Summary
The organiser of the Chennai Open tennis tournament paid a company owned by Vijay Amritraj for his appearance at the event. It also licensed broadcast rights to Zee Telefilms and sold overseas telecast rights through Trans World International. The service tax demands that followed were upheld by CESTAT. The Supreme Court partly allowed the appeals. "Manpower recruitment or supply agency" under Section 65(68) is widely worded, so the payment to the player's company was taxable, and the CBEC circular of 23 August 2007 did not add a requirement of an employer-employee relationship. But a "programme producer" under Section 65(86b) produces a programme on behalf of another person, and the organiser had sold rights to its own production, so BCCI was distinguishable. As the dispute was interpretational, the extended limitation period and penalty were set aside.
Issues
- Whether payment to a celebrity's own company for his appearance at a tournament was taxable as 'manpower recruitment or supply agency' service, absent an employer-employee relationship between the company and the celebrity.
- Whether licensing broadcast and telecast rights of a self-produced tournament was 'programme producer' service, and whether the extended limitation period and penalty were justified.
Provisions considered
- Section 65(68) read with Section 65(105)(k), Finance Act, 1994The definition, using 'directly or indirectly', 'in any manner' and 'temporarily or otherwise', covers supply of manpower without requiring an employer-employee relationship. (¶¶ 13, 14, 15, 17)
- Section 65(86b), Finance Act, 1994A programme producer is one who produces a programme on behalf of another person; selling rights in a self-produced event does not fall within it. (¶¶ 18, 19, 21)
- Circular dated 23 August 2007, CBEC CircularThe Revenue is bound by its circulars, but this one dealt with a case where an employment relationship existed and did not narrow the statutory definition. (¶¶ 16, 17)
Held
- The player's company, a distinct legal entity, provided his services to the organiser, which fell within 'manpower recruitment or supply agency' service; the absence of an employer-employee relationship between them is not dispositive. (¶¶ 15, 17)
- The organiser itself produced the programmes and sold the broadcast and telecast rights; neither licensee produced anything on its behalf, so Section 65(86b) did not apply, and BCCI, where a producer made the feed for BCCI, was distinguishable. (¶¶ 19, 20, 21)
- Since the Tribunal itself found that the case turned on interpretation of statutory provisions, the extended limitation period could not be invoked for the first show cause notice and no penalty was warranted. (¶¶ 23, 24, 25)
Result
Appeals partly allowed; the levy under manpower recruitment or supply agency service upheld; the Tribunal's view on programme producer service reversed; the first show cause notice confined to the normal limitation period and the penalty set aside; the adjudicating officer to abide by these directions on remand.