2025 (3) TMI 780 - AT - Service Tax

Levy of Brand Endorsement charges received by the appellant under the guise of Business Auxiliary Charges/Brand Promotion Charges - Levy of service tax on IPL Playing Fee attributing the same as rendering of Business Support Service - time limitation. Levy of Brand Endorsement charges received by the appellant under the guise of Business Auxiliary Charges/Brand Promotion Charges - HELD THAT - The fact of appellant having discharged tax on amounts directly received by him as aforestated is not disputed by the Revenue. In this regard the appellant has also taken us through the certified statement copies enclosed as part of the paper book of Rithi Sports Management Pvt. Ltd. and the various schedules pertaining to Mindscapes Maestros DB Corp. ltd. Lafarge India Nutrine Confectionery Company Dabur Aircel Parle Products Pvt. Ltd. NDTV MAXX and Purple People Entertainment Pvt. Ltd who acted as agents of the appellant - The impact analysis of this difference ought to have been taken note of by the authorities while working out the demand and as ascertained from the balance sheet the figures pertaining to the debtors. It is also noted that a fairly large amount of tax that was paid by the appellant s agents on his behalf and as presented in Annexure XI of the paper book (incidentally this is a communication of the department dated 30/10/2013) were not taken note of by the lower authority though these details were well available with the adjudicating authority at the time of adjudication. In Qui Facit Per Alium Facit Per Se a common legal principle to state that one who acts through another actually acts himself there remains no doubt that tax as discharged by the various agents would need to be taken note of for arriving at the total tax liability if any on the appellant. As elaborately explained that tax was duly discharged either by the appellant himself or on his behalf by the agent the demand raised towards Brand Endorsement does not survive and is required to be quashed. Levy of service tax on IPL Playing Fee attributing the same as rendering of Business Support Service - HELD THAT - It has been placed on record that tax due thereon was admitted and paid and was so indicated in their rejoinder reply dt. 2.1.2012 whereby the appellant self-assessed to tax on the said service as Brand Promotion Service and thereafter paid the tax @ 10% of the value of Playing Fees vide challans dt. 31.01.2012 13.2.2012 along with interest as applicable. It is noted that this amount does not find a mention as having been appropriated in the impugned order. Upon a query from the Bench the ld. CA for the appellant undertakes not to claim refund of the said amount paid. In view of the fact that the total demand on this count of Rs. 14, 96, 402 (Ist SCN-1, 16, 300 IInd SCN- 12, 80, 102/-) stands paid along with interest there is no merit in sustaining the same. Likewise for the IInd SCN it is noted that the appellant having admitted his liability to tax under BPS for the amount directly received by him and having paid the same vide challan dated 22.12.11 alongwith interest the said demand would no more survive. It is also clarified from records that the demand of Rs. 12, 80, 102/- as worked out by the revenue was inclusive of Match Winning Bonus. This amount has no bearing with rendering of service and needs to be excluded. Accordingly tax @ 10% of Player Fee of Rs. 11.50 Cr exclusive of Bonus is leviable to tax which as per challans as indicated above stands discharged. Thus no liability survives on this count as well. Time limitation - HELD THAT - There are no basis to sustain this charge of the revenue. It is settled law that to invoke these ingredients it is for the authorities to indicate specifics to prove their case. In the absence of no such evidence forthcoming any allegation invoking such strong and harsh measures regarding fraud suppression misdeclaration is clearly unsustainable and there appears no intent on part of the appellant to evade payment of duty who has himself paid tax as due along with interest. Under the circumstances no case is made out in the matter to sustain the said allegations and the same is dismissed. Conclusion - i) The appellant was not liable for service tax under the categories of Business Auxiliary Service and Brand Promotion Service for the periods in question. ii) There are no evidence of suppression or willful misstatement by the appellant and therefore the invocation of the extended period of limitation was not justified. iii) The penalties imposed under Sections 76 77 and 78 of the Finance Act were set aside as unjustified. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment were:

Whether the appellant, Mahendra Singh Dhoni, rendered "Business Auxiliary Service" and "Brand Promotion Service" and thereby liable for service tax under the Finance Act, 1994.
Whether the amounts received by the appellant for playing in the Indian Premier League (IPL) and for endorsements were taxable under the categories of "Business Support Service" and "Brand Promotion Service".
Whether the appellant suppressed taxable income to evade service tax, thereby justifying the invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994.
Whether the penalties imposed under Sections 76, 77, and 78 of the Finance Act were justified.
Whether the service tax paid by the appellant's agents on his behalf should be considered as compliance with the tax liability.

