2013 (12) TMI 860 - AT - Service Tax

Demand of service tax - Business Auxiliary Service - carriage fee - Lease Circuit Service - whether charging carrier fees from different channels is covered under Business Auxiliary Service - Held that - Appellants are undertaking the placement of channels of different broadcasters at desired frequency and carry the channel to the viewers through own cable network and by doing so, appellants facilitate better quality view of the channel. Better quality of channel enhances viewer ship of channel which amounts to promotion of broadcasting channel making the activity classifiable under Business Auxiliary Service (BAS) - BSS came into existence with effect from 01.05.2006 but period of dispute in the present appeal being the levy of service tax on carriage fee is for the period 2003-2004 and 2004-2005 that is prior to 01.05.2006 - activity of appellant in respect of carriage fees is liable to service tax under Business Auxiliary Service - Decided against assessee. Whether income received on account of Lease Rental on fiber optic cable network will be covered under Lease Circuit Service - Held that - Commissioner (Appeal) in the impugned order has confirmed demand for entire period under the category of Telecommunication service. Since the Show Cause Notice was issued to the appellants under category of lease circuit service, lower authorities have gone beyond Show Cause Notice and matter needs to be remanded to original authority on this ground - We remand the matter back to original authority to decide the demand in respect of Leased Circuit afresh after giving an opportunity heaving to appellants - Decided in favour of assessee.

Summary

Issues:
1. Whether charging carrier fees from different channels is covered under Business Auxiliary Service.
2. Whether income received on account of Lease Rental on fiber optic cable network will be covered under Lease Circuit Service.

Analysis:

Issue 1: Charging Carrier Fees under Business Auxiliary Service
The appeal revolves around the classification of the activity of charging carrier fees from different channels under Business Auxiliary Service (BAS). The definition of BAS under Section 65(19) of the Finance Act, 2003 includes services related to promotion, marketing, or sales of goods or services provided by the client. The appellants charged carriage fees from channels to broadcast their signals through the appellants' network, enhancing viewer ship and reach. By facilitating better quality viewing of channels, the appellants indirectly promoted the broadcasting channels, making the activity classifiable under BAS. The argument that the activity should be classified under Business Support Service (BSS) effective from 01.05.2006 was dismissed as the dispute period predates the introduction of BSS.

Issue 2: Demand of Service Tax under Lease Circuit Service
The second issue pertains to the demand of service tax under Lease Circuit Service. The Show Cause Notice demanded a significant amount under Lease Circuit Service for the period before 01.06.2007. The original authority confirmed the demand for the period before 01.06.2007 under Lease Circuit Service and from 01.06.2007 under Telecommunication Service. However, the Commissioner (Appeal) confirmed the demand for the entire period under Telecommunication service, deviating from the Show Cause Notice. The definition of Lease Circuit Service involves a dedicated link between fixed locations for exclusive use, which the authorities failed to adequately address. The matter was remanded back to the original authority for a fresh decision, considering the specific definitions and provisions related to Lease Circuit Service.

In conclusion, the Tribunal held that the activity of charging carriage fees falls under Business Auxiliary Service and directed a re-examination of the extended period and penalties related to this activity. Additionally, the demand for service tax under Lease Circuit Service was remanded to the original authority for a thorough reconsideration, emphasizing the need for a proper analysis based on the relevant legal definitions and provisions.