2018 (2) TMI 331 - AT - Service Tax

Liability of service tax - amount received for transfer of copyright of programmes to various TV channels amounts to service under the category of TV or Radio Programme Production service - demand has been raised alleging appellant has assigned their own programme and received consideration - Held that - There is no evidence placed to show that the appellant has produced the programme on behalf of another person. The appellant produces the programme on its own and after the completion it may or may not be accepted by the channel / broadcasting agency. After production, they have transferred the copy right in the programme temporarily to the broadcasting agency. Such transfer of copy right does not attract levy of service tax under TV or Radio Programme Production Service - the demand under programme production services is unsustainable. Short payment of service tax - it was alleged that appellant has not correctly paid service tax on the gross amount realized for discharging service tax on the output service Sale of space or time for Advertisement service by including the three components, variable cost, fixed cost and profit sharing - Held that - appellant has strongly argued that from the beginning itself, the appellant has contended that they have been discharging service tax including on all the three components; that the same has not been considered by the authorities below - the issue has to be verified and for this limited purpose, the matter requires to be remanded to the adjudicating authority - matter on remand. CENVAT credit - service tax paid on telecasting fee which was paid for broadcasting tele serials - Held that - the telecasting charges paid are used for providing the said output service of Sale of space or time for Advertisement - it was already found that the appellant is not liable to discharge service tax under the category of programme producing service - The contention of the department that programmes are telecast after production of the serials etc. is flimsy and not supported by any legal basis - credit allowed. Appeal allowed in part and part matter on remand.

Summary

Issues involved:
1. Demand raised under the category of "TV or Radio Programme Production Service"
2. Short payment of service tax under "Sale of space or time for Advertisement" service
3. Wrongful availment of credit on service tax paid input services

Analysis:

Issue 1: Demand raised under the category of "TV or Radio Programme Production Service"
The appellant was alleged to have not paid service tax on tele serials produced by them and incorrectly calculated the taxable value of services. The appellant argued that they did not produce programmes on behalf of another person, as required by the definition of "Programme Producer" under the Finance Act. The Tribunal noted that the appellant produced programmes on their own and transferred the copyright to broadcasting agencies, which did not attract service tax under the "TV or Radio Programme Production Service." Citing a similar case, the Tribunal set aside the demand under programme production services.

Issue 2: Short payment of service tax under "Sale of space or time for Advertisement" service
The appellant was accused of not including all three elements (fixed cost, variable cost, profit sharing) while discharging service tax under this service. The appellant contended that they had paid tax on all components, which was not considered by the authorities. The Tribunal decided to remand the matter to the adjudicating authority for verification.

Issue 3: Wrongful availment of credit on service tax paid input services
The appellant was alleged to have wrongly availed cenvat credit on service tax paid for telecast charges. The Revenue argued that telecast fees were not input services for programme production or advertisement services. However, the Tribunal disagreed, stating that telecast charges were essential for the output service of "Sale of space or time for Advertisement." The disallowance of input service credit was deemed unjustified and set aside.

In conclusion, the Tribunal modified the impugned order by setting aside the demand on programme production service and the disallowance of credit on input services. The issue of short payment of service tax for advertisement services was remanded for further verification. The appeal was partly allowed and partly remanded, with the appellant given an opportunity to present evidence and for a personal hearing.

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