M/S INTERNATIONAL MERCHANDISING COMPANY, LLC (EARLIER KNOWN AS INTERNATIONAL MERCHANDISING CORPORATION) versus COMMISSIONER, SERVICE TAX, NEW DELHI

Citation: [2022] 8 S.C.R. 872 · Decided: 01-11-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Case Partly allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
872
SUPREME COURT REPORTS
[2022] 8 S.C.R.
   [2022] 8 S.C.R. 872
872
M/S INTERNATIONAL MERCHANDISING COMPANY,
LLC (EARLIER KNOWN AS INTERNATIONAL
MERCHANDISING CORPORATION)
v.
COMMISSIONER, SERVICE TAX, NEW DELHI
(Civil Appeal Nos 3532-3536 of 2020)
November 01, 2022
[DR DHANANJAYA Y CHANDRACHUD AND
HIMA KOHLI, JJ.]
Finance Act, 1994: ss. 65(105), 65(68) – Manpower
recruitment or supply agency – Service Tax – Appellant was engaged
in providing diversified sports, entertainment and media services –
Appellant entered into an agreement with First Serve Entertainment
(‘FSE’) for the appearance of a noted tennis player, in connection
with the Chennai Open Tennis Tournament (‘tournament’) –
Appellants entered into an agreement with Zee telefilms to license
the rights to broadcast tournament in India – Another agreement
between appellant and Trans World International for the sale of
telecast rights of the tournament outside India – Demand of service
tax from the appellants under various heads, including manpower
recruitment or supply agency service under reverse charge,
programme producer service, sponsorship service, and other
services – Customs, Excise and Services Tax Appellate Tribunal
upheld the demand while observing that the services provided by
FSE were in the nature of supplying, recruiting, and providing
players for sport events organised by the appellant – Therefore,
such services will be covered under the definition “manpower
recruitment or supply agency” u/s. 65(105)(k) r/w s.65(68) of the
Finance Act – Tribunal also did not accept the argument of the
appellant that the Commissioner could not have invoked the extended
period of limitation – On appeal, held: There was nothing on the
record to indicate that Tennis player was an employee of FSE –
However, the definition of “manpower recruitment or supply agency”
does not incorporate such a requirement or condition of employer-
employee relationship between the manpower supply agency and
the persons whose services are provided – Circular issued by the
Central Board of Excise and Customs deals with a situation where
A
B
C
D
E
F
G
H
873
there exists a relationship of employer and employee between the
agency which supplies the service and a person whose service is
supplied – But the circular does not postulate that such a relationship
must exist for the statutory definition to be attracted – Hence, the
fact that there may be no relationship of employment between tennis
player and FSE would not be dispositive for the purposes of the
statutory definition in s.65(68) – No fault in the decision of the
Tribunal.
Finance Act, 1994: s.65(86b) – Definition of “programme
producer” – Whether the agreements entered into by appellants with
Zee Telefilms and Trans World International are covered under the
definition of “programme producer” in s.65(86b) – Held: The
expression “programme producer” would implicate a situation where
a person has produced a programme on behalf of another person –
In the present proceedings, the appellant produced the programmes
and sold the telecast rights to Zee Telefilms and Trans World
International – There was no production of a programme on behalf
of the appellant either by Zee Telefilms Limited or by Trans World
International – Therefore, the definition of “programme producer”
in s. 65(86b) was not attracted in the present case.
Finance Act, 1994: Extended period of limitation – Since, the
issue was to be decided on the basis of interpretation of the
provisions of s. 65(68) and 65(86b) of the Finance Act, there was
no warrant to allow the invocation of the extended period of
limitation – The extended period of limitation would clearly not stand
attracted in respect of the first show cause notice – The show cause
notice shall hence have to be confined to the normal period of
limitation excluding the extended period.
Finance Act, 1994: Imposition of penalty – Whether a valid
ground for the imposition of a penalty was made out – Held: There
was no warrant for the imposition of the penalty as the dispute in
the present case essentially involved the interpretation of the statutory
provisions and their inter play with the circular issued by the CBEC.
Partly allowing the appeals, the Court
HELD: 1. Section 65(68) defines a “manpower recruitment
or supply agency” to mean (i) any person engaged in providing
any service; (ii) directly or indirectly; (iii) in any manner; (iv) for
M/S INTERNATIONAL MERCHANDISING CO.  LLC (EARLIER KNOWN AS
INT

Excerpt shown. Read the full judgment & AI analysis in Lexace.