2. ISSUE-WISE DETAILED ANALYSIS

Business Auxiliary Service and Brand Promotion Service Liability

Relevant Legal Framework and Precedents: The Finance Act, 1994, defines "Business Auxiliary Service" and "Brand Promotion Service". The court examined whether the services provided by the appellant fell within these definitions.
Court's Interpretation and Reasoning: The court found that the appellant's engagement with India Cements Limited (ICL) was primarily for playing cricket, not for rendering promotional services. The agreement did not specify any separate remuneration for promotional activities.
Key Evidence and Findings: The court noted that the appellant's contracts with ICL did not indicate any payment for promotional activities. The appellant was bound by the employer's conditions as part of his employment, which did not constitute a separate taxable service.
Application of Law to Facts: The court applied the definitions of "Business Auxiliary Service" and "Brand Promotion Service" and concluded that the appellant's activities did not fall under these categories for the periods in question.
Treatment of Competing Arguments: The appellant argued that the payments were for playing cricket, not for promotional activities. The court accepted this argument, noting that the appellant's remuneration was not linked to promotional activities.
Conclusions: The court concluded that the appellant was not liable for service tax under the categories of "Business Auxiliary Service" and "Brand Promotion Service" for the amounts in question.

Suppression of Taxable Income and Invocation of Extended Limitation

Relevant Legal Framework and Precedents: Section 73(1) of the Finance Act, 1994, allows for the invocation of an extended period of limitation in cases of suppression of facts or willful misstatement.
Court's Interpretation and Reasoning: The court found no evidence of suppression or willful misstatement by the appellant. The appellant had paid the service tax due on amounts received directly or through agents.
Key Evidence and Findings: The court noted that the appellant's agents had paid service tax on his behalf, and the appellant had disclosed all relevant information.
Application of Law to Facts: The court applied the legal standards for invoking the extended period of limitation and found them unmet in this case.
Treatment of Competing Arguments: The revenue's argument for invoking the extended period was rejected due to a lack of evidence of suppression or fraud.
Conclusions: The court concluded that the extended period of limitation was not applicable.

Penalties under Sections 76, 77, and 78

Relevant Legal Framework and Precedents: Sections 76, 77, and 78 of the Finance Act, 1994, provide for penalties for failure to pay service tax and evasion thereof.
Court's Interpretation and Reasoning: The court found no basis for imposing penalties, as the appellant had not suppressed facts or evaded tax.
Key Evidence and Findings: The court noted that the appellant had paid the service tax due and had not engaged in any fraudulent conduct.
Application of Law to Facts: The court applied the legal standards for imposing penalties and found them unmet.
Treatment of Competing Arguments: The revenue's argument for penalties was rejected due to a lack of evidence of evasion or fraud.
Conclusions: The court concluded that the penalties were unjustified and should be set aside.

Service Tax Paid by Agents

Relevant Legal Framework and Precedents: The court considered precedents where service tax paid by agents was deemed compliance with tax liability.
Court's Interpretation and Reasoning: The court accepted that the service tax paid by the appellant's agents constituted compliance with the appellant's tax liability.
Key Evidence and Findings: The court noted that the appellant's agents had paid the service tax on his behalf, and this was not disputed by the revenue.
Application of Law to Facts: The court applied the principle that tax paid by agents is considered tax paid by the principal.
Treatment of Competing Arguments: The revenue's argument that the appellant had not paid the tax was rejected based on evidence of payment by agents.
Conclusions: The court concluded that the appellant had complied with his tax obligations through payments made by agents.

3. SIGNIFICANT HOLDINGS

The court held that the appellant was not liable for service tax under the categories of "Business Auxiliary Service" and "Brand Promotion Service" for the periods in question.
The court found no evidence of suppression or willful misstatement by the appellant, and therefore, the invocation of the extended period of limitation was not justified.
The penalties imposed under Sections 76, 77, and 78 of the Finance Act were set aside as unjustified.
The court accepted that service tax paid by the appellant's agents constituted compliance with the appellant's tax liability.
Significant legal reasoning included: "In Qui Facit Per Alium Facit Per Se, - a common legal principle to state that one who acts through another actually acts himself, there remains no doubt that tax as discharged by the various agents would need to be taken note of, for arriving at the total tax liability, if any on the appellant."
The appeal filed by the appellant was allowed, and the appeal filed by the revenue was dismissed.

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