TMI Blog2020 (7) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... The transmission of signals is as a result of the use of the space segment capacity of the transponder of the satellite. The relay station is able to uplink the programme signals which are then reflected to the earth by the Intelsat transponder on the footprint area of the earth. This is so evident from the pictorial representation drawn above. This is also clear from the procedure described by the two experts that frequency uplinked with a particular power is automatically reflected back by the satellite without any alteration/modification of the programme contents with the help of equipments on the satellite and no human intervention takes place. What is important to note is that the fixed charges are purely based on assignment of space segment capacity of a transponder and are not linked to speed and strength of transmission of data/signal. Even under the Revised Carrier Plan dated July 7, 2015, the monthly charges remain at US$ 40,000 per month. A carrier plan is an estimated calculation based on various technical aspects in order to obtain optimum quality of video. It specifies parameters for the desired carrier in a particular space segment on the satellite transponder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favor of appellant. - SERVICE TAX APPEAL NO. 50301 OF 2016 - FINAL ORDER NO. 50712/2020 - Dated:- 8-7-2020 - HON BLE MR. JUSTICE DILIP GUPTA, PRESIDENT AND HON BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Vishal Kumar, Advocate, for the Appellant Shri Vivek Pandey, Authorised Representative of the Respondent ORDER JUSTICE DILIP GUPTA : The order dated November 30, 2015 passed by the Commissioner of Central Excise, Dehradun, the Commissioner to the extent it confirms the demand of service tax amounting to ₹ 87,05,130/- with interest and penalty, has been assailed in this Appeal filed by M/s Vedic Broadcasting Ltd., Haridwar, the Appellant. The Commissioner, however, dropped the demand of ₹ 19,38,492/-. 2. The issue involved in this Appeal is as to whether the charges paid by the Appellant to M/s Intelsat Global Sales Marketing Ltd., UK, Intelsat are for a service provided by Intelsat (situated outside India) to the Appellant, that would be leviable to service tax under the head broadcasting service in the hands of the Appellant under the reverse charge mechanism. According to the Appellant, the Master Service Agreement, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any basis. The noticee has stated that the services as availed relate to the utilization of the bandwidth on the satellite on IGSML and do not relate to utilization of the transponder of the satellite. They further stated that the service of the utilization of the bandwidth of the satellite do not fall under any of the service categories as laid down under Section 65 (105) of the Finance Act, 1994. The contention of the noticee does not appear to be tenable in view of the fact that the Broadcasting Service , as received by the noticee from the service provider situated abroad, is covered under Section 65(105)(zk) of the Finance Act, 1994. The meaning of 'Broadcasting' as defined under clause (c) of Section 2 of the Prasar Baharti (Broadcasting Corporation of India) Act, 1990 (25 of 1990) also includes the rights to receive any form of communication like signal by transmission of electro-magnetic waves. In view of above, the noticee appears liable to pay service tax as per reverse charge basis under Section 66A of the Finance Act, 1994 on the above said amount paid during the period 2009-10 to 2014-15 (upto July 2014) xxxxxxxxxx 5. In view of the above, it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch within the purview of the definition of 'broadcasting' as provided under Section 2 (c) of the Prasar Bharti Act which was pari materia to the Section 65(105) (15) of the Act. Further, as the programme down linked by various MSOs/DTH operator was available for viewing in India, in spite of the encryption of signals or beaming thereof through the satellite being performed by M/s Intelsat outside India, the service was taxable. 10. The Commissioner also observed that Intelsat was a broadcasting agency or organization under section 65(105)(16) of the Finance Act, 1994, Finance Act and, therefore, the service provided would be taxable under section 65(105)(zk) of the Finance Act. The observations are as follows : 5.5.5 It is clear that the definition under Section 65(16) does not excludes an agency located outside India as long as it is engaged in providing service of broadcasting but the definition brings within its ambit even the branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner. The use of word includes expands the persons who can be subjected to levy of tax. In case the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in Antrix Corporation Ltd., was merely a medium through which the end result of transmitting the signals in a designated region was performed. Thus, after giving effect to dominant nature test , I am of the opinion that the transaction between the party and M/s Intelsat was that for provision of broadcasting services as defined under Section 65(15) of the Act read with