2008 (1) TMI 306 - AT - Service Tax

Appellants have clearly stated that they are MSO - they have not been merely carrying on the activity of cable operator while they were also sending the signals to all other cable operators appellant contend that respective cable operators should have discharged the Service Tax and not the appellants - Appellant having made out a case on merits in their favour the stay application is allowed granting waiver of pre-deposit and staying its recovery

Summary

Issues: Applicability of Service Tax on Multi-System Operators (MSO) providing cable services. Interpretation of Board Circular No. F.B.11/1/2002-TRU dated 1-8-2002. Discharge of Service Tax liability by Cable Operators versus MSOs.

Analysis:
1. The appellant, a Multi-System Operator (MSO), contested the demand for Service Tax and penalty imposed on them, claiming they were not liable as per Board Circular No. F.B.11/1/2002-TRU dated 1-8-2002. The Commissioner disagreed, asserting that as they provided Cable Operator services, they were obligated to pay Service Tax. The appellant argued that they fell under the MSO category during the period in question, hence not liable for Service Tax.

2. The appellant's counsel referenced the Board's Clarification stating that Service Tax was to be paid only by Cable Operators, not MSOs. They presented a letter acknowledging their MSO services, indicating they received programs from pay and free-to-air channels. The counsel argued that they were exempt from Service Tax as the tax on MSOs was effective only from 10-9-2004, not during the relevant period.

3. The Respondent's representative defended the order, supporting the authorities' findings and insisting on enforcing the tax liability on the appellant. However, the Tribunal carefully reviewed the submissions and evidence. The appellant's letter to the Superintendent of Central Excise clearly stated their MSO status and demonstrated that they were not solely operating as Cable Operators but also transmitting signals to other cable operators.

4. Considering the appellant's case and evidence in their favor, the Tribunal granted a waiver of the pre-deposit and stayed the recovery of the demanded amounts. The Tribunal acknowledged the appellant's argument that the respective cable operators should have discharged the Service Tax, not the appellants. The appeal was scheduled for an expedited hearing, with no recovery permitted until the appeal's disposal, thus allowing the stay application.

This detailed analysis of the judgment highlights the key issues surrounding the applicability of Service Tax on MSOs providing cable services, the interpretation of relevant circulars, and the differentiation between the tax liabilities of Cable Operators and MSOs.