The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has directed the service tax department to grant a refund of service tax paid by Bollywood writer Javed Akhtar on the compensation received from Reliance in connection with the Zanjeer copyright case in 2013.
Javed Akhtar was a co-writer along with Mr.Salim Khan of the film ‘Zanjeer’ in the year 1973. They undertook literary work viz. script, screenplay, and dialogue of that film. Much later a film by the same name was produced in the year 2013 by Reliance Big Entertainment Pvt. Ltd. the appellant, along with Mr. Salim Khan filed a case for the violation of copyrights inconsequent to which, they received a compensation of Rs. 2 crores in the year 2013 itself. The department levied service tax on the said amount stating that the same under the definition of declared services u/s. 66E(e) of Finance Act, 1994.
Resultantly, the appellant paid the amount of Rs.22,00,071/- as service tax along with interest of Rs. 1,28,029/- on 31.1.2014 under protest and claimed a refund of the same contending that no service tax can be levied.
Allowing the contentions of the appellant, Judicial Member Mr. Ajay Sharma observed that it is settled position that if the payment made by the assessee is not for any services rendered by him, the amount collected by Revenue as service tax is without the authority of law and cannot be termed as a tax even and can’t be retained by them.
“Where there is no levy of service tax, amount wrongly paid cannot partake the character of ‘service tax’. Had it been a tax then I would have understood the case of revenue but since in another case arising out of the same transaction it has been held not to be taxed since no service has been provided, then the amount paid by the appellant herein that too under protest cannot be termed as tax, but merely a deposit. If in the case of Salim Khan, it has been held by the adjudicating authority that since it is not in lieu of any service provided therefore no service tax is payable, then in the instant matter which also arises out of the same transaction, the department cannot keep the deposit under the head ‘Service tax’. The wrong nomenclature has been given by the revenue to the deposit and on that premise department cannot be permitted to retain it. Retention of any amount paid without any liability or in excess of the liability violates Article 265 of the Constitution of India. Therefore, the contention that the assessment in the case of the appellant has attained finality and hence, he cannot claim refund unless the assessment is challenged is misconceived and contrary to the law,” the Tribunal said.
“When the amount deposited by the appellant is not a tax and merely a deposit, there is no question of applying the provisions of the Finance Act for its refund. In the decisions cited by the learned Authorised Representative, the issue was about the refund of duty whereas in the instant matter there is no issue about the refund of duty but it’s all about refund of deposit which was deposited under protest by the appellant. In my view, refund provisions should be interpreted in a reasonable and practical manner and when warranted, liberally in favor of the assessee,” the Tribunal added.
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