2013 (9) TMI 666 - AT - Service Tax

Broadcasting services section 65(15)- broadcasting agency or organization - income on account of transmission of music clippings in between running of the programmes - sale of time slots and the rate of service charges is for the duration of the time of advertisement. - appellant is an agent of the foreign company - Held that - The demand for service tax on the appellant under the category of broadcasting agency service is sustainable in law - activity undertaken by the appellant is a taxable service u/s 65 (105)(zk). Pre deposit appellant directed to make a pre-deposit of Rs. 84 lakhs (Rupees Eighty Four Lakhs only), which is the approximate service tax demand for the normal period of time stay granted partly.

Summary

Issues:
1. Classification of service under Broadcasting Services for service tax liability.
2. Applicability of penalties under sections 75A, 76, 77, and 78 of the Finance Act, 1994.
3. Interpretation of legal provisions related to broadcasting agencies and sale of time slots for advertisement.
4. Consideration of time bar for service tax demand.
5. Decision on the grant of stay application.

Analysis:
1. The appellant, engaged in providing Broadcasting Services, received income from transmission of music clippings but did not include it in taxable value or service tax returns. The show cause notice proposed service tax demand for the period July 2001 to September 2005, along with penalties under relevant sections of the Finance Act, 1994. The appellant contended being an agent of a foreign company and engaged in selling time slots for advertisements, hence classified as a broadcasting agency. They argued against the demand for the period before Budget 2006 enactment and suppression of facts for invoking extended period for service tax demand.

2. The Revenue argued that the services provided by the appellant qualify as Broadcasting Services under the law, excluding sale of time slots by a broadcasting agency from the scope of sale of advertising space or time. The Revenue relied on previous tribunal decisions to support their stance. The judgment considered the legal provisions related to broadcasting agencies and sale of time slots, concluding that the appellant's activities fall under the taxable service category of broadcasting agency services.

3. The judgment highlighted that the appellant's activity of selling time slots was specifically excluded under the relevant legal provisions. It also emphasized that the demand for service tax on the appellant as a broadcasting agency was sustainable in law. The invoices issued by the appellant supported the view that the transactions involved were indeed sale of time slots for advertisements.

4. The judgment addressed the question of time bar as a matter of fact and law, indicating that it could be examined during the final consideration of the appeal. The appellant's lack of pleading financial hardship led to the balance of convenience favoring the revenue.

5. Ultimately, the judgment directed the appellant to make a pre-deposit of Rs. 84 lakhs within a specified period, with the balance of dues waived upon compliance. The recovery of the waived balance was stayed during the appeal's pendency.