TMI Blog2013 (10) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... be interpreted to conclude that the Appellant is a service recipient as per the ‘means’ and first inclusive part of the definition and a service provider under the second inclusive part of the definition. From the second inclusive part of the definition that only permitting the right to receive signals in any form by transmission through electromagnetic waves through space or cable to MSO/cable operators is an aspect covered as taxable and Distribution rights given by ESSD to the Appellant and which are not covered under the definition are not taxable and therefore this finding of the Commissioner is not sustainable - ESSM is not a service provider and Appellants are not recipient as held by the Commissioner and the distribution rights given by ESSM to the appellants are not taxable. Appellant is covered under second inclusive part of the definition of Broadcasting. Similarly appellant is a broadcasting agency also by virtue of inclusive definition of Broadcasting agency. Taxable service under Section 65(105)(zk) means any service provided or to be provided by a Broadcasting Agency and providing broadcasting service by virtue of being based in India and having a head office o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three appeals -two filed by M/s ESPN Software India Pvt. Ltd. (hereinafter referred to as Appellant No. 1) and one filed by M/s Turner International India Pvt. Ltd. (hereinafter referred to as Appellant No. 2). Since the issue involved is common, these are being taken up together for decision. Appellant No. 1 has filed Appeal No. ST/1301/2011 and ST/279/2012 against Order-in-Original No. 49/2011 dated 31.3.2011 and 18/2011 dated 29.11.2011 respectively both passed by the Commissioner of Central Excise, LTU, New Delhi. Appellant No. 2 has filed Appeal No. ST/56999/2013 against Order-in-Original No. 1-4/GB/13 dated 10.1.2013 passed by Commissioner of Service Tax, New Delhi. 2. Brief facts of the case in Appeals of Appellant No. 1 are that Appellant No. 1 is wholly owned subsidiary of ESPN (Mauritius) Limited and is engaged in import, promotion, marketing, distribution and sub-distribution of the international ESPN network programming service (ESPN channels), STAR Sports Network programming service (STAR Sports Channel) and STAR Cricket network programming service (STAR Cricket Channel) in India through Cable TV Network, satellite master antenna and DTH platforms received via satel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociate Director, Department felt that Appellant No. 1 is receiving taxable service as defined under Section 65(105)(zk) of Finance Act from foreign broadcasters and is liable to levy of service tax under reverse charge mechanism under Broadcasting Service. Accordingly, two Show Cause Notices dated 21.10.2010 and 13.4.2011 were issued to the Appellant No. 1 demanding service tax along with interest for the period April 2005 to March 2010 and April 2010 to December 2010 respectively and also proposing penalty on the appellants. These Show Cause Notices were adjudicated by the Commissioner, Service Tax, LTU vide Orders-in-Original No. 49/2011 dated 31.3.2011 and 18/2011 dated 13.4.2011 respectively confirming service tax amounting to Rs.225,78,99,391/- and Rs.73,97,95,551/- interest and equal amount of penalty on the appellants. Appellant has challenged these orders in the present appeals. 5. Brief facts of the case in respect of M/s Turner International India Pvt. Ltd. (hereinafter referred to as TIIPL) are that the appellant is subsidiary of M/s Turner Broadcasting System Asia Pacific, Inc., Hong Kong (TBSAP) and is engaged in import, promotion, marketing, distribution and sub-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause Notice dated 12.9.2011 issued by Range Superintendent of Service Tax Commissionerate on the basis of Show Cause Notice at (a) and (b) above for the period 1.4.2010 to 31.3.2011 for amount of Rs.6,92,52,551/-. (d) Show Cause Notice dated 18.10.2012 issued by the Range Superintendent for the subsequent period 1.4.2011 to 31.3.2012 for amount of Rs.7,50,27,704/-. The above four Show Cause Notices were adjudicated by the Commissioner vide Orders-in-Original No. 1-4/GB/2013 dated 10.1.2013. TIIPL has challenged the impugned order in the present appeal. 7. Ld. Sr. Advocate Shri V. Sridharan appearing on behalf of the Appellants No. 1 submits that by a legal fiction appellant is already being taxed on service actually being provided by the foreign broadcasting agency and therefore there is no question of demanding service tax again on the same activity. He submits that definition of broadcasting can be divided into three parts, first being meaning assigned to it under Section 2 of Prasar Bharti Act, Second being programme selection, scheduling or presentation of sound or visual matter and third being service undertaken by the branch office or subsidiary or representative in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot be invoked in this case. He submits that the documents on which Department is relying to levy service tax have already been submitted at various points of time to the Department. He submits that in response to summons issued to the Appellant documents were submitted to the Department between 17.6.2004 and 16.6.2005. Suppression would only be wilful if there is an element of intent contained in it. Since the agreements between the Appellant and foreign entities were already submitted to the Department and the fact that service tax was not paid on remittance sent to foreign entities was known to the Department, suppression cannot be inferred in this case. He therefore submits the demands are not sustainable on merit as well as on limitation. 