

Issue-wise Detailed Analysis:

1. Interpretation of Section 65(68) and Section 65(105)(k) of the Finance Act 1994:
The primary issue involved the interpretation of "manpower recruitment or supply agency" under Section 65(68) and "taxable service" under Section 65(105)(k) of the Finance Act 1994. The definition of "manpower recruitment or supply agency" includes any person engaged in providing services for the recruitment or supply of manpower, directly or indirectly, in any manner, temporarily or otherwise, to any other person. The court noted that the definition does not require an employer-employee relationship between the service provider and the person whose services are provided. The agreement between the Appellant and FSE for the participation of a tennis player was deemed to fall under this category, as FSE provided the services of the player to the Appellant. The court upheld the Tribunal's decision on this aspect, stating that the statutory definition does not necessitate an employer-employee relationship.

2. Taxability under the Category of "Programme Producer" Services:
The second issue was whether the Appellant's agreements with Zee Telefilms and Trans World International fell under the definition of "programme producer" as per Section 65(86b) of the Finance Act 1994. The court examined the agreements and found that the Appellant licensed the broadcast rights of the Chennai Open Tennis Tournament to Zee Telefilms and Trans World International. The court concluded that the Appellant did not produce the programmes on behalf of another person but rather sold the telecast rights. Therefore, the definition of "programme producer" was not applicable. The court reversed the Tribunal's decision, distinguishing it from the case of the Board of Control for Cricket in India, where the producer was appointed to exclusively produce the feed for BCCI.

3. Applicability of the Extended Period of Limitation:
The third issue concerned the applicability of the extended period of limitation for the first show cause notice dated 20 October 2009. The Tribunal had observed that the case involved the interpretation of statutory provisions. The court held that since the issue turned on the interpretation of legal provisions, there was no justification for invoking the extended period of limitation. The court directed that the show cause notice be confined to the normal period of limitation, excluding the extended period.

4. Imposition of Penalties:
The final issue was whether a valid ground for the imposition of penalties on the Appellant was made out. The court noted that the dispute centered on the interpretation of statutory provisions and their interplay with a CBEC circular. Given this context, the court found no warrant for the imposition of penalties. The Tribunal's direction to re-determine the penalty following the re-quantification of the demand was thus set aside.

Conclusion:
The appeals were allowed in part. The court upheld the Tribunal's decision regarding the taxability under "manpower recruitment or supply agency" services but reversed the decision on the applicability of "programme producer" services. The extended period of limitation was not applicable, and no penalties were warranted. The adjudicating officer was directed to abide by these directions on remand.

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