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2018 (2) TMI 331

and has been raised alleging appellant has assigned their own programme and received consideration - Held that: - There is no evidence placed to show that the appellant has produced the programme on behalf of another person. The appellant produces the programme on its own and after the completion it may or may not be accepted by the channel / broadcasting agency. After production, they have transferred the copy right in the programme temporarily to the broadcasting agency. Such transfer of copy right does not attract levy of service tax under "TV or Radio Programme Production Service" - the demand under programme production services is unsustainable. - Short payment of service tax - it was alleged that appellant has not correctly paid service tax on the gross amount realized for discharging service tax on the output service "Sale of space or time for Advertisement" service by including the three components, variable cost, fixed cost and profit sharing - Held that: - appellant has strongly argued that from the beginning itself, the appellant has contended that they have been discharging service tax including on all the three components; that the same has not been considered by t .....

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s paid for broadcasting tele serials. 2.2 On the first issue, Ld. counsel adverted to the definition of 'programme producer' under Section 65 (86b) of the Finance Act and submitted that to attract levy of service tax under the programme production service, the programme must be produced on behalf of another person. The appellant is not engaged in producing programmes of another person. They produce all the programmes by themselves and no person engages them to produce programme on their behalf. The definition clearly uses the word "on behalf of" which indicates a representative capacity or in other words, an agency capacity. Since the appellant is producing programmes / serials on their own, it cannot be said that they are producing programmes on behalf of another. Later the appellants have assigned copyright in the tele-serials for consideration. The department proposes to levy service tax on the consideration received for transfer of copyright under the category 'programme production service' which is highly erroneous. During the relevant period, the temporary transfer of Intellectual Property Right (IPR) was not subject to levy of service tax. Even afte .....

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ter under copy right assignment agreement has been rightly subjected to levy of service tax. 3.2 On the second issue, she submitted that as per the agreement entered with advertising agencies the appellant received the charges under three heads namely variable cost, fixed cost and profit share. The variable cost represents the cost of production of programme, fixed cost represents telecast fees payable to the broadcaster for the slot allotted to the appellant and profit sharing is sharing of revenue earned from free commercial time between appellant and advertising agencies. As per Section 67 of the Finance Act, 1994, the taxable value shall be the gross amount charged. In this case, the gross amount charged would include all the above three segments. Appellant has discharged service tax only on the variable cost and not on the other two elements. Verification of accounts revealed that appellants have not paid service tax on fixed cost and profit sharing. 3.3 On the third issue of irregular availment of cenvat credit, Ld. AR submitted that the output service of programme producers service is liable to levy of service tax. Similarly, the activity of 'Sale of space or time for Ad .....

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se of BBC World Services India Private Ltd. Vs CCE & ST Delhi the Tribunal observed that only when the programme is produced on behalf of another person, the said levy of service tax would be attracted. The relevant portion of the above Tribunal's order is reproduced below : ".....(g) On the second issue, the learned Counsel for the appellant submitted that they have produced various programmes without any reference to another person and thereafter whenever requirement arises gave such programmes to other domestic radio stations for broadcast. They received certain considerations for such transfer of programmes on temporary basis. These are specific radio programmes. They have not produced these programmes on behalf of another person, hence, they cannot be considered as programme producer in terms of Section 65 (86b) of the Act. Even otherwise these are copy right materials and if at all to be subjected to service tax, the same will apply only w.e.f. 01/07/2010. The learned counsel also contested the proceedings on limitation and on imposition of penalties considering the interpretation involved with reference to actual exports undertaken by the appellant only with ref .....

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e time slots. Without obtaining the free time slots appellant will not be able to provide output service of 'Sale of space or time for Advertisement' services. Thus, the telecasting charges paid are used for providing the said output service of 'Sale of space or time for Advertisement'. We have already found that the appellant is not liable to discharge service tax under the category of programme producing service. The contention of the department that programmes are telecast after production of the serials etc. is flimsy and not supported by any legal basis. From the above, we conclude that the disallowance of input service credit is unjustified and requires to be set aside, which we hereby do. 8. In the result, the impugned order is modified to the extent of setting aside the demand on programme production service and also the disallowance of credit on input services and demand thereon. The issue with regard to short payment of service tax on 'Sale of space or time for Advertisement' services for the period 1.5.2006 to 30.09.2007 is remanded to the adjudicating authority for the limited purpose of verifying whether the appellant has discharged service tax .....

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