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2016 (4) TMI 152 - CESTAT MUMBAI

2016 (4) TMI 152 - CESTAT MUMBAI - 2016 (43) S.T.R. 98 (Tri. - Mumbai) - Export of service - produced and distribution of television programmes Consideration received for taxable export service between April 2006 and March 2008 from M/s. SGL Entertainment Ltd., Hongkong - Export of Service Rules, 2005 - Contract between the two dating back to April 2006 for further distribution - Held that:- the reviewing authorities had, inappropriately, placed emphasis on the usage by the recipients of the pro .....

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y a programme producer in relation a programme. - There can be no doubt that, if the programme producer or any other person were to further disseminate the programme to others, such dissemination would be liable for tax as a separate and distinct service. Consequently, the usage of the programme after delivery to the overseas entity is irrelevant in deciding upon the tax liability as 'programme producer'. By following the settled law, the contention of Revenue that the distinction should re .....

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nward remittances were in convertible foreign currency. Therefore, both the conditions for export in Rule 3(2) of Export of service Rules,2005 have been complied with. - Decided against the revenue - Appeal No. ST/651/2010, Cross Objection No. ST/CO-13/2011 - Final Order Nos. A/86272-86273/2016-WZB/STB - Dated:- 9-9-2015 - M. V. Ravindran, Member (J) And CJ Mathew, Member (T) For the Appellant : Shri V K Singh, Special Counsel For the Respondent : Shri Badrinarayanan, Adv ORDER Per CJ Mathew R .....

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e of a contract between the two dating back to April 2006. 2, Under the said contract, the assessee produced television programmes which were, admittedly, to be uplinked by the Hong Kong entity for the benefit of viewers. The case of Revenue was that the production of these programmes were taxable under Finance Act, 1994 since 2004 under section 65(105)(zzu), i.e., '(zzu) to any person, by a programme producer, in relation to a programme' With section 65(86b) defining a programme produce .....

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s Ltd produces programmes which is a taxable service under section 65(105)(zzu) of Finance Act, 1994. There is also no dispute that M/s SGL Entertainment Ltd had contracted with the respondent for production of programmes with intent for further distribution. Proceedings were initiated on 15th June 2009 to recover the tax liability that had allegedly not been discharged by the assessee who claimed that the consideration received from M/s SGL Entertainment Ltd was not taxable being realisations a .....

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s are satisfied, namely- (a) such service is delivered outside India and used outside India; and (b) payment for such service provided outside India is received by the service provider in convertible foreign exchange.' With '(2) The provision of any taxable service specified in sub rule (1) shall be treated as export of service when the following conditions are satisfied, namely- (a) such service is provided from India and used outside India; and (b) payment for such service provided out .....

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upees. 6. In the impugned order, it was held that the appellant provides 'programme production service' to M/s SGL entertainment Ltd while the up-linking from Hong Kong by M/s SGL Entertainment Ltd for beaming to the distributors in India was in the course of rendering 'broadcasting service' taxable under section 65(105)(zk) of Finance Act, 1994; that the service rendered by the assessee being different from the service rendered by the overseas entity, it was held that the infere .....

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tion 86(2) of Finance Act, 1994. 7. According to the appeal of Revenue, the adjudicating authority is in error and failed to appreciate that the programmes that were exported to Hongkong were beamed backed to India. This, in our considered opinion, is a fallacy that Revenue authorities, steeped as they are in the legacy of tax on 'visibles', are susceptible to. The reviewing authority appears to have ignored the fundamental aspect that the proceedings were initiated under Finance Act, 19 .....

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ent that is sought to be taxed is undoubtedly with an overseas entity and hence likely to be deemed as export in 'colloquial' terms, argues that privilege of escapement from tax under Rule 4 of Export of Service Rules, 2004 is predicated solely upon fulfillment of the conditions in Rule 3(2) of the said Rules. Attention was drawn to the enunciation in 'Principles of Statutory Interpretation' [GP Singh, Thirteenth Edition p831] 'But equitable considerations are not relevant in .....

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ng noted that, it would also appear that the learned Authorized Representative may, unintentionally, no doubt, have described the review proceedings which does not appear, prima facie, to find sustenance; except for the reference to the use to which the programme is put by the overseas entity, the review proceeding mirrors the show cause notice which had been considered at length and rejected in the impugned order. No substantive counter to the findings of the original authority have been adduce .....

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e examined the condition of delivery/provision and, more particularly, the usage to which the output service has been put by the recipient of the service. Hence, their relevance to resolution of the dispute before us. Learned Counsel cites FIL Capital Advisors (India) Pvt. Ltd. vs. Commissioner of Service Tax, Mumbai - 2015-TIOL-795-CESTAT-MUM, AMP Capital Advisors Pvt. Ltd vs. Commissioner of Service Tax, Mumbai - I - 2015-TIOL-1001-CESTAT-MUM and Commissioner of Service Tax, Mumbai v Greater P .....

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nsideration from the overseas entity was sufficient to conclude that the services had been delivered outside India. 11. At this stage, we would like to refer to our observation supra that the reviewing authorities had, inappropriately, placed emphasis on the usage by the recipients of the programmes produced by the appellants. We find that the activity that is liable to tax must be one which is specifically listed in section 65 (105) of Finance Act, 1994 and which, with reference to the business .....

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on would be liable for tax as a separate and distinct service. Consequently, the usage of the programme after delivery to the overseas entity is irrelevant in deciding upon the tax liability as 'programme producer'. In the decisions cited supra, Revenue had sought to blur the distinction between investment advice and investment itself- a contention that did not find favour with the Tribunal. In the present appeal. Revenue seeks to blur the distinction between the programme delivered abro .....

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ffected in the Rules from 'delivery' to 'provided from' were considered to have differing implications but the lack of difference has been articulated in the decision of this Tribunal in M/s Paul Merchants Ltd. vs. Commissioner of Central Excise, Chandigarh - 2012-TIOL-1877-CESTAT-DEL. A difference of opinion required resolution by reference to a Third Member but the evolution of the principle of not subjecting export of services to tax having been elaborately and exhaustively di .....

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ay help in avoiding such arguments in future on the same issue. Xxxxxxx 23.2 xxxxxxx The Appeal could have been disposed of by such brief observations and relying on the following decisions of the Tribunal namely ,- (i) Nipuna Services Ltd. v. Commissioner-2009 (14) S.T.R. 706 (ii) Muthoot Fincorp Ltd. v. CCE Vizag -2010 (17) S.T.R. 303 23.3 Instead we have given more elaborate arguments to reaffirm the finding in the above decisions with the hope that it will clear up the cob-web in the ideas r .....

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a who makes over the consideration for the service so rendered. Therefore, the respondent in this appeal, having completed the rendering of the service of 'programme production' to the overseas entity has complied with the second leg of the first condition i.e. usage outside India. 14. That brings us to the second condition, viz., receipt of consideration in convertible foreign currency. The contract, undoubtedly, designates the consideration in Indian rupees. It is claimed by the respon .....

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