The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench ruled that no service tax demand in absence of service provider-service recipient relationship.
The demand under this head was made only against the appellant, Divya Yog Mandir Trust on the amount received by it from M/s. Rajashri Media Pvt. Ltd. for grant of exclusive rights to all audio, visual, audio-visual and text materials of Divya Yog Mandir Trust.
The Counsel for the appellant submits that the appellant has not developed any content whatsoever for Rajashri Media Pvt Ltd. As per the agreement, the appellant provided raw content to Rajashri Media who dubbed and developed the content and commercially exploited it. Of the Revenue so generated by which Rajashri Media Pvt Ltd, the appellant got a share.
Such a revenue share cannot be termedprovision of development and supply of content service. The Authorised Representative supported the impugned order.
Evidently, as per the agreement between the appellant and Rajashri, the appellant provided material which was developed into audio and video content by the latter and it was also commercially exploited. Part of the Revenue earned was shared by Rajashri with the appellant.
Thus, the relationship between the appellant and Rajashri is not one of service provider-service recipient but one of partners in a joint venture in which each contributed something to the project and shared the Revenue earned.
A Coram consisting of Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “In the absence of any service provider-service recipient relationship, there can be no service tax because service tax is chargeable on taxable services provided. There must be a service, it must be taxable, there must be a service provider and a service recipient and a consideration to levy service tax. There is no charge of service tax on sharing of revenues in any joint venture between two entities or persons.”
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