Section 2(c) of Prasar Bharti Act. I further hold that the services received by the party were taxable services falling under Section 65(105)(zk) of the Act on which they were required to discharge service tax under Section 66A of the Act. 5.7 In view of the aforesaid observations and the provisions of their MSA I also find no force in the party s plea that the contract was merely for allotment of space segment capacity and nothing more and that they did not receive any broadcasting services from Intelsat. Their plea is that whatever is received in form of retransmitted electro magnetic waves (signals) was incidental. This, I find is not correct at all. When the payment is linked to the uninterrupted availability of signals it becomes prime objective and the intention behind entering into the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roadcast of programme signals in the capacity of a relay station. This is for the reason that Intelsat merely receives the transmitted signals, amplifies it into high frequency and re-transmits the same to the desired footprint area. This activity is not akin to broadcasting; (iv) In terms of the Agreement, Intelsat has leased the transponder of the satellite to the Appellant for the purposes of up-linking and down-linking of signals using the 8 MHz space segment (bandwidth) on its satellite IS-10/IS-20; (v) No value addition is undertaken by Intelsat insofar as the programme content of the Appellant is concerned. Intelsat merely converts the low-band frequency into high-band frequency and relates the same over the desired footprint area. In fact, the re-transmission of amplified signals through the transponder belonging to Intelsat completes the broadcasting service provided by the Appellants on its account; (vi) The definition of broadcasting under section 65(15) of the Finance Act has been grouped into three categories. It would be evident that the definition of broadcasting in terms of section 2(c) of the Prasar Bharat Act would only include the actual broadcaste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the earth to another and it is not the intention of the Appellant to hire a space on the satellite. 15. The submissions advanced by learned Counsel for the Appellant and learned Authorized Representative of the Department have been considered. 16. In order to appreciate the controversy involved in this Appeal, it will be necessary to examine, in brief, the methodology of broadcasting, as has been explained by the experts who had been asked to assist the Bench. The same is as follows : A. Introduction to Cable/ Satellite TV Broadcasting: Cable/ Satellite TV broadcasting is an activity, which serves the purpose of creating audio visual content and then disseminating it to a wide audience for viewing/listening and involves roles of many players. These players are broadcaster, uplink service provider (also known as earth station or teleport operator), satellite operator and Cable/ DTH operators. 1) Broadcaster : A broadcaster produces/ aggregates the program content, which can either be news or non-news content. Non-news content includes general entertainment channels, sports channels, religious channels, music channels, movie channels and infotainment chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business. These Government agencies charge license fees, spectrum charges, monitoring charges, etc. from the different players and also play a vital role in regulating and monitoring the activities of the players, at all times. The mandatory permissions/ rules/ regulations/ fees required by each player are as under: 1) Broadcaster: a) A broadcaster who desires to launch a channel first approaches a satellite operator for leasing space segment on a satellite. The satellite chosen would depend on the target audience which is based on the footprint area of the satellite. The satellite operator then allocates the required space segment on the appropriate transponder of the satellite and thereafter the broadcaster and the satellite operator enter into an agreement for the charges towards the space segment allocation on the transponder of the satellite to be paid by the broadcaster. b) Simultaneously, the broadcaster also enters into an agreement with an earth station (i.e. uplink service provider) with respect to up-linking of the proposed television channel. c) Thereafter, the broadcaster approaches the Ministry of Information and Broadcasting for obtaining uplink ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment of Telecommunications for site clearance with respect to setting up of a teleport. The teleport operator is also required to seek permission from the concerned department for setting up a teleport called Letter of Intent. c) After obtaining the Letter of Intent the teleport operator has to seek import license with respect to import of required uplink equipments. After obtaining import license for equipments, the teleport operator imports the equipments and installs the same. d) After installation, the concerned departments issue clearance certificate called the Mandatory Performance Verification Testing Certificate. 