As a relief to Reliance Media Work ltd, the Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Service Tax can’t be levied under ‘Business Support Service’ (BSS).
The assessee challenged the order-in-original passed by the Principal Commissioner of GST & Central Excise, Mumbai East, which arises from the unique deployment of constituents, that makeup channel entity involved in the exhibition of cinematographic films, in an arrangement by which several distributors participate in sharing of revenue with the appellant.
The tax authorities concluded that these are distinct entities rendering service in a de-mutualized capacity on a ‘principal-to-principal’ basis and do not acquire the status of partners asa consequence of their agreement.
Tax liability of ₹ 15,66,91,993/- on the value of ₹ 1,89,59,12,990/- for the period from 2014-15 and up to September 2015 in 2015-16 was ordered for recovery under section 73 of the Finance Act, 1994, along with appropriate interest under section 75 of Finance Act, 1994.Penaltiesunder sections 76 and 77 of the Finance Act, 1994wasa also imposed.
It was observed that in cases the character of a “person” is not acquired in the business transaction and the transaction is on a principal-to-principal basis, the tax is leviable on either of the constituent members based on the nature of the transaction and as per rules of classification of service as embodied under Sec 65A of Finance Act, 1994
By definition ‘Business Support Service’ is a generic service of providing ‘support to the business or commerce of the service receiver’. A Coram consisting of Mr C J Mathew, Member (Technical) and Mr Ajay Sharma, Member (Judicial) viewed that the principal activity is to be undertaken by the client while assistance or support is provided by the taxable service provider.
In light of the decision by the Supreme Court and the Tribunal, it was observed that no service tax can be levied on the appellant under BSS. While allowing the appeal, the Tribunal set aside the impugned order.
Ms Ginita Bodani, Advocate appeared for the appellant and Shri Nitin M Tagade appeared for the respondent.
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