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2015 (3) TMI 1051 - MADRAS HIGH COURT

2015 (3) TMI 1051 - MADRAS HIGH COURT - 2015 (40) S.T.R. 671 (Mad.) - Invocation of extended period of limitation - agreement between appellants and broadcasting company was known to department - Suppression of facts or not - Penalty u/s 76 & 78 - Held that:- Tribunal was of the view that the Slot Sale Agreement between the first respondent and the broadcasting company was very much known to the department and in this regard, gave a specific finding on fact that there was no suppression of mater .....

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and is covered by the extended period which is not invocable and moreover, there is a dispute on interpretation of the relevant provisions of Section 65 of the Finance Act, 1994. Therefore, the Tribunal, placing reliance on the decision of the Tribunal in Zee Telefilms case [2004 (3) TMI 1 - CESTAT, NEW DELHI], referred supra, vacated the penalty. - there is no suppression of material facts with an intent to evade payment of service tax and education cess, we hold that the Tribunal was justified .....

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livered by R.SUDHAKAR, J.) This appeal is filed by the department under Section 35G of the Central Excise Act, 1944 read with Section 93 of the Finance Act, 1994 against the Final Order No.1098 of 2008, dated 30.7.2008 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai. 2. Though notice of admission was ordered on 10.12.2009, this appeal was not admitted till date. The department intends to raise the following questions of law: (i) Whether the decision .....

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volved is predominantly and legally interpretative in nature? 3.1. The facts in a nutshell are as under: On 1.8.2001, the first respondent entered into a Slot Sale Agreement with M/s.Vijay Broadcasting Company (P) Ltd., (for brevity, the Broadcasting Company ) the owner of the channel Vijay TV . The first respondent was buying broadcasting time from the Broadcasting Company and selling slots thereof to various clients, namely sponsors of television programmes, who wanted their advertisements to .....

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ndent to be a broadcasting agency or organization as defined under Section 65(15) of the Finance Act, 1994 and held that they have rendered broadcasting service to the advertisers/sponsors as a taxable service under Section 65(105)(zk) read with the first part of the definition of broadcasting given under Section 65(14) of the Act as amended. 3.3. As per the Slot Sale Agreement dated 1.8.2001, the first respondent was given 18 hours time per day to get their programmes telecast by the Broadcasti .....

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nder Section 73 of the Finance Act, 1994. The relevant portion of the said show cause notice reads as under: 13. Whereas it also appears that- (i)(a) VTPL had been rendering taxable service under the category of Broadcasting Service and had been earning income towards the same w.e.f. 16.07.2001, without taking out Registration under Service Tax, payment of appropriate Service Tax and filing periodical ST-3 Returns. (b) The facts relating to the said business transactions and income earned there .....

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red themselves liable to pay the Service Tax in terms of proviso to Section 73(1) of the said Act, and they have rendered themselves liable for penalty under Section 76, 77 & 78 of the said Act, as amended. 14. Now, therefore M/s.Vijay Television Private Limited are hereby required to show cause to the Commissioner of Service Tax, Service Tax Commissionerate, No.692, MHU COMPLEX, VI Floor, Anna Salai, Nandanam, Chennai 600 035, within thirty days from the date of receipt of this notice as to .....

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be telecast, sale of time slots & sale of Advertisements. (iii)A sum of ₹ 6,16,28,954/- (details as per Annexure-II) being the service tax on the taxable service Broadcasting should not be demanded from them for the period from 16.07.2001 to 30.04.2005, as per first proviso of Section 73 of the said Act, read with Section 68 of the said Act and Rule 6 of the said Rules. (iv)Education Cess of ₹ 3,60,794/- (Annexure-II) on the Service Tax payable by them from 10.09.2004 to 30.04.20 .....

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as per the provisions of Section 68 read with Rule 6 of the Service Tax Rules, 1994 as amended. (vii)Penalty under Section 77 of the said Act as amended should not be imposed on them for their failure to file the periodical ST-3 Returns under Broadcasting service category. (viii)Penalty under Section 78 of the said Act as amended should not be imposed on them in as much as they have suppressed the facts of having rendered the said taxable services to the Department and also contravened the prov .....

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Education Cess due and file S.T.3 Returns for the value of taxable service realized by them. They have contravened the provisions of Section 68, 69 & 70 of the Finance Act, and suppression of facts and willful intent to evade payment of Service Tax and Education Cess by VTPL are well established. Therefore, the Service Tax and Education Cess are liable to be demanded under proviso to Section 73(1) of the Finance Act. They are also liable for penal action under Sections 76, 77 & 78 of th .....

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n as per Section 65(16) of the Finance Act, 1994, as amended, for having rendered such services as programme selection, programme scheduling, causing the said programmes to be telecast, sale of time slots & sale of Advertisements. (iii)I demand a sum of ₹ 6,16,28,954/- (Rupees Six Crores sixteen lakhs twenty eight thousand nine hundred and fifty four only) being the service tax on the taxable service Broadcasting from VTPL for the period from 16.07.2001 to 30.04.2005, as per first prov .....

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ce Tax and Education Cess under Broadcasting service for such services rendered from 16.7.2001 to 30.4.2005. (vi)I impose a penalty of ₹ 200/- (Rupees Two Hundred only) per day on VTPL from the due date of payment of Service Tax and Education Cess till the actual date of payment of the above demand under Section 76 of the said Act. However, the penalty imposed under this Section shall not exceed the Service Tax and Education Cess demanded in this order. (vii)I impose penalty of ₹ 1,0 .....

