TMI Blog2014 (9) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... ity on the basis of the evidence available. Therefore, the confirmation of service tax demand on the basis of these legal provisions cannot be challenged/questioned. Once the liability to pay service tax is decided, the question of interest liability is automatic and consequential in terms of provisions of section 75 of the Finance Act, 1994. While the penalty under section 76 is for default/delay in the payment of service tax and no mens rea is required to be proved, penalty under section 78 involves mens rea on the part of the appellant. Prior to 10-5-2008 penalties under both the sections could be imposed simultaneously - However penalties cannot be imposed simultaneously under both the above sections with effect from 10-5-2008 as the law was amended to that effect. - demand of service tax and penalties confirmed - Decided against the assessee. - Appeal No.ST/312/2006 - Final Order No. A/1327/2014-WZB/C-I(CSTB) - Dated:- 7-8-2014 - P R Chandrasekharan and Ramesh Nair, JJ. For the Appellant : Shri V L Jain, CA. For the Respondent: Shri D Nagvenkar, Addl. Comm. (AR) JUDGEMENT Per: P R Chandrasekharan: The appeal is directed against order-in-original N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 in December, 2003. The billing statement of SIPL on ICC also revealed the subscriber base to be 28750 during August to December, 2002, 57500 during January and February, 2003, 74350 in March, 2003 and 82750 since April, 2004 at the rate of ₹ 30 per subscriber. Based on the subscriber base declared to the broadcasters and adopting the subscription charges invoiced and recovered by the appellant, a show-cause notice 23-6-2005 was issued demanding differential service tax for ₹ 1,90,62,683/- for the period 16-8-2002 to 30-9-2004 along with interest and proposing to impose penalties. Subsequently another show cause notice dated 25-4-2006 was issued demanding service tax of ₹ 1,57,29,893/- for the period 1-10-2004 to 30-6-2005 adopting the subscriber base declared to the broadcasters. Both these notices were adjudicated vide the impugned order and the demands were confirmed along with interest and penalties imposed. It is against this order, the appellant is before us. 3. The ld. Chartered Accountant appearing for the appellant made the following submissions:- (1) There is a violation of principles of natural justice in as much as no opportunity of cross e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Telecommunication (Broadcasting and Cable Services) Regulations, 2004 (TBCR in short) as amended from time to time. As per the said regulations, subscriber base' means the number of subscribers as agreed to by two providers in a non-addressable system on the basis of which payments are made by one service provider to the other, or as reflected by the subscriber management system where addressable systems are employed. The subscriber management system is an addressable system which stores the subscriber records and details with respect to name, address, etc. as well as information regarding the hardware being utilized by the subscriber, channels/bouquets of channels subscribed to by the subscriber, price of such channels or bouquets of channels as defined in the system,.......... invoices raised on each subscriber and the amounts paid by the subscriber for each billing period. Vide clause 9 of the regulation, in non-addressable systems, while executing an interconnection agreement for the first time between a multi systems operator and a cable operator, the parties to the agreement shall take into account the subscriber base of the cable operator on the basis of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umerated in the ensuing paragraphs. 5.1 Though the appellant had requested for cross examination of the deponents of the various statements relied upon by the Revenue in their preliminary reply to the show cause notice vide letter dated 25-7-2005, they never pressed for the same as is evident from the record of personal hearings held on 10-08-2006 and 22-9-2006. During the personal hearing held on these dates, there was no mention whatsoever about the request for cross examination. On the other hand, they filed final written submissions which were taken on record. Further most of the persons whose cross-examination has been sought for are the executives of the Broadcasters. When the agreement entered into with the Broadcasters are available on record, the same is sufficient to determine the terms and conditions of the transaction between the broadcaster and the cable operator. Further there is a clause relating to supercession in the agreement which states that except as provided herein, the agreement constitutes the whole agreement between the parties relating to the subject matter hereof and supercedes any other agreements or understanding relating to such subject matter. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm of the agreement as per clause III is for a fixed period of 12 months or upto on December 31, 2003, whichever is earlier. Clause IV provides for payment of fees. As per clause IV A (i), immediately upon execution of this Agreement, based on the actual number of Subscribers of the Affiliate, the affiliate shall pay to the Licensor, subscription fee, in advance, as detailed in Annexure A hereof. In the event of any increase in the number of affiliate's subscribers, the subscription fee shall be calculated and increased accordingly. The Affiliate agrees that the subscription fee shall not reduce below what is stated in Annexure A. As per the said annexure, the subscriber shall pay to the Licensor the following subscription fees (based on the existing subscriber base) of ₹ 17,25,000/- and the number of subscribers is 57,500. Thus from the agreement entered into with the broadcaster, the number of actual subscribers at the time of entering into the agreement was 57500. Similar is the position with respect to the other agreements entered into by the appellant with the broadcasters for different periods of time. 5.5 In the case before us, for the determination of the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of income was arbitrary. That is not the situation obtaining in the facts of the case before us. The figures adopted for determination of subscriber base is from the various agreements entered into by the appellant with the broadcasters. Thus the facts are completely different and distinguishable and hence the ratio of the said decision is not applicable. 5.8 The next question is whether on the basis of the subscriber base declared in the agreements with the broadcasters and the subscription charges given in the bills/invoice issued to the subscribers, can service tax demand be made and whether such an assessment of tax liability can be considered as arbitrary. Prior to its omission with effect from 10-9-2004, section 72 of the Finance Act, 1994 provided for best judgment assessment and read as follows:- 72. Best judgment assessment. - If, - (a) any person fails to furnish the return under section 70, or (b) having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder, the Central Excise Officer, may require the person to produce such accounts, documents or other evide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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