Principal Commissioner Vs Wunderbar Films Private Limited (Madras High Court)
Madras High Court held that levy of service tax ought to be determined on the basis of contracts entered into between service provider and service recipient. There cannot be generalisation of transactions.
Facts- Present writ petition is filed by the revenue. The challenge before the learned Judge was to the show cause notice(s) proposing to levy or the orders-in-original levying tax on assignment of certain rights in the cinematograph films as representing temporary transfer or permitting use or enjoyment of intellectual property i.e., copyright in the instant case.
The respondent on the other hand is of the view that the perpetual transfers being permanent rather not temporary, the show cause notices proposing to levy tax and the impugned orders of adjudication levying tax are without jurisdiction.
Conclusion- Held that the question as to whether a particular transaction would attract the levy of Service Tax as constituting a taxable service within the meaning of 65(105)(zzzzt) prior to 01.07.2012 or Section 66B read with Section 65B(44) and Section 66E(c) w.e.f. 01.07.2012 ought to be determined on the basis of the contracts entered into between the service provider and the recipient. One cannot generalize the transactions nor determine the liability without examining the contracts individually for the rights/ obligations flowing therefrom may vary from contract to contract. This would be evident by the very fact that some of the contracts have been treated by the respondents in the writ appeals as representing temporary transfers thereby attracting the levy of Service Tax, while other contracts are understood by the respondents as resulting in perpetual transfers i.e., permanent and not temporary, thus outside the purview of levy of Service Tax. We are of the view that the observations so made by the learned Judge represent a truncated rather incomplete adjudication, warrant.
