TMI Blog2019 (1) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin 15 days from the end of the service and if it is returned in functional condition. We also find that said amount is treated as security deposit in the books of account of the appellant. The learned Commissioner has held that there was no evidence of return of any security deposit and hence service tax was payable - Revenue should have investigated as to whether any subscriber had returned the viewing card within 15 days of end of the service and whether the appellant have refused to return the deposit. We do not find any such investigation carried out by revenue. Therefore, the presumption of revenue that there was no evidence of return of any security deposit was not sufficient ground to conclude that the said amount of deposit was liable to be subjected to service tax - thus, without investigation as to whether appellant has refused to refund security deposit to any person who has terminated services, it cannot be presumed that the said amount collected as security deposit, should be treated as consideration - demand set aside. Appeal allowed - decided in favor of appellant. - APPEAL No.ST/52649/2014-CU[DB] - FINAL ORDER NO-70026/2019 - Dated:- 8-1-2019 - Smt. Archan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the customer for the said Set Top Box. Further, appellant was paying service tax on said value of ₹ 2,000/-. Value of ₹ 2,000/- was subjected to service tax. ₹ 250/- was paid as VAT. ₹ 400/- was security deposit for viewing card which was borne by the ultimate subscriber and which reached the appellant and was treated as security deposit in the books of account of appellant. The Balance ₹ 300/- was being retained by dealer. It appeared to revenue that said balance of ₹ 300/- was the amount which was received by the appellant and paid as commission to the dealer. Therefore, it appeared to Revenue that said ₹ 300/- per subscriber should be subjected to service tax. Therefore, revenue collected the number of subscribers during the period from 2007-08 to 2011-12 and multiplied the number of subscribers with such amount which were retained by dealers from subscriber treating such amount as commission paid by the appellant to the dealers and calculated service tax payable on the same and through show cause notice dated 19.10.2012 raised a demand of ₹ 24,57,55,162/-. For raising the said demand revenue invoked Rule 5 of Service Tax (Deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less the same price at which Dish TV has sold the same to the distributors. As per the policy of Dish TV only the dealers approach the subscriber in regard to broadcasting services, and dealers collected the subscription charges on which service tax is being paid by Dish TV. As per the agreement with distributors it is the responsibility of the distributors to procure the dealers who get the subscribers for the broadcasting services of Dish TV. The dealers are also given a unique ID in regard to collection of subscription charges, and they can view the details of any subscriber regarding subscription charges, and they can view the details of any subscriber regarding subscription charges and recharges paid. The amount of subscription charges, as fixed by Dish TV, are to be collected by the dealers from the subscribers and dealers route the same amount to Dish TV via the distributor. Service Tax is paid on the entire amount of subscription charges. d) In regard to the customer premises equipment, a markup is allowed to the dealer as decided by Dish TV policy. The dealers recover from the subscribers, the whole or any part of the markup and such markup realized goes to the pockets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax. The books of accounts of Dish TV show that the dealer only remits the amount of subscription money/activation charges to Dish TV and does not remit anything in regard to the CPE to Dish TV. g) That, on cross examination of the dealers and distributors all the above averments have been corroborated. Moreover, it has come out from the affidavits of a number of dealers that they are not in any way accountable to Dish TV for the margins earned by them and in many cases have not even earned any margins, but in fact have promoted other products while providing the CPE to the subscribers free of cost. The Department on the other hand has taken the different margins as per the policy of Dish TV, multiplied the same by the number of subscribers thereof, and on such value, demanded service tax, without even establishing that the margins or any part thereof have actually been earned by the dealers themselves. h) As per Section 2 (h) of the Central Excise Act as applicable to Service Tax Law, sale amounts to transfer of possession. Thus even assuming without admitting there is any privity of contract between Dish TV and the dealers in regard to the CPEs, there being a sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax. Appellants also provided the agreement with the importing company, which imported and supplied the viewing cards to Dish TV, and which had charged service charges while providing the conditional access system (CAS) with respect to broadcasting service rendered by dish TV India Ltd using the viewing cards. This agreement required that security deposit shall be collected for the Viewing cards. The books of accounts of the appellants show the security deposit collected as contingent liabilities. ₹ 400/- deposited is also shown as a credit in the subscriber s account maintained by the appellants, as a liability of the appellants, being a refundable deposit. k) Without prejudice to the foregoing, at any rate the quantification of service tax demand raised on the viewing cards is incorrect in as much as the relied upon document no.19 to show cause notice dated 19.10.2012 clearly shows that for 2007-08 the amount of security deposit was ₹ 31,96,77,800/- however in the impugned order the Commissioner has arrived at a figure of ₹ 42,11,49,200/- as follows 10,52,873/- (number of subscribers) X ₹ 400/-. Such an amount has not been collected, and only the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmation of service tax to the tune of ₹ 24,57,55,162/-. For the sake of ready reference, we reproduced below the finding of Original Adjudicating Authority as recorded in para-27.36:- 27.36 As discussed above, I hold that the service provider in the instant case is M/s Dish TV and the service recipient is the subscriber; the dealer and distributor are only intermediaries assisted Dish TV in providing the broadcasting services. Further, I find that the offer price collected by the dealer of Dish TV from the subscriber is the gross value charged by M/s Dish TV for its DTH broadcasting services. Accordingly, I hold that, the commission retained by the dealer out of the total gross offer price received by him from the subscriber is an expenditure incurred by M/s Dish TV during the provision of service to the ultimate subscriber. Therefore, in terms of the Section 67 of the Finance Act, 1994 read with Rule 5 (1) of the Service Tax (Determination of Value) Rules, 2006, the amount retained by the dealer is required to be included in the assessable value of DTH broadcasting services provided by M/s Dish TV and the offer price‟ collected by the dealer from the subscrib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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