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TMI Blog2025 (3) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract-IPL playing contract covered the following rights given by MSD to ICL (franchisee): To (i) photograph, both individually and as member of squad, when involved in activities related to the team. (ii) film, televise, photograph, identify, record matches & periods ancillary thereto, training, press conference, as set down by franchise/IPL, i.e. to record the player (MSD) & his performance, training, press conference (excepting the player's dressing room) (iii) use Player Identification (iv) assist and cooperate with franchisee / IPL partners to maximise their respective promotional benefits from his (MSD) association by making upto ten personal appearance from each contracted season, and by way of granting interviews and photographic opportunities etc. (v) MSD would not undertake promotional activities or exploit the player identification in any way/through any media to any third party. In addition the agreement dated 20.10.2010, incorporated the following, that: (i) ICL shall be entitled to place branding on helmet and other protective equipment. (ii) MSD to unconditionally and irrevocably assign to ICL for the benefit of ICL, the entire copyrigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Business Auxiliary Service Assumed Service Tax on amount received from companies towards endorsement rights 3,52,98,171.00 Total - 4,80,99,189.00 8. With regard to the second SCN, the revenue alleged that MSD had rendered Business Support Services to ICL in terms of various clauses of the agreement concerning "Sponsorship, Media and Promotional Activities and Player Restrictions". Besides rendering services of playing cricket matches for its IPL team since no split-up of income earned by MSD from ICL for playing matches and for promotional activities was available, the entire income received from the ICL under the agreement was considered as taxable income under "Brand Promotion Service" for the period April 2011 to March 2012 thereby charging service tax on entire amount of Rs. 12,42,81,728.00 received from ICL, alleging evasion of service tax of Rs. 1,28,01,018.00. 9. The second SCN further stated that MSD had received endorsement fees from business agents and from clients during the period April 2011 till March 2012 amounting to Rs.47,32,86,047.00 as indicated in the Trial Balance Statement and the Ledger for the concerned period but had declared an amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant by way of a cheque and stated that however by mistake the company had entered the same amount and the same cheque number three times in the said statement. He further submitted that all other payments were made to the agency that is Mindscape Maestros. Service tax and education cess for the direct payment received by them was paid on 29.03.2010. For the expenditure incurred by Dabur, the Learned Advocate inviting reference to Rule 5 of the Service Tax (Determination of Value) Rules, 2006 ("where any expenditure or costs are incurred by the service provider in the course of providing taxable services, all such expenditure or costs shall be treated as a consideration.....") submitted that accordingly, if the service provider incurred any expenditure and claimed re-imbursement of such expenditure then such expenditure shall be included as a in consideration. As in the present case, the appellant had not incurred any such expenditure nor claimed such expenditure from the recipient of service, the same was not liable to be taxed. In support of his contention he invited reference to a communication from Dabur vide letter dated 02/01/2010. For payments from Aircel, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividually and as well as a member of the team/squad. 3) IPL was free to film, televise, photograph, identify and or otherwise record the performance of the appellant during the course of the match etc. 13. Based on the agreement entered into between the appellant and ICL and the agreement entered into between ICL and other sponsors of the team, the SCN alleges that India Cements were serving the business or commercial interest of the sponsors through the players who were made to take part in such promotional activities. It is alleged by the Revenue, that ICL executed sponsorship agreements with other sponsors giving them official sponsorship rights. The promotional activities contended in clause 4 and 5 of the agreements supra (entered between ICL and players) were nothing but akin to promotion or marketing of the logo/brands/marks/activities of the franchisees/sponsors. 14. Countering the charge, the appellant submitted that in terms of the Contract, if a player failed to take part in the promotional or endorsement activities or failed to comply with the agreement, then the franchisee was at liberty to reduce the player fee by 5% on each occasion. In view of the aforesaid, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support service and other transaction processing" Explanation- For the purposes of this clause, the expression "Infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle, messages, secretarial services, internet and telecom facilities, pantry and security". It can be noted from the above that none of the variety of acts/activities as indicated in the definition actually come into play in the matter. 17. As for Board's Circular No. 334/4/2000-TRU dated 28.2.2006, the appellant had contended that the intention thereof, was to tax services which were out-sourced by an organization engaged in the activities of business or commerce while the person rendering the Business Support Service and the person receiving the service were independent entities having a principal to principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed 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. We note that the ld. Adjudicating authority failed to take note of the same while going about the confirmation of the demand. It is also clear from records that the demand was worked out on the basis of gross revenue figures as indicated in the Profit & Loss Accounts of the appellant, without taking note of the fact that the P & L account was drawn on accrual basis, whereas tax liability Bill 31.3.2011 was on cash receipt basis. 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. We also note that a fairly large amount of tax that was paid by the appellant's agents on his behalf and as presented before us in Annexure XI of the paper book (page 284 onwards) (incidentally this is a communication of the department dated 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (57,86,30,079) Pg 284 / Pg 33 Add: RITHI's share @ 7% (included in above) [E] 4,05,04,105 Pg 284 BALANCE AMOUNT ON WHICH SERVICE TAX IS TO BE PAID BY DHONI [F] 11,69,70,605 [C-D+E] Less: Amount Shown in ST-03 Return under category 'BAS' (Undisputed fact) [G] 13,05,85,383 Pg 237 (OIO BALANCE: Excess Amount (Taxable Value) reported and paid in ST-3 [H] (1,36,14,778) [F-G] Less: 'Brand Promotion Services' (1st Issue-2nd SCN) inadvertently included in 'Business Auxiliary Services' in the ST-3 [I] 1,36,00,000 Balance: Excess reported and paid in ST-3 (14,778) [H-I] The aforesaid statistics only goes into buttressing our aforesaid findings in the matter. 21. As for the revenue's case for levy of service tax on IPL Playing Fee attributing the same as rendering of Business Support Service, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities are merely intended to establish goodwill or adding value to the brand of ICL without any direct link with any particular product or service of the latter. At best it could be so said that intended impression that it seeks to create in the minds of people at large is that the products and services of brand of ICL, were of the level of excellence comparable to that of MSD. 23. It also appears to us that in order to overcome limitation, the revenue has made sweeping generalizations alleging suppression, mis-statement, fraud etc. with intent to evade payment of duty. We however find 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, we are afraid, 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, we are of the view that no case is made out in the matter to sustain the said allegatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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