ST - Appellant models for product through ad films, print ads etc - Revenue treats her activity as BAS - Demand - Appellant appoints agent to discharge tax liability - mere payment under wrong head does not mean that ST liability has not been discharged - Appeal allowed: CESTAT
By TIOL News Service
MUMBAI, DEC 05, 2012: ON the basis of intelligence that the appellant through Matrix India Entertainment Consultants P. Ltd. (Matrix) was providing services to various companies for promotion of their products, whether manufactured directly or indirectly, or marketed or sold by these companies, by agreeing to model herself for advertisement films, TV commercials, still photographing, footage, press advertisement, outdoor, packaging and sales material including backing sheets, mobile stickers, danglers, wobbles, booklets and other printed matters and other promotional material but not paying Service Tax under the head ‘Business Auxiliary Service', SCNs were issued for recovery of service tax of Rs.2,79,24,960/- .
The Commissioner of Service Tax, Mumbai confirmed the demands along with penalty and interest and so the sylphlike appellant is before the CESTAT.
The appellant through her Advocate, and obviously so, submitted that she has acted as a model for promotion of the product of various clients and had discharged service tax liability through her agent i.e Matrix, as per the agreement amongst the appellant, M/s Matrix and the client (service recipient); M/s Matrix had to receive the entire amount of consideration for promotion of the product and thereafter to discharge the service tax liability on behalf of the appellant and rest of the amount was to be given to the appellant by Matrix, who are the agents for the appellant for discharging the service tax liability. That as per section 65(7) of the Finance Act, 1994 the "assessee" means a person liable to pay service tax and includes its agent; there is no dispute that on the activity undertaken by the appellant, the service tax liability has been discharged by Matrix as an agent of the appellant and, therefore, the demands confirmed are not sustainable. Nonetheless, although the service tax has been paid by Matrix under the category of Advertisement Agency Service, it did not mean that the appellant has not discharged the service tax liability since by merely paying service tax under wrong head did not mean that the appellant has not discharged the service tax liability.
The Revenue representative justified the order of the lower authority by submitting that the appellant had performed the activity of promoting the product of her clients which activity falls under the category of ‘Business Auxiliary Service' on which no service tax has been paid; that M/s Matrix had discharged the service tax liability under the category of Advertisement Agency service as Matrix had involved in the activity of Advertisement and this service tax paid by M/s Matrix same cannot be related to the activity undertaken by the appellant.
The Bench observed -
"6. In this case, the appellant has provided the service for promotion of product by agreeing as model herself for advertisement films, TV commercials, still photographing, footage, press advertisement, outdoor, packaging and sales material etc. The revenue is of the view that as the appellant is engaged in the activity of promoting/marketing or sales of the product manufactured by her client etc., therefore, the said activity falls under "Business Auxiliary Service". The liability of service tax has not been disputed by the appellant. The appellants contention is that appellant has appointed M/s Matrix as their agent to receive payment on behalf of the appellant from the clients and thereafter discharge the service tax liability on the above activity. These facts are also not in dispute. As per the agreements, the payments are to be made by the clients in the name of M/s Matrix and M/s Matrix has to discharge service tax liability, thereafter the balance amount was to be paid to the appellant. In this set of facts, service tax liability has been discharged by Matrix on the above said activity cannot be denied merely on the ground that it has paid under Advertisement Agency Service. As M/s Matrix has paid the service tax under the category of Advertisement Agency Service that does not mean that M/s Matrix has not paid service tax on behalf of the appellant. By mere paying the service tax liability under wrong head does not meant that service tax liability has not been discharged. The allegation of the revenue that service has been rendered by appellant but has not discharged the service tax liability is not sustainable as per section 65(7) of the Finance Act, wherein the ‘assessee' means a person liable to pay service tax and includes his agent. In this case, appellant has appointed M/s Matrix as her agent to discharge her service tax liability on her behalf and same has been discharged by M/s Matrix.
7. In these set of facts, we hold that the appellant has discharged the service tax liability through her agent on the activity in question undertaken by her, therefore, the proceedings in this matter by way of show-cause notice and adjudication were not warranted."
In fine, the order of the adjudicating authority was set aside and the appeal was allowed with consequential relief.
In passing: By the way, the appellant in this case is Ms. Katrina Turcotte alias Ms. Katrina Kaif.
(See 2012-TIOL-1780-CESTAT-MUM)