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Act, 1994, more particularly, the definition of the term broadcasting as defined under Sections 65(14) of the Finance Act, 1994 (as amended by the Finance Act, 2001) and Section 2 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990; and the term broadcasting agency or organization as defined under Section 65(15) of the Finance Act, 1994, came to the conclusion that the services rendered by the first respondent/assessee fall under the service tax net and observed as under: 5. Afte .....

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sed for the telecast of programmes which were got produced under agreements between M/s.Vijay Television and producers of TV serials and other programmes. M/s.Vijay Television prepared the schedules and decided the programmes to be telecast during the time slot. As per the definition of 'broadcasting' as amended by the Finance Act, 2001, with retrospective effect from 16.7.2001, programme selection, scheduling or presentation of sound or visual matter on a television channel would consti .....

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of 'broadcasting'. By all these activities, they were providing a service to their clients in relation to 'broadcasting' and such service was exigible to levy of service tax. (emphasis supplied) On merits, therefore, the Tribunal held against the first respondent/ assessee. However, on the plea of limitation, the Tribunal was of the view that the Slot Sale Agreement between the first respondent and the broadcasting company was very much known to the department and in this regard .....

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ion of the said observation for better clarity: 8. .... We find that these and other provisions of the SLOT SALE AGREEMENT between the appellants and the Broadcasting Company were within the knowledge of the department and the same were enough for the department to find out that the appellants were engaged in the activity of producing, selecting and scheduling of programmes to be telecast by the Broadcasting Company and were collecting money from advertisers and sponsors for such programmes for .....

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cts and wilful intent to evade payment of service tax and education cess by VTPL are well established'. We have not found a speaking order on the limitation issue. In the circumstances, the demand of service tax and education cess for the extended period of limitation is liable to be set aside, and we do so. The Commissioner may requantify the amount for the normal period of limitation and recover the same from the party. (emphasis supplied) Consequently, the penalty imposed under Sections 7 .....

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art of the demand is covered by the extended period which is not invocable in this case. Secondly, the dispute in this case has arisen, by and large, out of rival interpretations of the relevant provisions of Section 65 of the Finance Act, 1994. A predominantly legal issue has been agitated before us by the assessee and the Revenue. In such circumstances, according to us, it will not be justifiable to impose any penalty on the assessee. We note that, in similar circumstances, penalty was vacated .....

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ent did not make it as an issue in the appeal before the Tribunal and there was no material for the Tribunal to render such a factual finding. Thus, the department justifies the appeal stating that the Tribunal erred in setting aside the demand of service tax for the extended period of limitation, as the department had no knowledge about the Slot Sale Agreement. 6. At the outset, it is to be seen that the original adjudication order, which has been filed in the typed set filed by the department .....

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ed by the first respondent/ assessee, on fact, the Tribunal has gone into the Slot Sale Agreement dated 1.8.2001 and based on the plea taken by the first respondent herein, the Tribunal came to the conclusion that there was material before the department to show that they were in the know of activities undertaken by the first respondent. Though the learned counsel for the first respondent wanted to file certain documents to show that there was series of correspondence exchanged between the depar .....

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of service tax on the premise that the nature of activity rendered by the first respondent/assessee is a taxable service. 8. The plea now raised by the department that no such grounds have been raised by the first respondent in the appeal before the Tribunal and that the assessee has never intimated the department about their activity under the Slot Sale Agreement cannot be accepted by any stretch of imagination, as it is incumbent on the department to establish that no such material was availa .....

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t finding authority, cannot be overturned merely based on a plea made in the appeal by the department. This view is fortified by a decision of the Supreme Court in Kushal Fertilisers (P) Ltd. v. Commissioner of Customs & Central Excise, Meerut, 2009 (238) ELT 21 (SC). In the said decision, while dealing with Section 11-A of the Central Excise Act and the proviso thereto, which is pari materia to Section 73 of the Finance Act, 1994 and the proviso thereof, the Supreme Court held as under: 16. .....

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entral Excise would have been maintainable provided a substantial question of law arose for consideration of the High Court and not otherwise. 17. Whether non furnishing of information was willful and would amount to suppression of material fact in terms whereof the extended period of limitation as provided for in Section 11-A of the Customs Act, 1944 could be invoked or not, in our opinion, was not a substantial question of law. The finding of fact arrived at by the Tribunal should have been tr .....

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the High Court was perverse and/or was based on applying wrong legal principles etc. The High Court proceeded on the basis that the failure on the part of the appellant to submit required declaration or application for licence for establishment, would amount to concealment of facts from the department. We will assume to be so. But, as we have noticed earlier, requisite information was not only furnished on 22nd January, 1991, indisputably the officers of the Central Excise Department made inspec .....

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Section 11-A of the Central Excise Act, 1944 provides for penalty. It, therefore, requires strict consideration. Period of limitation provided for in the Act bars the jurisdiction of the Commissioner to initiate a proceeding for imposition of penalty on the expiry thereof. The proviso appended to Section 11-A(1) of the Act makes an exception to the said Rule, the ingredients whereof are thus required to be established for invoking the extended period of limitation. If on the materials produced .....

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