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Radaan Media Works (I) Ltd. Versus Commissioner of Service Tax, Chennai

2018 (2) TMI 331 - CESTAT CHENNAI

Liability of service tax - amount received for transfer of copyright of programmes to various TV channels amounts to service under the category of "TV or Radio Programme Production service - demand 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 o .....

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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 the authorities below - the issue has to be verified and for this limited purpose, the matter requires to b .....

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production of the serials etc. is flimsy and not supported by any legal basis - credit allowed. - Appeal allowed in part and part matter on remand. - Appeal No. ST/363/2009 - Final Order No. 40341 / 2018 - Dated:- 6-2-2018 - Ms. Sulekha Beevi C.S. Member ( Judicial ) And Shri Madhu Mohan Damodhar, Member ( Technical ) Shri V. S. Manoj, Advocate For the Appellant Ms. P. Hemavathi, Commissioner (AR) For the Respondent ORDER Per Bench The appellants are registered with the service tax departme .....

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est and imposed penalties. Aggrieved, the appellants are before this Tribunal. 2.1 On behalf of the appellant, Ld. counsel Shri V.S. Manoj submitted that the demand is raised on three main allegations raised in the show cause notice which are (i) The amount received for transfer of copyright of programmes to various TV channels amounts to service under the category of "TV or Radio Programme Production service" (ii) the appellant has not correctly paid service tax on the gross amount re .....

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ttract 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 / s .....

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ter the said activity became taxable under the category of "Intellectual Property Service", it excluded the temporary transfer of copy right. 2.3 On the second issue that the appellant has not discharged service tax on all three segments namely fixed cost, variable cost and profit sharing, the ld.counsel submitted that this allegation is factually incorrect; that in the reply to show cause notice itself, the appellant has stated that they have discharged service tax on all the componen .....

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ement'. The appellant cannot provide this output service unless the free commercial time slot is obtained by telecast of the programmes. Therefore indeed, the telecast fees as well as service tax paid thereon is input service for the appellant for providing output service of 'Sale of space and time for Advertisement'. That therefore the credit availed is right and proper. 3.1 The Ld. Commissioner (A.R) Ms. P. Hemavathi appeared on behalf of Revenue and reiterated the findings in the .....

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uction Service" including the programmes which are sold to the broadcaster. Since the appellant has assigned the copy right of the programme to the broadcaster, the consideration received is classifiable under the category of "Programme Production Service" and not under "Intellectual Property Right Service". The levy of service tax on the consideration received from broadcaster under copy right assignment agreement has been rightly subjected to levy of service tax. 3.2 O .....

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7 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 .....

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ice for production of programmes. Therefore, the credit has been rightly denied. 4. Heard both sides and gone through the facts. 5. The first issue is with regard to demand raised under the category of "TV or Radio Programme Production Service". For better appreciation, the definition of "TV or Radio Programme Production Service" as defined under Section 65 (105) (zzu) is as under: "any service provided or to be provided to any person, by a programme producer, in relatio .....

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." Section 65 (86b) as shown above indicates that 'Programme Producer' is a person who produces a programme on behalf of another person. In the present case, the department has no case that appellants are producing programme for any other person. In fact, the demand has been raised alleging appellant has assigned their own programme and received consideration. There is no evidence placed before us to show that the appellant has produced the programme on behalf of another person. The .....

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case 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 .....

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ned 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 reference to the nature of receipt of consideration from UK. ..... .... ..... 12. On the second issue, a plain reading of the statutory definition for programme producer service makes it clear that such programme producer should produce programmes on behalf of another person. In the present case, the .....

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e to safely conclude that the demand under programme production services is unsustainable and requires to be set aside, which we hereby do. 6. The next issue is with regard to the short payment of service tax alleging that appellant has not included all the three elements while discharging service tax under 'Sale of space or time for advertisement' service. Ld. Counsel for appellant has strongly argued that from the beginning itself, the appellant has contended that they have been discha .....

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consideration of telecasting their programme, the appellant receives free time slots from the broadcasting agency. Using this free time slot, the appellant generates revenue by indulging in 'Sale of space or time for Advertisement' services. The Revenue alleges that service tax paid on telecast fees cannot be considered as input service for the output service of programme producing service and 'sale of space or time of advertisement' services. We are afraid that we cannot concur .....

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