3) Satellite Operator: a) A Satellite operator desiring to launch a satellite approaches the International Telecommunication Union (ITU), which is a regulatory body that governs the orbital traffic for launch of a satellite. The Satellite Operator prepares and submits a proposal for launching of a satellite into a proposed orbital location targeting a particular footprint and specification with the ITU. b) Thereafter, the ITU, in coordination with all members countries, approves the location of the satellite and grants permission to launch the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such change does not result in a failure of the Service to meet the Service Specifications. Except in emergency circumstances, Intelsat shall notify Customer of any changes to its allocation as soon as reasonably practicable prior to such change and shall use reasonable efforts to minimize disruption to Customer's Service during any such change. 19. The Customer Obligations and Use Restrictions are contained in clause 3 of the Agreement and they are reproduced below: 3. CUSTOMER OBLIGATIONS AND USE RESTRICTIONS 3.1 Customer s Use and Third Party Use . Each Service is provided for Customer's own use and in no event shall Customer be permitted to resell a Service to any other person or entity unless Customer s provision of services to such person or entity includes substantially more communications facilities than the Service provided by Intelsat. For purposes of this Section, resell shall include any means allowing another person or entity to utilize the Service, in whole or in part, including through sale, resale, license, lease, sublease, grant, assignment, or any other means of direct or indirect conveyance. Without limiting the foregoing, Customer sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, operation, maintenance of, and for securing all necessary licenses and/or authorizations for, all earth station facilities and equipment ( Customer-Provided Facilities ) for transmitting signals to, or receiving signals from, the Satellite in accordance with the requirements set forth in the Service Order. In addition, all Customer earth stations must be registered by Intelsat prior to operation, in accordance with the Service Order. By executing a Service Order, Customer represents and warrants that the information it will provide to Intelsat in connection with earth station registration will be complete and accurate in all material respects. Customer may contract with parties other than Intelsat to transmit its signals to, or receive its signals from, the Satellite, provided that Customer shall require that its contractors comply with all of the requirements of this MSA and the Service Order. If Customer retains third parties as permitted by the previous sentence, those third parties' facilities and personnel shall be deemed to be Customer-Provided Facilities and the acts and omissions of those third parties shall be deemed to be the acts or omissions of Customer. Intelsa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n restored. Any period during which Customer uses the applicable Service shall not count towards the duration of the Confirmed Outage. 5.3 Outage Credits . If a Confirmed Outage occurs, Intelsat shall give Customer a credit (an Outage Credit ) against future Charges for that Service. Unless otherwise specified in a Service Order, Outage Credits shall equal pro rata Service Fees due for that period of time during which a Confirmed Outage of the Service, or any portion thereof, has occurred. 21. Clause 6 of the Agreement deals with Interruption of Service and the relevant clause 6.1 is reproduced below : 6. INTERRUPTION OF SERVICE 6.1 Interruption Rights . Customer recognizes that it may be necessary, if the Satellite or any component thereof loses power, or in other unusual or abnormal technical situations, or other unforeseen conditions, for Intelsat to deliberately interrupt Customer's use of the Service. Intelsat shall make decisions to interrupt Services for such purposes in good faith. To the extent technically feasible, Intelsat shall give Customer at least 24 hours notice of such interruption and shall use all reasonable efforts to schedule and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customer Information Name: PanAmSat Corporation CMM Broadcasting Network Limited Place/Type of Organization: A Delaware corporation India General Information Service Start Date Service End Date Non-Recurring Connection Fee Service Fee Security Deposit (Last 1 Month) Total Initial Payment August 1, 2002 August 31, 2012 NA US$40,000 per month US$40,000 US$120,000 Transponder Segment Service Satellite: PAS-10 Planned Orbital Location: 68.5 degrees West Longitude Beam(s): Global Beam Band: C-Band Bandwidth/Circuit: Two(2) 4065.7 kbps,QPSK,R (Reed Solomon) Simplex Digital Video Channels This Full-Time Agreement is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Satellite SFD: -86.50 dBW/m2 Tx Earth Station Size: 13.0 m Tx EIRP: 59.2 dBW Rx Location: Various, India Rx Earth Station Size: 3.0 m Rx Earth Station G/T: 19.7 dB/K EIRP Twd Rx Earth Station: 40.4 dBW Satellite EIRP (per carrier): 25.2 dBW Satellite EIRP Beam Centre: 26.6 dBW Minimum C/N: 7.47 dB Allocated Bandwidth: 4.0000 MHz Uplink Frequency: 5998.0000 MHz Uplink Polarization: Vertical Downlink Frequency: 3773.0000 MHz Downlink Polarization: Vertical 25. Attachment 2 deals with Service Attachments for Transponder Segment Services and the relevant portion is reproduced below : 1.0 GENERAL . Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, from and after November 1, 2002, all other payments shall be due in advance on the first business day of the month in accordance with Article II of the Master Agreement. xxxxxxxxxx 27. It is important to note that the name of the PanAmSat Corporation was changed to Intelsat Corporation by Certificate of Amendment dated July 03, 2006. This apart, CMM Broadcasting Network Limited was changed to Aastha Broadcasting Network Limited on October 13, 2003. 28. In April, 2008 Customer Service Transfer Agreement was entered into between Aastha Broadcasting Network Limited (Transferor), Vedic Broadcasting Limited (Transferee) and Intelsat Corporation and the relevant portion is reproduced below : WHEREAS, both the Transferor and transferee are Customers of Intelsat under certain Agreements executed by and between the Transferor and Intelsat Corporation on 9 August 2002 (Master Service Agreement, contract number 7106, the Transferor s MSA ), and by and between the Transferee and Intelsat on 27 February 2008 (Master Service Agreement, contract number 20885, the Transferee's MSA ) and WHEREAS, the Transferor, as of the Effective Date, as set forth in Section 3 below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in mind that a broadcaster who desires to launch a channel, has to first approach a satellite operator for leasing a space segment on its satellite. The choice of a satellite depends on the target audience which is based on the footprint area of the satellite, which is a designated region on earth. The satellite operator then allocates the required space segment on an appropriate transponder of the satellite. Thereafter, the broadcaster and the satellite operator enter into an agreement for the charges to be paid by the broadcaster. The broadcaster has also to enter into an agreement with an earth station for up-linking the proposed television channel. For this purpose, the broadcaster has to obtain permission/licence for uplinking and down linking. Based on the technical parameters provided by the satellite operator, a detailed carrier plan giving all the technical details about the uplink is prepared by the earth station operator for obtaining approval from the concerned Wireless Planning Commission. In fact, the earth station can only uplink radio frequency to the satellite as per the carrier plan approved by the Government of India. A carrier plan specifies parameters for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement requires the Appellant to use each Service in compliance with the operational requirements contained in the Service Order. The Appellant has also to configure, equip and operate its transmit facilities so that the interface of these facilities, in outerspace, with the Satellite shall conform to the characteristics and technical parameters of the Satellite. Clause 4 deals with charges and payments . Charges have been explained to refer to all charges specified in the Service Order and the fixed recurring monthly charges specified in the Service Order are due and payable in advance. Clause 5 deals with Service Outage . A confirmed outage occurs when the Service fails to meet the service specifications for a period of time specified in the Service Order and such failure is confirmed by Intelsat. If a confirmed outage occurs, then under Clause 5.3 Intelsat shall give the Appellant a credit against future charges for that Service. Clause 6 deals with Interruption of Service . Under this clause, the Appellant recognizes that it may be necessary for Intelsat to deliberately interrupt the use of the Service by the Appellant if the satellite or any component thereof loses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay the charges for the month of September and October, 2002 and the security deposit by October 31, 2002, but from and after November 01, 2002 all other payments would be due in advance on the first business day of the month in accordance with Article II of the Master Agreement. 40. This fact is also clear from the Office Memorandum dated 25 June, 2006 issued by the Ministry of Information Broadcasting regarding remittance of foreign exchange towards hiring of transponder by the Appellant and the same is reproduced below : This is with reference to M/s. Vedic Broadcasting Ltd's letter dated 22.1 2009 and subsequent correspondence requesting for correction in the No Objection issued vide OM of even number dated 21.1.2009 for remittance of foreign exchange towards hiring of transponder on foreign satellite. 