2016 (4) TMI 454 - AT - Service Tax

Liability of service tax - for the period April, 2003 to 13.07.2005 - Exclusive distributors of T.V. channels broadcast by the foreign broadcasters in India - Retained 15% of total subscription revenue collected through cable operators and MSOs and remitted the remaining revenue to the foreign broadcasters - Revenue contended that the respondent is not an MSO but a representative or agent for foreign broadcasters. Held that - it is clear that the respondents were discharging service tax arising out of their role as agent of foreign broadcasters and there is no dispute on that account. It is found that the Board s Circular was wrongly interpreted so as to refer with reference to the services provided by the MSOs. It is also clear from the clarification issued by the Board that the charges recovered from the broadcasting agencies from MSOs for providing the signals had been made specifically liable to service tax from 16.06.2005. Therefore, the charges recovered from the broadcasting agencies from MSOs or Cable Operators were not liable to service tax prior to 16.06.2005. - Decided against the revenue

Summary

Issues:
1. Interpretation of service tax liability for broadcasting agencies acting as agents of foreign broadcasters.
2. Application of Board's circulars dated 26.09.2005 and 9.6.2006 in determining service tax liability.
3. Clarification on the scope of "Broadcasting Services" and taxable services post-amendment in 2005 Budget.
4. Dispute regarding the role of the respondent as an agent or representative of foreign broadcasters.
5. Comparison of the present case with the decision in Zee Tele Film Ltd. Vs. CCE, Mumbai - 2004 (166) ELT 34 (T-Delhi).

Analysis:

1. The appeal addressed the issue of service tax liability for a respondent who acted as an exclusive distributor of foreign TV channels in India. The Revenue contended that the respondent was merely an agent of foreign broadcasters, thus liable for service tax. However, the respondent argued that they were correctly discharging service tax as agents of foreign broadcasters and not as MSOs. The Tribunal examined the nature of services provided and concluded that the respondent's tax liability was appropriately determined based on their role as agents, not MSOs.

2. The Board's circulars dated 26.09.2005 and 9.6.2006 played a crucial role in determining the service tax liability of broadcasting agencies. These circulars clarified that service tax on amounts collected from MSOs and cable operators by broadcasters was applicable from 16.06.2005. The circulars differentiated between charges for selling time slots and subscription fees, specifying when these charges became taxable under the law.

3. The judgment delved into the scope of "Broadcasting Services" and taxable services pre and post-amendment in the 2005 Budget. It highlighted that prior to the amendment, charges collected by broadcasters from MSOs were subject to service tax, and the 2005 Budget expanded the scope to include charges for permitting the right to receive any form of communication. The clarification provided insights into the evolution of tax liability concerning broadcasting activities.

4. The dispute regarding the respondent's role as an agent or representative of foreign broadcasters was crucial in determining their service tax liability. The Tribunal emphasized that the respondent was discharging service tax obligations correctly as agents of foreign broadcasters, in line with the legal provisions and the Board's circulars. The misinterpretation of the Board's Circular in referring to services provided by MSOs was noted and corrected.

5. In comparing the present case with the decision in Zee Tele Film Ltd. Vs. CCE, Mumbai, the Tribunal found that the issues addressed in the previous case were distinct from the current matter. The Zee Tele Film case focused on activities related to selling time slots and obtaining sponsorship for programs, which differed from the service tax liability context in the present appeal.

Overall, the Tribunal dismissed the Revenue's appeal, affirming the correctness of the respondent's service tax liability determination as agents of foreign broadcasters and highlighting the importance of correctly interpreting legal provisions and circulars in tax matters.