2008 (8) TMI 209 - AT - Service Tax

Cable Operator - it is not in dispute that only w.e.f. 10.09.2004 the multi system operator (MSOs) was brought under the service tax net for services rendered as cable operator - for the period prior to 10.09.2004, there was also an exemption notification 25/2004-ST dated 10.09.2004 by which the services provided to any persons by a multi system operator in relation to cable services was exempted therefore, appellant is not liable to pay service tax during the relevant period

Summary

Issues:
1. Liability to pay service tax as "Cable Operators" and for 'Advertisement Internet Services and Online Information Services'.
2. Confirmation of demand for internet services and online information services.
3. Dropping of proceedings regarding service tax as "Cable Operator" and irregular credit availed.
4. Review by Commissioner of Service Tax under Section 84 of the Finance Act.
5. Confirmation of demand for "Cable Operator Services" and irregular service tax credit.
6. Imposition of interest and penalties under Sections 76 and 78 of the Finance Act.

Analysis:

1. The appeal was filed against the Review Adjudication Order passed by the Commissioner of Service Tax, Bangalore. The proceedings were initiated against the appellants for not paying service tax as "Cable Operators" and for services like internet services and online information services. The Assistant Commissioner confirmed the demand for internet services and online information services but dropped the proceedings regarding the charge of service tax liability as "Cable Operators". The Commissioner (Appeals) upheld the order, but the Commissioner of Service Tax reviewed the matter and confirmed the demand for "Cable Operator Services" along with irregular service tax credit and imposed penalties.

2. The appellants argued that during the relevant period, they were only operating as Multi-System Operators (MSOs) and not as Cable Operators. They had informed the authorities about their status as MSOs and had undertaken to collect service tax from cable operators based on the department's insistence. The lower authority had considered their status as MSOs and dropped the proceedings during the relevant period. The law was amended on 10.09.2004 to include MSOs as providers of cable services, but for the period before that, there was an exemption. The appellants had not taken any input credit and only requested for credit if service tax was confirmed, which the lower authority rightly dropped.

3. Upon careful consideration, the Tribunal found that the liability to pay service tax as a multi system operator for cable services only started from 10.09.2004. An exemption notification dated 10.09.2004 further supported this exemption for services provided by MSOs in relation to cable services before that date. Therefore, the Tribunal concluded that there was no liability for the appellants to pay service tax during the relevant period. The Tribunal found the lower authority's decision to be correct and allowed the appeal with consequential relief.

4. In conclusion, the Tribunal ruled in favor of the appellants, considering the legal provisions and exemptions applicable to the services provided by them as Multi-System Operators. The decision highlighted the importance of the timeline and legal framework in determining the liability for service tax, ultimately leading to the allowance of the appeal and relief for the appellants.