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2017 (3) TMI 563 - AT - Service TaxPenalty u/s 77 and 78 of FA, 1994 - cable operator service or not? - waiver of penalty by invocation of section 80 - Held that - The appellant s role is as an intermediatory and apparently there could be a bonafide belief on their part regarding the tax liability under the said category - they are not acting as a local cable TV operator in transmitting signals to the clients, neither they are involved in receiving satellite signals as a MSO - The Finance Act, 1994 borrows the definitions of Cable operator and Cable service from Cable Television Network (Regulation) Act, 1995. Considering scope of definition u/s 2 (aa) of the said Act there is a possibility of bonafide belief for non-tax liability - it is a fit case for invoking the provision of Section 80 for waiver of penalties imposed on the appellant - appeal allowed - decided in favor of appellant.
Issues:
Waiver of penalty under Section 77 and 78 of Finance Act, 1994. Analysis: The appellant sought waiver of penalties imposed under Section 77 and 78 of the Finance Act, 1994, related to their service provision to M/s Siti Cable Network Ltd. involving local program preparation, franchisee agreements, and compliance with local laws. The appellant did not contest the tax liability but requested the penalties to be waived invoking Section 80. The appellant argued they did not fall under the category of cable operator service, acting as intermediaries between the MSO and local cable operators. They highlighted their bonafide belief in non-liability to tax based on their scope of work. The Counsel referenced Tribunal decisions supporting penalty waivers under similar circumstances. The appellant's role was distinguished from that of a traditional cable operator, as they were not directly involved in signal distribution or satellite signal reception. The learned AR supported the lower authorities' findings, emphasizing the confirmed tax liability. The Tribunal, after hearing both sides and reviewing the records, noted the undisputed tax liability. The Tribunal acknowledged the unique role of the appellant as an intermediary in the distribution chain, distinct from typical cable operators transmitting signals. The Tribunal considered the definitions of 'Cable operator' and 'Cable service' from the Cable Television Network (Regulation) Act, 1995, and recognized the appellant's potential bonafide belief in non-tax liability under the given category. Citing precedents and the specific circumstances of the case, the Tribunal found it appropriate to invoke Section 80 for waiving the penalties imposed on the appellant. Consequently, the penalties were set aside, and the appeal was allowed to that extent. In conclusion, the Tribunal granted the appellant's request for penalty waiver under Section 80, considering their unique role as intermediaries in the distribution of television signals and their bonafide belief in non-liability to tax under the cable operator service category. The Tribunal's decision was based on the specific facts of the case, distinguishing the appellant's activities from traditional cable operators and aligning with precedents supporting penalty waivers in similar situations.
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