2018 (2) TMI 826 - AT - Service Tax

Valuation - cable operator service - Revenue entertained a view that the appellants incurred much higher expenditure in receiving the signal from MSO whereas they have collected much lesser amount for the same service rendered by them to their employees - Held that - The quantification of non-monetary consideration should be based on specific and tangible evidence - In the present case, there is no non-monetary consideration or any extra payment by the employees which can be added to the taxable value. The appellants received signals and distributed the same. There is no allegation that such consideration has been specifically under-stated - appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of service rendered by the appellant under cable operator service.

The judgment involves two appeals against impugned orders passed by Commissioner(Appeals), Mangalore, concerning the valuation of services provided by the appellant as a cable operator. The dispute revolves around the consideration received by the appellant for distributing TV signals received from a Multi-System Operator (MSO) to its employees. The Revenue contended that the cost incurred by the appellant in receiving signals should be included in the taxable value, leading to a demand against the appellant under Rule 5 of Valuation Rules.

The appellant argued that they had already paid tax to the MSO for the TV signals received and had also collected service tax from their employees for distribution. Since no additional consideration was received from employees, they contended that there should be no further taxable value. The Revenue, however, maintained that the cost of service from the MSO was directly linked to the distribution of signals to employees.

After hearing both sides and examining the records, the Tribunal found that the appellants had collected consideration for the service provided to employees, with no evidence of any extra payments or non-monetary considerations received. The Tribunal emphasized the need for specific and tangible evidence to quantify non-monetary considerations under Section 67 of Valuation. Since there was no evidence of under-statement or additional payments beyond the collected consideration, the Tribunal concluded that there was no basis for varying the taxable value.

Therefore, the impugned orders were set aside, and the appeals were allowed, with the Tribunal determining that there was no scope for adjusting the taxable value based on the arguments and evidence presented during the proceedings.