9911796707
TMI Blog2022 (12) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... - HELD THAT:- It is undisputed the rights were originally granted to ZEEL at which time they were not taxable. Had ZEEL continued to use the rights for the full 10 years no tax would have been payable. Had an agreement been reached whereby the rights were returned by ZEEL to the appellant for a consideration that could have been a consideration for termination of the original contract. Thereafter, had the appellant sold the rights to IMGR or to any other entities, it would have been taxable under section 65 (105) (zzzzr). The tripartite agreement which has been entered into has effectively circumvented this situation by transferring the rights from ZEEL to IMGR directly with the concurrence of the appellant for a consideration known as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L and M/s IMG Reliance Pvt. Ltd. [ IMGR ] It was found that the appellant had, as per an agreement with ZEEL granted commercial rights for broadcasting for a period of 10 years by an agreement dated 26.09.2005. This agreement was to expire on 30.09.2015 subject to any extensions or renewals. 3. Five years after the agreement was signed a tripartite agreement was signed between the appellant, ZEEL and IMGR on 09.12.2010 by which commercial rights which were granted to ZEEL were transferred to IMGR. In consideration of this transfer, IMGR paid to ZEEL a termination fee of Rs. 70 crores on behalf of the appellant. The relevant clause of this agreement is as below:- As a consideration for the termination of the MRA (Master Rights Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The operative part of it is as follows. (i) I confirm the Service Tax demand of Rs. 7,76,35,633/- (Rs. Seven crore Seventy Six Lac Thirty Five Thousand Six Hundred Thirty Three only) including Education Cess and Secondary Higher Education Cess under proviso to subsection (1) of section 73 of the Act ibid read with Rule 6 of Service Tax Rules, 1994 ; (ii) I confirm demand of interest under section 75 of the Finance Act, 1994 on the above service tax liability at the applicable rate till the date of payment ; (iii) I impose a penalty equivalent to the amount of service tax not paid by them i.e. Rs. 7,76,35,633/- under section 78 of the Finance Act, 1994. However, the benefit of reduced penalty of 25% will be available to the No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dited. Therefore, extended period of limitation was correctly invoked. 7. On merits, Commissioner held that ZEEL had been granted commercial rights which subsisted till the agreement was terminated by the tripartite agreement. He found no reason for payment of any amount to ZEEL as termination fee except because the rights have been surrendered by the ZEEL. Consideration for such surrender in the form of termination fee was also received by ZEEL. Accordingly, this amount is not a termination fee at the hands of the appellant. Since there is no other transaction than the two transactions namely, termination fee and grant of rights, the necessary implication is that the amount was paid for grant of rights by the appellant to IMGR. 8. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement and were transferred to IMGR. However, instead of the appellant returning an amount to ZEEL and collecting an amount from IMGR, the amount was transferred directly from IMGR to ZEEL through the tripartite agreement as termination fee which was paid on behalf of the appellant. Therefore, according to the Revenue, effectively the amount was paid as a consideration for the commercial rights which IMGR received from the appellant through the tripartite agreement. 12. On the other hand, according to the appellant it has not received any amount whatsoever from IMGR. The tripartite agreement only to enabled transfer of rights from ZEEL to IMGR. These rights were originally given by the appellant to ZEEL at which time they were not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
