2017 (8) TMI 838 - AT - Service Tax

Reverse charge mechanism - It appeared to the department that fee given by appellant to STARL for this purpose was liable to service tax and since STARL did not have office in India, appellant was to discharge tax liability on reverse charge basis - Held that - the appellant cannot be held as a service recipient since foreign broadcaster is engaged in up-linking signals to a satellite outside India and down-linking of signals is done by MSOs/COs in India and appellant technically does not receive any broadcasting service - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax on the fee paid to a foreign entity for distribution and marketing rights of a television channel?
2. Whether the definition of broadcasting agency or organization under Section 65(16) of the Finance Act, 1994 covers the activities of the appellant?

Issue 1:
The appellant, engaged as an agent for collecting broadcasting charges, faced a demand for service tax on the fee paid to a foreign entity for distribution rights. The appellant contended that the distribution of rights to Indian sponsors did not fall under the Broadcasting definition. The appellant argued they did not receive or broadcast signals, and the tax liability was already discharged. They relied on a previous Tribunal decision in ESPN Software India case, which favored them. The department argued that the broad definition of broadcasting agency covered the appellant's activities.

Issue 2:
The definition of taxable service under broadcasting agency or organization service was examined. The key question was whether the appellant, not involved in uplinking signals but transferring rights, should bear tax liability. The Tribunal analyzed the transmission process, noting that the foreign service provider directly sent signals to MSOs/COs, not through the appellant. Drawing parallels with the ESPN Software case, where a similar situation was considered, the Tribunal ruled in favor of the appellant. It was emphasized that the appellant did not technically receive any broadcasting service, aligning with the previous decision's rationale. The Tribunal upheld that the tax liability against the appellant could not be sustained based on the established grounds and set it aside, allowing the appeal.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Tribunal's decision on each aspect.