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M/s Frame Movie Pvt. Ltd. (CESTAT-Mum)

Hon’ble CESTAT placing reliance on Service Tax Guidance Note dated 20th June 2012 held that following services when provided on principal to principal basis do not qualify as intermediary service.

  • Setting up and arranging for the India part of the shoot of the film;

  • Engaging the contributors and making payments for and on behalf of the Producer to the Contributors and to such suppliers for the Film in India;

  • Hiring individuals other than the Contributors for the provision of their services on the Film in the UK, Poland, and India;

  • Procuring for air travel of contributors travelling from India and the excess baggage for equipment travelling out of India and back to India;

  • Procuring/buying props and costumes for the shoot in UK and Poland; and

  • Providing post-production services for the Film.

Hon’ble CESTAT relied on the following factors for deciding ‘intermediary’ or ‘otherwise’.


  • Nature and value: An intermediary cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal.

  • Separation of value: The value of an intermediary’s service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as “commission”.

  • Identity and title: The service provided by the intermediary on behalf of the principal is clearly identifiable.”

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