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2022 (10) TMI 694 - AT - Service TaxLevy of Service Tax - gross amount collected from the subscribers/ultimate customer or only on the gross amount received by them from the Local Cable Operators (LCOs) who are providing the content - providing maintenance services to the subscriber/ultimate customer and collecting payments from them and remitting amount to respondent as per their invoice and retaining the balance amount collected by them - eligibility for CENVAT Credit - HELD THAT:- As per the definition of ‘cable operator’ in Cable Television Networks Act, any person who provides cable service is cable operator, therefore it implies that both MSO and LCOs are cable operators as MSO is providing cable service to LCOs who in turn providing the same to the ultimate customer/ individual. We are in complete agreement with learned Commissioner that the actual functionality of MSOs and LCOs differ from analogue period to DAS period to the extent that during DAS period, the signals received/purchased by MSO were encrypted whereas in analogue period they were not and for viewing of encrypted signals installation of set top boxes at subscriber’s end is a must in DAS period and subscribers’ records in the SMS server were also maintained with MSO. While interpreting the word ‘for such service’ in Section 67, the Hon’ble Supreme Court in the matter of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] has laid down that value of taxable services shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax cannot be anything more or less than the consideration paid as quid pro quo for rendering such a service. There is no iota of doubt that LCOs received signals from MSOs (who received the signals from broadcasters) and the ultimate customers/subscribers received signals from the LCOs. The findings of the learned Commissioner is agreed upon that in the post DAS era both MSO and LCOs would fall within the ambit of persons providing taxable services of ‘cable service’ however the service recipient for both would be different as for the MSOs the recipient is LCOs whereas for LCOs it’s the subscribers. It is not disputed that the respondents did not have set top boxes, CAS, SMS etc and were using the infrastructure provided by their group company FTPL and also did not have the equipments required for transmitting the signals by LCOs to subscribers and therefore it is clear that the LCOs were utilising their own infrastructure for transmitting signals to the ultimate subscribers - it is concluded that the respondent is liable to pay service tax only on the gross amount received by them from LCOs. Demand of short payment of amount - denial of Cenvat credit - non-production of respective invoices by the respondent - levy of service tax on audit fee - extended period of limitation - HELD THAT:- It is found that without any discussions and/or proper reasoning the learned commissioner has confirmed the short payment of demand and denied the Cenvat credit to the respondent, which do not find favour the present case, therefore, there are no other option but to set aside the part of the impugned order confirming the short- payment of demand and denial of Cenvat credit alongwith penalty for which cross-objection has been filed by the respondent and remanding the same to the Adjudicating Authority to decide the issue afresh including the issue of extended period of limitation, after giving proper opportunity to the respondent. The appeal filed by revenue is rejected and the cross-objections of respondent are accordingly disposed off.
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