2. In supersession to this Ministry's O.M. of even No. dated 21.1.2009 , the undersigned is directed to convey no objection on technical grounds for remittance of foreign exchange by M/s. Vedic Broadcasting Ltd. to the extent of USD 4,80,000 to M/s. Intelsat Global Sales Marketing Limited, London towards meeting the charges for hiring transponder on IS-10 sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the signals that are transmitted. This apart, the Office Memorandum dated 25 June, 2009 also supports this position. By the said Office Memorandum, the Ministry of Information Broadcasting conveyed its no objection for remittance of foreign exchange by the Appellant to the extent of US$ 4,80,000 for the period from November, 2008 to October 2009 to Intelsat towards meeting the charges for hiring transponder on IS-10 satellite. It needs to be noted that if the monthly services were dependent on signals, the charges would be variable and not fixed and would, therefore, be calculated at the end of the month. The transmission of signals is as a result of the use of the space segment capacity of the transponder of the satellite. The relay station, as noticed above, is able to uplink the programme signals which are then reflected to the earth by the Intelsat transponder on the footprint area of the earth. This is so evident from the pictorial representation drawn above. This is also clear from the procedure described by the two experts that frequency uplinked with a particular power is automatically reflected back by the satellite without any alteration/modification of the programme c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organization. 45. Taxable Service under section 65(105)(zk) of the Finance Act means : 65(105)(zk) taxable service means any service provided or to be provided to a client, by a broadcasting agency or organization in relation to broadcasting, in any manner and, in the case of broadcasting agency or organisation, having its head office situated in any place outside India, includes service provided by its branch office or subsidiary or representative in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) branch office (ii) subsidiary (iii) representative in India (iv) any agent appointed in India (v) or by any person who acts on its behalf (b) List of activities performed by the service providers mentioned under (i) to (v) above, like the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means. (c) Last limb of the definition enumerates the list of recipients of the service, namely, cable operators, multisystem operators or any other person. 50. The contention of the Department is that the activity undertaken by Intelsat in downlinking of the signal is transmission of signal and would fall in the definition of broadcasting and, therefore, service tax is required to be paid by Intelsat, but since it is situated outside India, the recipient of service, that is the Appellant, shall have to pay service tax on reverse charge mechanism. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each of the broadcaster. In the present case, relay station would be Intelsat that receives, amplifies and retransmits the signals to the desired footprint area on the earth. Intelsat, being a relay station itself, therefore, cannot be said to be a broadcaster under section 2(c) of the Prasar Bharati Act. The Commissioner, therefore, clearly fell in error in concluding that Intelsat would be a broadcaster under section 2(c) of the Prasar Bharati Act. 54. It has now to be seen whether any service of broadcasting as contemplated under the first inclusive part of the definition of broadcasting under section 65(15) of the Finance Act has been performed by Intelsat. 55. The submission of learned Counsel for the Appellant is that Intelsat has not carried out any activity like programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intended for public listening or viewing. This position is not disputed by the Department and there is no finding also of the Commissioner that the activity undertaken by Intelsat would fall in the first inclusive part of the definition of broadcasting under section 65(15) of the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Intelsat would be of broadcasting and, therefore, Intelsat would be a broadcasting agency or organization . 59. It is not possible to accept the contention of learned Authorised Representative of the Department. The second inclusive part of the definition of broadcasting under section 65(15) of the Finance Act is in the context of a broadcasting agency or organization having its head office situated in any place outside India. It is only in the case of a broadcasting agency or organization that the activities mentioned in the second inclusive part of the definition, have to be examined, since broadcasting agency or organization under section 65(16) of the Act means any agency or organization engaged in providing service in relation to broadcasting. It has already been seen that Intelsat is not providing any service of broadcasting under the means part of the definition or the second inclusive part of the definition of broadcasting under section 65(15) of the Finance Act. The meaning of the term in relation to cannot be stretched to such an extent so as to include an activity which is not even covered under the definition of broadcasting . 