2021 (10) TMI 97 - AT - Service Tax

Levy of service tax - Commercial Exploitation of Rights of Sports Events - place of provision of services - service provided in taxable territory or not - HELD THAT - A conjoint reading of section 66B of the Finance Act, 1994 alongwith Rule 6 of the Place of Provision of Services Rules, 2012, provides for charge of service tax at the specified rate on the value of any service, other than services specified in the negative list, provided or agreed to be provided in the taxable territory (India), by any person to another. Admittedly, no services have been provided in the taxable territory. Rule 6 of the Place of Provision of Service Rules, 2012, provides and clarifies that in case of any cultural or sporting event and/or services related to such event, shall be the place where the event is actually held - Admittedly the event was held outside India (Zimbabwe), and this service has not been received in India, rather it was meant for Bangladesh, for which territory, the telecasting rights were purchased and resold by the appellants. Only for the reason that the appellant provider or trader of telecasting right is located in India, it cannot be assumed or presumed by any stretch of imagination, that the service under dispute has been received in India. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether the appellant is liable to pay service tax under Section 65(105)(zzzzr) for 'Commercial Exploitation of Rights of Sports Events' under various provisions.

Detailed Analysis:

1. Background and Disputes:
The appellant acquired media/broadcasting rights for cricket matches from a company in Mauritius and sold/sub-licensed them for broadcasting in Bangladesh. The department alleged liability for service tax under the Reverse Charge Mechanism (RCM) for services acquired from overseas providers. Show cause notices were issued for unpaid service tax for the periods April 2012 to March 2016 and April 2016 to June 2017.

2. Appeals and Orders:
The Commissioner (Appeals) upheld the demand for 100% service tax under the RCM on the value of services procured for commercial exploitation. The appellant challenged this decision before the Tribunal.

3. Appellant's Arguments:
The appellant argued that no services were provided or consumed within India's taxable territory. They referenced Section 66B of the Finance Act, 1994, stating that service tax is chargeable only for services provided within the taxable territory. They also cited Rule 6 of the Place of Provision of Services Rules 2012, asserting that services related to the sports event should be deemed where the event occurred, which was outside India.

4. Tribunal's Findings:
The Tribunal analyzed the relevant provisions and noted that service tax is levied on services provided in the taxable territory. Since no services were provided within India, the imposition of service tax was deemed inappropriate. Rule 6 clarified that services related to events are to be considered where the event took place. As the cricket matches were held outside India and broadcasted in Bangladesh, the services were not consumed in India. The Tribunal allowed the appeals, setting aside the impugned orders.

5. Conclusion:
The Tribunal ruled in favor of the appellant, stating that the services in question were not provided within India's taxable territory, hence service tax imposition was unjustified. The appellant was entitled to consequential benefits as per the law.

This judgment highlights the importance of determining the place of provision of services in cross-border transactions and clarifies the applicability of service tax under the Reverse Charge Mechanism in such scenarios.