Whether assessee was required to discharge service tax liability if his agent had discharged the same?

PJ/Case Law/2014-15/2349

Case:- ZAHEERKHAN B. KHAN Versus COMMISSIONER OF SERVICE TAX, MUMBAI

Citation:- 2014 (33) S.T.R. 75 (Tri. - Mumbai)

Brief facts:- The appeal and stay application were directed against Order-in-Appeal No. BR/90/2012, dated 6-9-2012 passed by Commissioner of Central Excise (Appeals), Mumbai.
The appellant, Mr. Zaheerkhan B. Khan, Mumbai, a well known Indian cricketer was providing services to various corporates for promotion of their products by agreeing to model himself for advertisements films, TV commercials, still photographing, footage, press advertisement, etc. For this purpose, he had entered into a tripartite agreement. As per the said agreement his agents, namely, M/s. Percept D Mark (India) Pvt. Ltd., M/s. Globo sport and M/s. Globo Media Solutions (I) Pvt. Ltd. would negotiate with the corporates on behalf of Shri Zaheerkhan B. Khan for the activity to be undertaken by him and they would receive consideration from the corporates for the services rendered and would discharge the Service Tax liability on the whole amount of the consideration received and after deducting the expenses including their commission, they would remit the balance amount to Shri Zaheerkhan B. Khan.
A notice dated 22-10-2008 was issued demanding Service Tax from Shri Zaheerkhan B. Khan for the services rendered by him on the ground that he was the service provider and the Service Tax paid on the consideration received by his agent could not be treated as proper discharge of Service Tax. Accordingly, a demand of Service Tax for an amount of Rs. 17,86,300/- along with interest thereon and also proposing to impose penalty was made and the demand was confirmed vide order dated 17-11-2009 wherein apart from confirming the demand of Service Tax and interest thereon, penalties under Sections 76, 77 and 78 of the Finance Act, 1994 were imposed. The appellant filed an appeal before the lower appellate authority, who vide the impugned order dismissed the appeal.

Appellant’s contentions:- The ld. Consultant for the appellant submitted that as per the definition under Section 65(7) of the Finance Act, 1994 “assessee means a person liable to pay Service Tax and includes his agent”. As per the tripartite agreement, he had appointed three agencies as agents not only for the purpose of negotiating with the corporates for the services to be undertaken by him but also for the discharge of tax liabilities. Accordingly, they had discharged the Service Tax liability. Since the agent had discharged the Service Tax liability, which amounted to payment of Service Tax by the appellant, there could not be any demand on the same transaction again. He also relied on the decision of this Tribunal in the case of Ms. Katrina R. Turcotte v. CST, Mumbai reported in 2012-TIOL-1780-CESTAT-Mum. = 2013 (31)S.T.R.670 (Tribunal),wherein this Tribunal held that the Service Tax liability discharged through the agent was sufficient and Service Tax demand could not be made on the principal for the same transaction again and accordingly allowed the appeal. Therefore, he pleaded that in the present case also, the appeal be allowed.
Respondent’s contentions:- The ld. Addl. Commissioner (AR) fairly conceded the matter and submitted that the decision of this Tribunal in the case of Katrina R. Turcotte case (cited supra) was relevant to the facts of the present case.

Reasoning of judgment:- The Bench had carefully considered the submissions made by both the sides. As the issue lied in a narrow compass, after dispensing with the requirement of pre-deposit, they took up the appeal itself for consideration.
As rightly pointed out by the ld. Consultant, the assessee included his agent and therefore, if the tax liability had been discharged by the agent on the service rendered by his principal, that was sufficient for discharge of Service Tax liability by the principal. Therefore, following the decision in the case of Ms. Katrina R. Turcotte (supra), the appeal was allowed with consequential relief, if any. The stay application was also disposed of.

Decision:- Appeal allowed.

Comment:- The analogy drawn from the case is that the Service Tax liability discharged through the agent was sufficient and Service Tax demand could not be made on the principal for the same transaction again as it would lead to double taxation.
Prepared by: Ranu Dhoot

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PJ/Case Law/2014-15/2349

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