2014 (10) TMI 66 - AT - Service Tax

Broadcasting services - activity of selling time slots for advertisements by SIPL on behalf of Star Hong Kong - Star Hon Kong had appointed SIPL as their representative in India to solicit advertisements for the channels telecast by the former and also to collect and remit the advertisement charges - Held that - SIPL is the independent representative of Star Hong Kong and is engaged in selling time slots for broadcasting or obtaining sponsorships or collecting broadcasting charges on behalf of the latter. It is also not in dispute that whenever advertisement charges are collected in Indian Rupees on behalf of Star Hong Kong SIPL is discharging service tax liability. Therefore it does not stand to reason that the service rendered to a person who directly makes payment to Star Hong Kong for broadcasting in India cannot be classified under broadcasting services . Since SIPL is essentially engaged in selling time slots for broadcasting on behalf of Star Hong Kong in both the situations service tax would be leviable. It is abundantly clear that so long as the radio or television programme is received in India and intended for listening or viewing by the public in India such activity shall be taxable service even if the physical activity of broadcasting such as encryption of signals or beaming thereof takes place outside India and any branch office subsidiary representative agent or any person who is appointed by the broadcaster for selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting broadcasting charges on behalf of the broadcaster will be liable to pay service tax. Representative of the Foreign Broadcaster (who undertakes broadcasting in India) engaged in selling time slots or obtaining sponsorships or collecting and remitting charges on behalf of the broadcaster has to be made liable to service tax in India which is the express intention of the Legislature while making retrospective amendments to sections 65 (15) 65 (16) and 65 (105) (zk) of the Finance Act 1994. Therefore this will of the legislature has to prevail and has to be given effect to. Viewed from this perspective the argument that such a transaction is not taxable in India has to be rejected in toto and we do so. The responsibility also included delivery of the invoices to the advertisers on a timely basis. Thus the appellant obviously knew the amount charged for the broadcasting services. Section 70 of the Finance Act 1994 mandated that - Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise a return in such form and in such manner and at such frequency as may be prescribed. Thus the appellant was operating under self-assessment procedure during the impugned period. The appellant has failed to declare in the said return the complete particulars with regard to the services rendered to the foreign advertisers. Therefore the ratio of the decision of the hon ble apex court in the case of Madras Petrochem Ltd. (1999 (3) TMI 81 - SUPREME COURT OF INDIA) relied upon by Revenue would squarely apply. Representative of the Foreign Broadcaster (who undertakes broadcasting in India) engaged in selling time slots or obtaining sponsorships or collecting and remitting charges on behalf of the broadcaster has to be made liable to service tax in India which is the express intention of the Legislature while making retrospective amendments to sections 65 (15) 65 (16) and 65 (105) (zk) of the Finance Act 1994. Therefore this will of the legislature has to prevail and has to be given effect to. Viewed from this perspective the argument that such a transaction is not taxable in India has to be rejected in toto and we do so. The responsibility also included delivery of the invoices to the advertisers on a timely basis. Thus the appellant obviously knew the amount charged for the broadcasting services. Section 70 of the Finance Act 1994 mandated that - Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise a return in such form and in such manner and at such frequency as may be prescribed. Thus the appellant was operating under self-assessment procedure during the impugned period. The appellant has failed to declare in the said return the complete particulars with regard to the services rendered to the foreign advertisers. Therefore the ratio of the decision of the hon ble apex court in the case of Madras Petrochem Ltd. (supra) relied upon by Revenue would squarely apply. invocation of extended period of time for confirmation of demand is fully justified - Decided against assessee.

Summary

Issues Involved:
1. Jurisdiction of the adjudicating authority.
2. Taxability of services provided by SIPL on behalf of Star Hong Kong.
3. Applicability of service tax on amounts collected in foreign currency.
4. Limitation period for raising the tax demand.
5. Interpretation of statutory definitions and amendments.
6. Export of services and its implications on tax liability.
7. Allegations of suppression of facts and invocation of the extended period for tax demand.

Detailed Analysis:

1. Jurisdiction of the Adjudicating Authority:
The appellant raised the issue of jurisdiction but did not press this point during oral submissions. The Tribunal referenced the decision in Standard Chartered Bank and Others (21-02-2013) and upheld the jurisdiction for the Revenue in this matter.

2. Taxability of Services Provided by SIPL on Behalf of Star Hong Kong:
The appellant, SIPL, was engaged in activities such as selling time slots for advertisements, obtaining sponsorships, and collecting broadcasting charges on behalf of Star Hong Kong. As per the agreement dated 1-4-1999, SIPL was responsible for soliciting advertisements and collecting charges, which brought them under the definition of a "Broadcasting Agency or Organization" as per sections 65(15) and 65(16) of the Finance Act, 1994. The Tribunal concluded that SIPL's activities fell squarely within the taxable service category defined in section 65(105)(zk).

3. Applicability of Service Tax on Amounts Collected in Foreign Currency:
The appellant argued that since payments were made in US dollars directly to Star Hong Kong, they were not liable for service tax. However, the Tribunal held that the mode of payment does not change the taxable event, which is the rendering of taxable service. The statutory definitions and amendments made it clear that any activity related to selling time slots or collecting charges on behalf of a broadcaster situated outside India is taxable, regardless of the payment method.

4. Limitation Period for Raising the Tax Demand:
The appellant contended that the demand was time-barred. The Tribunal noted that the appellant failed to declare the complete particulars of services rendered to foreign advertisers in the ST3 returns, which was a requirement under the self-assessment procedure. The Tribunal referenced the Supreme Court decision in Madras Petrochem Ltd. (1999) and concluded that the extended period for raising the tax demand was rightly invoked due to the appellant's failure to disclose necessary information.

5. Interpretation of Statutory Definitions and Amendments:
The Tribunal examined the retrospective amendments made in the Finance Act, 2002, which expanded the definitions of "broadcasting" and "broadcasting agency or organization" to include activities undertaken by representatives in India on behalf of foreign broadcasters. The Tribunal emphasized that these amendments aimed to ensure that services intended for public viewing in India are taxable, even if the broadcasting activities occurred outside India.

6. Export of Services and Its Implications on Tax Liability:
The appellant argued that services rendered to foreign advertisers should be considered as exports and thus not taxable. The Tribunal rejected this argument, stating that during the relevant period, to qualify as export of service, the payment for the service rendered should be received in convertible foreign exchange and no part of such payment should be repatriated outside India. Since the payments were made to Star Hong Kong, the conditions for export were not satisfied.

7. Allegations of Suppression of Facts and Invocation of Extended Period:
The Tribunal found that the appellant had not disclosed the amounts charged to foreign advertisers in the ST3 returns, which constituted suppression of facts. The Tribunal upheld the invocation of the extended period for raising the tax demand, referencing the Supreme Court decision in Madras Petrochem Ltd. and the Gujarat High Court decision in Salasar Dyeing & Printing Mills (P) Ltd. (2013).

Conclusion:
The Tribunal dismissed the appeal, holding that SIPL was liable to pay service tax on the activities undertaken on behalf of Star Hong Kong, including those involving foreign advertisers. The extended period for raising the tax demand was justified due to the appellant's failure to disclose necessary information in the ST3 returns. The statutory definitions and amendments were interpreted to include services rendered by representatives in India for foreign broadcasters, ensuring that such services are taxable if intended for public viewing in India.