60. It also nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order of the Commissioner. It has been submitted that the Agreement contains features relating to both allocation of bandwidth and transmission of signals and, therefore, the activity which gives the essential character to the transaction as per section 65(A)(2)(b) of the Finance Act would be the main activity. In this connection, the following submissions have also been advanced : (i) In the Revised Carrier Plan, the rate of transmission of data/signal has been specified as 4095.8 Kilobytes per second and the minimum downlink signal strength as 15.6 decibel watts which indicates that the speed and strength of transmission of data/signal have been recognized as two crucial aspects of the Agreement in addition to frequency bandwidth; (ii) As per clause 3.3 of Attachment 2 relating to Services Attachment dealing with frequency assignment, PanAmSat reserved the right to assign and/or reassign customers space segment allocation within the service transponder or to other transponders within the applicable uplink and/or downlink beam of the satellite. Attachment 1(a) and 1(b) also show that frequency assignments are tentative and subject to change. Thus, there is no fixed fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant is to get the TV programmes in the form of radio waves transmitted from one part of the earth to another and it is not the intention of the Appellant to hire a space on the satellite. It is of prime importance to the Appellant that the transmission of TV programmes at a particular speed and of a particular power or signal is obtained so that the quality of TV programmes remain unaffected during the transmission. Clauses 5.1 (confirmed outage) and 5.3 (outage credit) of the Agreement indicate that the fee paid to Intelsat is directly related to the provision of uninterrupted service. 63. Learned Authorized Representative of the Department has laid much emphasis on the Revised Carrier Plan to contend that since the rate of transmission of data signal has been specified as 4095.8 Kilobytes per second and the minimum downlink signal strength as 15.6 decibel watts, it means that the speed and strength of transmission of data/signal are two crucial aspects of the Agreement in addition to frequency bandwidth. 64. As noticed above, what is important to note is that the fixed charges are purely based on assignment of space segment capacity of a transponder and are not linked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to other transponders within the applicable uplink and/or downlink beam of the satellite is to minimize mutual interference between the adjacent satellites in order to ensure compliance with applicable coordination agreements with other networks, and/or to permit efficient loading of the satellite. This is a step to ensure non-interference of signals with corresponding transponders so that the lease segment capacity of the transponder is effectively utilized by the broadcaster or broadcasting agencies or organizations. 67. It has also been submitted by the learned Authorized Representative of the Department that certain terrestrial facilities have also been provided under Clause 2.2 of the Agreement with space segment allocation. 68. It is not possible to accept this submission. Clause 2.2 of the Agreement provides that Intelsat shall provide its service using satellite and/or terrestrial facilities owned and/or operated by Intelsat and/or third parties under contract with Intelsat. This simply means that Service would be provided to the Appellant using a satellite and/or terrestrial facilities. The term terrestrial means of or related to the earth or its inhabitance . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a different satellite provided that any such change does not result in a failure of the Service to meet the Service Specifications. Clause 1.0 of Attachment 2 to the Service Order fixes the space segment. Thus, the Service agreed to be provided to the Appellant comprises of bandwidth which is the space segment capacity. Any interruption of service will necessarily refer to the space segment capacity and not transmission of signals. Interruption of Service , therefore, would refer to non-functioning of the transponder, as a result of which there would be no transmission of signals. A transponder may not function for various reasons including loss of power. It is in such a situation that a right has been conferred on the Appellant to seek remedies regarding outage credit in accordance with Clause 5.3 of the Agreement. 73. It has also been contended by learned Authorized Representative of the Department that the test of intention of the parties behind the transaction should be examined , as was observed by the Supreme Court in Bharat Sanchar Nigam Ltd. According to the learned Authorized Representative, it is clear that the intention of the Appellant is to get its TV programm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows:- (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, insofar as this criterion is applicable; (c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration. 77. A bare perusal of section 65A(1) shows that classification of taxable services shall be determined according to the terms of the sub-clauses of clause (105) of section 105. Sub-section (2) of section 65A stipulates that when for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, then the classification shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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