2026-VIL-242-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Liability of service tax on expenses incurred for Marketing and Promotion of Music Rights - Appellant had entered into agreements with film producers, copyright holders, and individual artists to acquire the rights to distribute and monetize songs and music videos. As per the agreements, the appellant was required to incur certain expenses for the marketing and promotion of the assigned music rights - Whether the activities undertaken by the appellant in marketing and promoting the assigned music rights can be considered as a taxable service under Section 65B(44) of the Finance Act, 1994 – HELD - The appellant is not in a service provider-client relationship with the assignors, and the marketing and promotion expenses are incurred for the purpose of commercially exploiting the rights acquired by the appellant, rather than for providing any service to the assignors. The promotion or marketing of music cannot be equated with the promotion or marketing of films, and the appellant's activities are aimed at promoting the music rights acquired by it, not the films produced by the assignors. The activities undertaken by the appellants would not promote viewing of films and thus cannot be treated as service rendered to Film Production Companies/assignors in order to attract the levy of service tax. The appellant's activities do not fall within the definition of "service" under Section 65B(44) of the Finance Act, 1994 – The impugned order is set aside and the appeal is allowed - Whether the obligation of the appellant to incur marketing and promotion expenses as per the agreement can be considered as "agreeing to an obligation to do an act" under Section 66E(e) of the Finance Act, 1994, thereby making it a taxable service – HELD - The appellant's obligation to incur marketing and promotion expenses cannot be considered as "agreeing to an obligation to do an act" under Section 66E(e) of the Finance Act, 1994. For the provisions of Section 66E(e) to apply, there must be a specific agreement for the appellant to obligate itself to do an act or to tolerate an act, and a consideration involved for such an act. In the present case, the marketing and promotion expenses incurred by the appellant are not in the nature of consideration for any service provided to the assignors, but are rather for the appellant's own commercial exploitation of the acquired music rights.
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