TMI Blog2019 (4) TMI 1812X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The appellant society is thus administering the right of owner assigned to it as if it is the owner of the copyright by issuance of the license for utilization of the copyrighted material. They in terms of section 34 of the Copyright Act, collect the fees in pursuance of the licenses issued by it under Section 30 to the users of the copyrighted material and share the same with the owner of copyright after deducting its expense. The appellants are rendering Copyright Services as the assignee of copyright by the owner to them in terms Section 18 as a society registered under Section 33. In fact they are paying service tax under that category. For payment of the service tax entire amount collected by the appellants from the users is taken for determination of the taxable value and service tax discharged on that. Having done so, there are no merits in the demand of service tax under the category of Club or Association Services . Appeal allowed - decided in favor of appellant. - ST/89996/2014,85748/2015 - A/86194-86195/2019 - Dated:- 4-4-2019 - Mr. Sanjiv Srivastava, Member (Technical) and Dr. Suvendu Kumar Pati, Member (Judicial) Shri M.H. Patil, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndheri (West) Mumbai 400053. 23.5 M/s Phonographic Performance Ltd Andheri (West) Mumbai 400053. Shall also b liable to appropriate late fee at the rate specified in Rule 7C of the Service Tax Rules, 1994 subject to a maximum of ₹ 20,000/- each return specified under Section 70 of the Finance Act, 1994 for their failure to file proper returns covering the period April 2010 to March 2013 to the date of filing of the ST-3 Returns. Order in Original No 08/ST-VI/RS/2014 dated 31.12.2014 15.1 I confirm the demand of Service Tax totally amounting to ₹ 4,20,53,684/- (Rupees Four Crore Twenty Lakh Fifty Three Thousand Six Hundred Eighty Four only), in terms of Section 73(2) of the Finance Act, 1994. 15.2 I order recovery of interest at the appropriate rate, on the amount confirmed at para 15.1 above, under the provisions of Section 75 of the Finance Act, 1994. 15.3 I impose penalty on M/s. Phonographic Performance Ltd., Andheri (West), Mumbai-400 053, under Section 76 of the Finance Act, 1944, which shall be ₹ 100/- every day during which such failure continues or at the rate of 1 (one) percent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.10.2009 1.7.2008 to 31.03.2009 1,95,66,744 V-Adj/ST-ii/PPL/15-280/2010 28.9.2010 1.4.2009 to 31.03.2010 19572650 These Show Cause Notices were adjudicated by the Commissioner Service Tax II Mumbai vide order No 21 to 23/ST-II/KKS/2010 dt 31.11.2010. This order has been accepted by the Committee of Chief Commissioners as communicated vide letter dated F No IV/ 198- Rev/CCO/MCX/ST-II/2010 dated 31.01.2011. 2.4 Since the appellants were not following the procedural aspect and did not pay the service tax to be paid in respect of taxable service rendered by them during the subsequent periods enquiries were conducted. Appellants responded that they were not required to pay the service tax and the order of Commissioner have been challenged by them before CESTAT. 2.5 Thereafter Show Cause Notices as detailed below were issued to the appellant demanding Service Tax from them for the subsequent periods: Show-cause Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the category of Copyright Services . The consideration received by the appellants towards the provision of the said service has also been taxed, in toto, under the said category. iv. As per the provisions of Copyright Act, 1957 the copyright society is enjoined to collect fees in pursuance of issue of license and to distribute such fees among the owners of rights after making deduction for its expenses. The deductions of expenses of the society while distributing the fees to its members is a part and parcel of the gross amount received towards license fees/ royalty for the usage of sound recordings by the licensees and the said gross amount in its entirety has been subjected to service tax under the category of copyright services. The amount retained as expenses from the licenses cannot be construed as either subscription or any other amount paid by the members of the Appellants, especially when the members are not required to make any payments to the appellants. v. It is settled law that introduction of a new entry clearly shows that the coverage in the new entry was not covered by the earlier entries. [SAP India Pvt Ltd [2011 (21) STR 303 (T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to avail the services of appellant as per tariff specified therein. As per provision of Section 33 of the Act, the Owner in his individual capacity continue to have the right to grant license in respect of his own work. Hence the conclusion that it is legal mandate thus ceases to be service is not correct. ii. As per the decision in case of Deposit Insurance Credit Guarantee Corpn [2015-TIOL-629-CESTATMum], the issue of taking deposit insurance as per statutory mandate being sovereign/ statutory function not amenable to service tax was rejected, while holding that service tax is leviable. iii. Merely because the appellants have sought registration under Section 33 of Copyright Act, 1957, they cannot be said to be constituted under the said Act. iv. Appellant is discharging service tax under the category of Copyright Service on behalf of the owner and is not the service provider for the said service. Even as per the appellants themselves owners have authorized by assignment to deal with copyright, and tariff for providing the service is also specified. Thus the conclusion that appellant is not providing service to music compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... license agreements to be used by entities such as restaurants, malls, hotels, airlines, etc. These blanket licenses are issued for a prescribed period. In the disposition of its earnings, the society deducts its administrative expenditure and may retain some part for specific purposes as well as in the reserve fund before distributing the rest. The society was issued with a show cause notice demanding ₹ 76,90,150 as tax for providing club or association service for the period from 16th June, 2005 to 31st March, 2008. Two more show cause notices for 2008-09 demanding ₹ 50,92,097 and for 2009-10 demanding ₹ 55,79,902 were also issued. The total liability sought to be fastened on the appellant was ₹ 1,83,62,149. 4. The membership fees received by M/s. Indian Performing Rights Society for the period in dispute is ₹ 4,37,797. The administrative fees expenses deducted by them from the fees obtained for assigning copyrights by license given is ₹ 34,15,540. 5. The appeal of Revenue pertains only to imposition of penalty on M/s. Phonographic Performance Ltd. whereas the appeals of the assessees challenge the taxabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own behalf to negotiate with potential users and receives license fee which is then allocated to its members in accordance with its internal regulations. Tax authorities have sought to exact a levy on both the membership fee and the amount retained on account of expenditure incurred. 8. Learned Counsel for M/s. Phonographic Performance Ltd. places before us a sample of invoices issued by them to licensees. It is seen from these invoices that they are issued on their own account towards the use of copyright material. These invoices carry the endorsement that the taxable service is copyright [taxable under Section 65(105)(zzzzt) of Finance Act, 1994] and by citing the decision of the Hon ble High Court of Bombay in Indian National Shipowners Association v. Union of India [2009 (14) S.T.R. 289 (Bom.)], which has been affirmed by the Hon ble Supreme Court, argued that the taxability as copyright service having been accepted would preclude recovery of tax under any other previously existing category of taxable service. The invoices that are furnished indicate acceptance of the taxable services as copyright for the period beyond that in dispute. The decision s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices Ltd. v. Commissioner of Service Tax, Chennai [2008 (11) S.T.R. 161 (Tri.-Chennai)] and Commissioner of Service Tax, Ahmedabad v. Trumac Engg. Co. Pvt. Ltd. [2008 (10) S.T.R. 148 (Tri.-Ahmd.)]. Learned Authorised Representative urged us to accept the conclusions in the impugned order. Notwithstanding these urgings, we are convinced that the activity of rendering copyright service from July, 2010 would detract from taxability as provider of club or association service . 10. There is no doubt that the other appellant, M/s. Indian Performing Rights Society, is an association comprising of members who have come together for a common purpose. The conclusions in the impugned order have been reiterated by learned Authorised Representative to assert that an association receiving consideration from its members cannot but be held to be taxable under Finance Act, 1994. However, learned Counsel for the appellant contends that no service has been rendered for a consideration and that the transaction of the appellant, as the owner of copyright by deed of assignment, is akin to a sale by the member to the appellant and thereafter by the appellant to the user of the copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through a society registered under the Act. With such a statutory mandate in force, the option of transaction except through societies such as the two appellants is non-existent. A transaction in services, particularly of a taxable service, carries with it the characteristic of voluntariness and exercise of option to execute that activity by oneself or through another entity; it is upon the exercise of the option to source such activity that taxability arises. A legal mandate to act only through a society erases the exercise of option and such activity ceases to be a service. Moreover, the definition of club or association service specifically excludes any body established or constituted under any law for the time being in force There can be no doubt that copyright societies are established under law and hence not liable to be taxed on any receipts from its members. 5.3 Learned Authorized representative, sought to challenge the order of the Tribunal in appellants own case and argued that Hon ble Supreme Court has in case of State of West Bengal Others vs Calcutta Club Ltd [(2016) 5 SCC 356], referred the following issue to larger bench: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks incorporated in a cinematograph films or sound recordings shall be carried out only through a copyright society duly registered under this Act: Provided also that .. (2) Any association of persons who fulfils such conditions as may be prescribed may apply for permission to do the business specified in sub-section (1) to the Registrar of Copyrights who shall submit the application to the Central Government. (3) The Central Government may, having regard to the interests of the authors and other owners of rights under this Act, the interest and convenience of the public and in particular of the groups of persons who are most likely to seek licences in respect of the relevant rights and the ability and professional competence of the applicants, register such association of persons as a copyright society subject to such conditions as may be prescribed: Provided that the Central Government shall not ordinarily register more than one copyright society to do business in respect of the same class of works. 3A) . (4) .. (5) ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. Assignment of copyright.- (1) The owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partially and either generally or subject to limitations and either for the whole term of the copyright or any part thereof: Provided that in the case of the assignment of copyright in any future work, the assignment shall take effect only when the work comes into existence. Provided further that Provided also that .. Provided also that . (2) Where the assignee of a copyright becomes entitled to any right comprised in the copyright, the assignee as respects the rights so assigned, and the assignor as respects the rights not assigned, shall be treated for the purposes of this Act as the owner of copyright and the provisions of this Act shall have effect accordingly. (3) In this section, the expression assignee as respects the assignment of the copyright in any future work includes the legal representatives of the assignee, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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