B. Ravichandran ORDER
B. Ravichandran, Member (T)
1. This appeal by the Revenue is against the order dated 18.03.2011 of Commissioner (Adj.) Service Tax, New Delhi.
2. The brief facts of the case are that the respondents were registered with the Department for various taxable services. They have entered into agreements with various foreign broadcasters. As per these agreements, the respondents were appointed as exclusive distributors of T.V. channels broadcast by the foreign broadcasters in India. The respondents were to promote, market, sell and distribute the channels; collect the subscription revenue; use channel marks and other promotional materials. The respondents retained 15% of total subscription revenue collected through cable operators and MSOs and remitted the remaining revenue to the foreign broadcasters.
3. Revenue entertained a view that the respondents were liable to pay service tax for the period April, 2003 to 13.07.2005, though the respondents have registered and paid service tax w.e.f. 14.07.2005. The case was adjudicated and vide impugned order, the ld. Commissioner dropped the proceedings initiated vide show cause notice dated 28.04.2008. Aggrieved by this order, Revenue is in appeal.
4. In the grounds of appeal, the main contention of the Revenue is that the respondent was only acting as a representative or agent of foreign broadcasters for promoting, selling and distributing their channels in India. Broadcasting and distribution of channels inevitably included selling, advertisements, spots and getting sponsorship. It was contended in the appeal that the respondents are not covered by Board's letters dated 26.09.2005 and 9.6.2006. The Board's Circulars were with reference to the services provided by MSO which became chargeable to service tax w.e.f. 16.06.2005. The respondents were not acting as an MSO and hence, the Commissioner erred in dropping the demand.
5. We have heard both the sides and perused the appeal records.
6. Ld. AR mainly reiterated the points in the grounds of appeal.
7. Ld. Counsel for the respondent submitted that the ld. Commissioner (Appeals) examined the nature of services rendered by the respondents, allegations in the show cause notice and the scope of amendment carried out in the term Broadcasting and Broadcasting Agency or Organization w.e.f. 16.06.2005 and came to the conclusion that there is no additional service tax liability on the respondent. Ld. Counsel further submitted that the Board's letter dated 26.09.2005 to DG Service Tax is very clear. In the appeal by Revenue, there appears to be a mis-appreciation of the facts to the effect that the respondent's tax liability is being decided treating them as MSO. This is not correct. Ld. Counsel categorically stated that they are agents of foreign broadcasters and are rightly discharging service tax under such category all along. The amount collected from MSOs and cable T.V. Operators by the respondent are subjected to tax. He pleaded that the appeal by the Revenue is without merit. We find that the Original Authority has examined the issue in detail and arrived at the conclusion based on the legal provisions as clarified by the Board. For better appreciation, the relevant portion of the impugned order is reproduced below:--
"3.3.1 The legal position that the service tax was chargeable on amount collected by broadcasting agencies or organizations or their agents from multisystem operations and cable operators only with effect from 16.06.2005, has further been clarified by Central Board of Excise & Customs under their letters issued from F. No. 345/5/2005-TRU dated 26th September, 2005 and F. No. 149/5/2006-CX.4 dated 9th June, 2006.
3.3.2 The letter dated 26th September, 2005 was addressed to Director General (Service Tax), Mumbai and has been signed by Joint Secretary (TRU II). The letter dealt with the issue of charging service tax on amount collected from MSOs and cable TV operators by broadcasters for selling time slots (for advertisements) and the amount collected from MSOs and cable TV operators by the broadcasters as subscription fee for allowing access to paid channels. After discussing the Circular dated 9th July, 2001 (supra) it was concluded that the said Circular clearly stated that amount collected from MSOs and Cable TV Operators by broadcasters for selling time slots (for advertisements) was includible in the value of the service of broadcasting right from the inception of the levy, i.e. 16.07.2001. With regard to the amount collected from MSOs and cable TV operators by broadcasters as subscription fee for allowing access to the paid channels, it was clarified that the amount collected by broadcasters as subscription fee for merely permitting the right to receive signal was subject to service tax only with effect from 16th June, 2005 when the definition of taxable service of broadcasting was amended and the amount collected from MSOs/cable operators by broadcasters for permitting right to receive signals was made taxable.
3.3.3 The letter bearing F. No. 149/5/2006-CX.4 dated 9th June, 2006 dealt with the doubt regarding the scope of Broadcasting Services as it was prior to amendment to the definition of the said taxable service in 2005 Budget. It was opined by a subordinate formation that even prior to 16th June, 2005, the subscription charges collected by the broadcasters from Multi Service Operator (MSO s) or cable operators were subject to service tax and that the amendment made in 2005 Budget only clarified the scope of the levy. The view expressed by the subordinate formation was that the term Broadcasting Charges that existed even prior to 2005 Budget, included the charges recovered by broadcasting agencies from MSOs or DTH, as broadcasting is a composite activity that include (a) dissemination (b) communication through electromagnetic waves and (c) receiving such signals disseminated. The term broadcasting charges, therefore, included subscription for receiving such signs traveling through electromagnetic waves. After examining the matter it was stated that prior to 2005 Budget, in respect of the foreign broadcasting channels, the activity of selling of time slots or collecting broadcasting charges was within the tax net. In 2005 Budget, the scope was expanded to include permitting the right to receive any form of communication. In other words, whereas prior to 2005 Budget, the charges were limited to those collected by broadcasters from clients who purchased time slots to show a telecast (say a TV serial, a cricket watch or an advertisement), after 2005 Budget, the tax was also extended to such customers (of the broadcaster) who subscribed/pay the channels for receiving the broadcasted signals. It was mentioned that only after the insertion of provision regarding charging for right for receiving signal was added in Budget 2005 (i.e. w.e.f. 16.06.05) that the charges collected by broadcasters from MSOs etc fell within the purview of tax net. This was also mentioned that the issue had also been clearly brought in circular No. B1/6/2005-TRU dated 27.07.2005."
8. We find that in the grounds of appeal the Revenue contended that the respondent is not an MSO but a representative or agent for foreign broadcasters. It is clear that the respondents were discharging service tax arising out of their role as agent of foreign broadcasters and there is no dispute on that account. We find that the Board's Circular was wrongly interpreted so as to refer with reference to the services provided by the MSOs.
9. It is clear from the clarification issued by the Board that the charges recovered from the broadcasting agencies from MSOs for providing the signals had been made specifically liable to service tax from 16.06.2005. The charges recovered from the broadcasting agencies from MSOs or Cable Operators were not liable to service tax prior to 16.06.2005.
10. We find no infirmity in the impugned order. We also note that the reliance placed by the Revenue in the decision of the Tribunal in the case of Zee Tele Film Ltd. v. CCE, Mumbai - MANU/CE/0059/2004 : 2004 (166) ELT 34 (T-Delhi) is not appropriate to the facts of the present case. The issue dealt with in that case was relating to activity of selling of time slots or obtaining sponsorship for programmes, etc.
11. Considering the above discussion and analysis, we find no merit in the present appeal and accordingly dismiss the same.
[Operative portion already pronounced in open court]
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