Divya Yog Man Dir Trust Vs Commissioner of Central Excise (CESTAT Delhi)
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. Learned 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 termed provision of development and supply of content service. Learned authorised representative supports the impugned order.
20. We have considered the submissions. 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. 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.
As far as the penalties are concerned, penalty under section 78 is imposable only when the service tax is not paid or short paid by reason of fraud or collusion or willful misstatement or suppression of Penalty under section 76 is imposable in other cases. Penalty under section 77 is imposable for offences not covered under any other section. Further, as per section 80, no penalty is imposable under section 76 or section 77 if there is a reasonable cause for failure to pay service tax.
In this case, we do not find any evidence to substantiate the elements required to levy penalty under section 78. Therefore, only Section 76 would apply. Except for small amounts of service tax under two heads, we have also found that the demands themselves are not sustainable. Therefore, we find this a fit case to invoke section 80 and set aside the penalties under section 76 and 77.
FULL TEXT OF THE CESTAT DELHI ORDER
These four appeals assail the same order in original1 dated 25.2.2014 passed by the Commissioner of Central Goods and Services Tax, Meerut-I2 whereby demands of service tax under six different heads were confirmed against the appellants along with interest under section 75 of Chapter V of the Finance Act, 19943. Penalties were also imposed under sections 76, 77 and 78.
2. Enquiries by the Directorate General of Central Excise Investigation4 into the affairs of the four appellants culminated in the DGCEI issuing a Show Cause Notice5 dated 19.10.2012 calling upon the appellant to explain why service tax should not be demanded from them along with interest and why penalties should not be imposed. The Commissioner issued the impugned order confirming the demands against the four appellants under various heads as follows:
