2009 (7) TMI 806 - AT - Service Tax

Waiver of pre-deposit - appellant pays Service tax to the broadcaster on telecast fee - availed Cenvat credit on Service tax - utilized for setting off the liability of Service tax under the category of Sale of space or time for advertisement - free commercial time is sold to various advertising agencies for consideration and Service tax is being paid - appellant is entitled for Cenvat credit on Service tax paid towards telecast fee pre-deposit waived

Issues:
1. Disallowance of Cenvat credit and imposition of penalty by the adjudicating Commissioner.
2. Taxability of assignment fee under 'TV or Radio Programme Production Service'.
3. Eligibility for Cenvat credit on service tax paid towards telecast fee.
4. Taxability of permanent assignment of copyright.
5. Inclusion of fixed costs in the taxable value for service tax purposes.

Issue 1: Disallowance of Cenvat credit and penalty:
The adjudicating Commissioner confirmed demands and disallowed Cenvat credit, imposing a penalty on the appellants. The appellants contested these decisions, arguing for the waiver of pre-deposit due to a prima facie case on merit. The department did not strongly oppose the waiver, indicating that certain aspects raised by the appellants were not adequately considered in the impugned order. Consequently, the Tribunal allowed the waiver of pre-deposit and stayed the recovery proceedings during the appeal.

Issue 2: Taxability of assignment fee:
The appellant, engaged in teleserial production, faced challenges regarding the tax treatment of the assignment fee under 'TV or Radio Programme Production Service'. The appellant contended that the assignment fee should not be subject to service tax, especially when selling the Free Commercial Time obtained from the broadcaster to advertising agencies. The argument centered on the nature of the assignment fee and its categorization under service tax provisions.

Issue 3: Eligibility for Cenvat credit:
Regarding the eligibility for Cenvat credit on service tax paid towards telecast fee, the appellant emphasized the importance of telecasting in their business model. The appellant availed Cenvat credit on the telecast fee and utilized it for setting off the liability under the 'Sale of Space or Time for Advertisement Service'. The argument relied on interpretations of essential business activities and the broader definition of input services, as established in relevant case law.

Issue 4: Taxability of permanent assignment of copyright:
The appellant, as a copyright holder of various programs, argued that the permanent assignment of copyright should not be taxed as 'Intellectual Property Service'. Citing legal precedents, the appellant contended that copyright is considered goods under sales tax laws, and the assignment of copyright amounts to a sale of goods, exempt from service tax. The appellant highlighted specific cases supporting the non-taxability of copyright assignments.

Issue 5: Inclusion of fixed costs in taxable value:
The appellant raised concerns about the inclusion of fixed costs in the taxable value for service tax purposes. The appellant maintained that fixed costs, such as broadcasting charges, were appropriately accounted for in their returns and should have been considered in the tax assessment. This issue required further examination, as acknowledged by the department representative during the proceedings.

In conclusion, the Tribunal addressed various complex issues related to service tax, Cenvat credit, copyright assignments, and taxable values in the context of teleserial production. The decision to allow the waiver of pre-deposit and stay recovery proceedings reflected the Tribunal's recognition of the prima facie merits presented by the appellants, necessitating a detailed review of the tax implications involved.

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