11. Ld. Sr. Advocate Shri R. Venkatraman appearing for Appellant No. 2 submits that TENA and other foreign entities are owners of channels through which programmes are beamed. These programmes are played out at a play stations located outside India and communication signals are uplinked to satellite located outside India. By telecasting these channels revenue is generated by owners of the channels by entering into distribution agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SOs/DTH. He therefore submits that Appellant is a service provider and broadcaster under the second inclusive part of the definition and has discharged service tax liability in full on amounts received on subscription/advertisement charges and for services rendered by Zee Turner it is paid commission on which service tax is paid by Zee Turner. 13. Ld. Sr. Advocate further argues that Appellant cannot be termed as a service recipient and TENA as a service provider as technologically Appellant No. 2 does not receive any signals from TENA. Signals are directly received by MSO/DTH etc. and it is not permissible to read or interpret the inclusive part of the definition to include both the foreign channel and its representative for the simple reason that the foreign channel cannot do any of catalogued services in the inclusive part in India, because of the prohibition imposed by Ministry of Information and Broadcasting. Only the Indian entities falling under the inclusive clause and who have marketing and distribution rights can render these services and therefore Indian entities are service providers and not service recipients. Therefore demand on the ground of recipient of broadcasti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue stands settled in view of Delhi High Court judgement in case of Intercontinental Consultants and Technocrats Pvt. Ltd. and demands needs to be set aside. 19. Ld. Sr. Advocate submits that without prejudice to the fact that transactions are not taxable, Appellant No. 2 makes an alternative submission of eligibility of Cenvat credit of service tax paid by them and that the whole exercise is revenue neutral. He submits that as Appellant No. 2 has already discharged service tax on amounts received on account of subscription/Advertisement, Appellant is eligible to Cenvat credit of tax paid by them and can utilise such credit for payment of service tax demanded from the Appellant. He further points out that the Commissioner in para 39.10 conceives the Cenvat eligibility and transaction as revenue neutral. On the basis of Cenvat eligibility and if transaction is revenue neutral, the extended period cannot be invoked since revenue neutrality exists for the same Appellant and consequently penalties are also not imposable on the Appellant. Ld. Sr. Advocate further submits that interest under Section 75 also is not payable in the present proceedings. 20. Shri Somesh Arora, Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht only after investigation was taken up by the Department. The fact that chips through which signals received are controlled and activated was never revealed by them and it came to light during the course of recording of statement of Shri Vineet Kumar Jain. Intention to evade is further established by the fact that Distribution Agreement was non est and was entered into in 2008. Therefore suppression of fact by the Appellant No. 1 is clearly established as held by the Commissioner attracting extended period of limitation as well as imposition of penalty. He also referred to various case laws submitted during the course of hearing. 25. Shri Pramod Kumar, Jt. CDR appearing for Revenue in ESPN Appeal No. ST/279/2012 and the TIIPL Appeal adopts arguments advanced by Shri Somesh Arora. Shri Kumar further reiterated the findings of the Commissioner in Order-in-Original No. 18/2011 dated 29.11.2011 passed by Commissioner, Service Tax, LTU and Order-in-Original NO. 104/GB/13 dated 10.1.2013 passed by Commissioner, Service Tax, Delhi. 26. We have heard both sides. Major issue to be decided in these appeals is whether Appellant No. 1 and No. 2 are liable to pay service tax as recipients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner. 65(16) broadcasting agency or organisation means any agency or organisation engaged in providing service in relation to broadcasting in any manner and, in the case of a broadcasting agency or organisation, having 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 transm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r who provides the service in terms of Section 2(c) of Prasar Bharati (Broadcasting Corporation of India) Act, 1990. (2) Under the first inclusive clause, the following services are also considered to be broadcasting 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. 3. Last part of the inclusive definition consists of following three limbs : (a) List of entities (in case of broadcasting agency or organisation having its head office situated in any place outside India) (i) Branch office; (ii) Subsidiary; (iii) Representative in India; (iv) Any agent appointed in India; or (v) By any person who acts on its behalf. b. List of activities performed by the service providers mentioned (i) to (v) above which are the activity of selling of time slots, obtaining sponsorship for broadcasting of any programme, collecting the broadcasting charges, permitting the right to receive any form any communication like sign, signal, writing, picture, image and sound of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Broadcasting Service. Thus, ESPN appears to have imported broadcasting services from ESSD in the form of distribution rights for ESPN Channel , STAR Sports Channel and STAR Cricket Channel which were further distributed by ESPN in India through MSOs and Cable Operators. ESPN also appear to have imported broadcasting services from ESSM in the form of Advertising time inventory on ESPN Channel , STAR Sports Channel and STAR Cricket Channel which were further sold by ESPN in India to advertisers. The amounts paid by ESPN to the foreign broadcasters viz. ESSB and ESSM, in consideration for grant of TV Channel distribution rights and Advertisement Time inventory , appear to be consideration for import of broadcasting services, liable for payment of service tax by ESPN under reverse charge mechanism, in terms of provisions of Section 66A of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 and Taxation of services (provided from outside India and received in India) Rules, 2006. 