2008 (7) TMI 232 - AT - Service Tax

Advertisers/sponsors - appellants activity of buying broadcasting time from Broadcasting Company and selling slots thereof to various clients (sponsors of television programmes), is taxable under the head broadcasting service - appellants should be treated as broadcasting agency or organization defined u/s 65 (15) - Since agreement between appellants and broadcasting company was known to department, larger period cannot be invoked demand for the extended period & penalties are vacated

Summary

Issues Involved:
1. Demand of service tax on broadcasting services.
2. Definition and applicability of "broadcasting" under Section 65 (14) of the Finance Act, 1994.
3. Definition and applicability of "broadcasting agency or organization" under Section 65 (15) of the Finance Act, 1994.
4. Applicability of service tax under Section 65 (105) (zk) and Section 65 (105) (zzzm).
5. Limitation period for raising the demand.
6. Imposition of penalties under sections 76 to 78 of the Finance Act, 1994.

Detailed Analysis:

1. Demand of Service Tax on Broadcasting Services:
The appeal by M/s. Vijay Television (P) Ltd. concerns a demand for service tax exceeding Rs. 6 crores for the period from 16.7.2001 to 30.4.2005. The demand is based on the charges collected by Vijay Television from advertisers/sponsors for time slots. The Commissioner deemed Vijay Television a "broadcasting agency or organization" under Section 65 (15) of the Finance Act 1994, asserting they rendered "broadcasting service" under Section 65(105)(zk).

2. Definition and Applicability of "Broadcasting":
The definition of "broadcasting" under Section 65 (14) includes program selection, scheduling, or presentation of sound or visual matter intended for public viewing. The adjudicating authority placed Vijay Television's activities within this definition, as they selected and scheduled programs for telecast by the Broadcasting Company and collected consideration from sponsors/advertisers.

3. Definition and Applicability of "Broadcasting Agency or Organization":
Section 65 (15) defines a "broadcasting agency or organization" as any entity engaged in providing broadcasting services in any manner. The appellants argued they were not acting for a broadcasting agency with its head office outside India and thus were not covered by the second part of the definition. However, the Tribunal found that Vijay Television's activities of selecting, producing, and scheduling programs for telecast, as well as selling time slots, qualified them as a "broadcasting agency or organization."

4. Applicability of Service Tax under Section 65 (105) (zk) and Section 65 (105) (zzzm):
The appellants contended that their activities were covered under Section 65 (105) (zzzm) introduced from 1.5.2006, which pertains to the sale of space or time for advertisement. However, the Tribunal held that the sale of time slots by a broadcasting agency or organization was already covered under Section 65 (105) (zk) prior to 1.5.2006. Therefore, the appellants' activities were taxable under the existing provision.

5. Limitation Period for Raising the Demand:
The appellants challenged the demand on the ground of limitation, as the Commissioner invoked the extended period under Section 73 of the Finance Act, 1994. The Tribunal found that the department was aware of the SLOT SALE AGREEMENT and the activities of Vijay Television. Hence, there was no suppression of facts with intent to evade tax. Consequently, the demand for the extended period was set aside, and the Commissioner was directed to requantify the amount for the normal period of limitation.

6. Imposition of Penalties:
The Tribunal vacated the penalties imposed under sections 76 to 78 of the Finance Act, 1994, considering the dispute arose from differing interpretations of legal provisions. Given the peculiar nature of the case and the Tribunal's precedent in similar circumstances (Zee Telefilms Ltd.), imposing penalties was deemed unjustifiable.

Conclusion:
- The demand for the extended period of limitation is set aside.
- The Commissioner is directed to requantify the service tax and education cess for the normal period and recover the same with interest.
- Penalties imposed on the appellants are vacated.

The case is remanded for the limited purpose of requantifying the tax amount for the normal period.