30. Para-11 shows the narration of the allegation by the Department in the Show Cause Notice. Commissioner straightway concluded that demand was made with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd STAR Cricket channels after examining the Distribution Agreement between ESPN and ESSM and definitions of Broadcasting, Broadcasting agency or organisation and the taxable service. In view of our observations in respect of ESSD, we hold that ESSM is not a service provider and Appellants are not recipient as held by the Commissioner and the distribution rights given by ESSM to the appellants are not taxable. 35. In case of Appellant No. 2, the Commissioner examined the taxability of service under para 39.7 and 39.8 of the Order-in-Original. Commissioner has held that the appellant being covered under means part is a broadcasting agency and provided the service of broadcasting and has discharged the service tax liability as service provider. He holds in para 39.8 of the order that appellant being an agent of the foreign broadcaster is liable to pay service tax as recipient of services under reverse charge mechanism. We find that appellant is covered under second inclusive part of the definition of Broadcasting. Similarly appellant is a broadcasting agency also by virtue of inclusive definition of Broadcasting agency. Taxable service under Section 65(105)(zk) means any service pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Trade Mark Act, 1999 Section 2(b) trade mark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours; and (i) in relation to Chapter XII (other than section 107), a registered trade mark or a mark used in relation to goods or services for the purpose of indicating or so as to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right as proprietor to use the mark; and (ii) in relation to other provisions of this Act, a mark used or proposed to be used in relation to goods or services for the purpose of indicating or so to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right, either as proprietor or by way of permitted user, to use the mark whether with or without any indication of the identity of that person, and includes a certification trade mark or collective mark. Section 2(m) - mark includes a device, brand, heading, label, ticket, name, signature, word, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) to make any other sound recording embodying it; (ii) to sell or give on hire, or offer for sale or hire, any copy of the sound recording, regardless of whether such copy has been sold or given on hire on earlier occasions; (iii) to communicate the sound recording to the public. Explanation -For the purposes of this section, a copy which has been sold once shall be deemed to be a copy already in circulation. Section 2 (c) Artistic work means (i) a painting, a sculpture, a drawing (including a diagram, map, chart or plan), an engraving or a photograph, whether or not any such work possesses artistic quality; (ii) work of architecture; and (iii) any other work of artistic craftsmanship. The dispute relates to Cartoon Characters. It is the contention of the assessee that Cartoon Characters are created by TENA and are the artistic work and are clearly covered under Copyright Act whereas Revenue contests that these are Trademarks and not artistic work and are thus covered under IPR Services. 38. Product Licensing Agreement and Promotional Licensing Agreements were executed between TENA and TIIPL. TIIPL i.e. Appellant No. 2 executed sub licensing agreements betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y paying 60% of revenue to TENA, particularly when they are already paying Copyright fee to TENA. We find the sub licensing of products to clients in India amounts to promotion of product and properties of TENA and is covered under Business Auxiliary Service under Section 65(19) of the Act. Appellant is at liberty to claim Cenvat credit of service tax paid in accordance with law. 42. Commissioner has also confirmed service tax under taxable service of Programme Producer Service as defined under Sections 65(105)(zzzu) read with 65(86a) and 86(b) of the Act. It is the contention of the Appellant that they are not engaged in producing any programme but providing assistance in production of programme to TENA and their role is that of supervisor and these services are appropriately covered under support service of business which came into effect with effect from 1.5.2006. We find that as per Service Agreement between TENA and the Appellants, the Appellant has to create, produce and develop the concept/format creation/acquisition and to provide pre-production, production and post-production services to create programme content intended for broadcasting on TENA international channel net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax is not leviable. We find that under Section 73 of Finance Act, where service tax has not been levied or short levied, tax can be demanded within one year from the relevant date. However if tax has not been levied or short levied by reason of, fraud, collusion, wilful, misstatement, suppression of fact etc tax can be demanded within 5 years from the relevant date. The Commissioner has discussed the invocation of extended period in para 46 of Order-in-Original and has held that appellant has suppressed the facts from the department as they did not get themselves registered for these services, pay the service tax and file ST-3 returns. The appellant did not pay any service tax under Intellectual Property Service, Business Auxiliary Service in respect of Product Licensing Agent/promotion licensing Agent and on Programme Producer Service and did not file any Return for these services. We do not find any fault in finding of the Commissioner in invoking extended period of limitation and consequently Appellant is liable to interest and penalty. 46. In view of the above 1) Appeals filed by Appellant No. 1 are allowed. 2) In respect of appeal filed by the Appellant No. 2 we set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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