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TMI Blog2017 (4) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... vice is rendered by the appellant to its members and the contributions are the quid pro quo for that service. There can be no doubt that 'copyright societies' are established under law and hence not liable to be taxed on any receipts from its members. Demand set aside - appeal dismissed - decided against Revenue. - ST/734/2010 & ST/10 & 130/2011 - A/86369-86371/17/STB - Dated:- 16-3-2017 - Shri M V Ravindran, Member (Judicial) And Shri C J Mathew, Member (Technical) Shri A R Krishnan, Chartered Accountant for assessee no. 1 Shri M H Patil, Advocate for assessee no. 2 Shri Nagvenkar, Additional Commissioner (AR) for Revenue Per: C J Mathew. Three appeals are before us: of these, one has been filed by Revenue against order-in-original no. 16-18/ST-II/KKS/2010 dated 8 th October 2010 of Commissioner of Service Tax, Mumbai-II demanding tax from M/s Indian Performing Rights Society Ltd and the assessee has also filed an appeal. Yet another appeal pertains to the demand confirmed against M/s Phonographic Performance Ltd in-order-in-original no. 21-23/ST-II/KKS/2010 dated 30 th November 2010. As the dispute arises from the same set of facts we dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bership is conferred upon payment of membership fee as prescribed and members, by deed, assign the performing and mechanical rights in music and literary works to the society which, thereafter, exclusively belong to the society. As consideration, the owner of the copyright receives payments from an allocation made by the society. The society is registered under section 33 of Copyright Act 1957 as 'copyright society' and permits the rights assigned to it through license agreements to be used by entities such as restaurants, malls, hotels, airlines etc. These blanket licenses are issued for a prescribed period. In the disposition of its earnings, the society deducts its administrative expenditure and may retain some part for specific purposes as well as in the reserve fund before distributing the rest. The society was issued with a show cause notice demanding ₹ 76,90,150/- as tax for providing 'club or association service' for the period from 16 th June 2005 to 31 st March 2008. Two more show cause notices for 2008-09 demanding ₹ 50,92,097/- and for 2009-10 demanding ₹ 55,79,902/- were also issued. The total liability sought to be fastened on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of copyright in music, literary works etc., and charges a fee for inducting members into the society. Unlike the other assessee before us, M/s Indian Performing Rights Society does not act as an intermediary for distribution of copyright material to users. On the contrary, it acts on its own behalf to negotiate with potential users and receives license fee which is then allocated to its members in accordance with its internal regulations, Tax authorities have sought to exact a levy on both the membership fee and the amount retained on account of expenditure incurred. 8. Learned Counsel for M/s Phonographic Performance Ltd places before us a sample of invoices issued by them to licensees. It is seen from these invoices that they are issued on their own account towards the use of copyright material. These invoices carry the endorsement that the taxable service is 'copyright' [taxable under section 65 (105) (zzzzt) of Finance Act, 1994] and by citing the decision of the Hon'ble High Court of Bombay in Indian National Shipowners Association v. Union of India [(2009 (14) STR 289 (Bom)], which has been affirmed by the Hon'ble Supreme Court, argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant, M/s Phonographic Performance Ltd, that in the then prevailing regime of specified taxable service, the insertion of a new taxable category precludes that activity from being taxed under a different head. Similar view had been adopted by this Tribunal in Cameo Corporation. Services Ltd. v. Commissioner Service Tax, Chennai [2008 (II) STR 161 (Tri-Chennai)] and Commissioner of Service Tax, Ahmedabad v. Trumac Engg. co. Pvt. Ltd [2010 (10) STR 148 (Tri-Ahmd)]. Learned Authorised Representative urged us to accept the conclusions in the impugned order. Notwithstanding these urgings, we are convinced that that the activity of rendering 'copyright service' from July 2010 would detract from taxability as provider of 'club or association service.' 10. There is no doubt that the other appellant, M/s Indian Performing Rights Society, is an association comprising of members who have come together for a common purpose. The conclusions in the impugned order have been reiterated by Learned Authorised Representative to assert that an association receiving consideration from its members cannot but be held to be taxable under Finance Act, 1994. However, Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant to its members and the contributions are the quid pro quo for that service. 12. There is yet another aspect of the submissions that cannot be overlooked in so far as both appellants are concerned. Section 33 of Copyright Act, 1957 requires that copyright transactions be handled only through a society registered under the Act. With such a statutory mandate in force, the option of transaction except through societies such as the two appellants is non-existent. A transaction in services, particularly of a taxable service, carries with it the characteristic of voluntariness and exercise of option to execute that activity by oneself or through another entity; it is upon the exercise of the option to source such activity that taxability arises. A legal mandate to act only through a society erases the exercise of option and such activity ceases to be a service. Moreover, the definition of 'club or association service' specifically excludes any body established or constituted under any law for the time being in force There can be no doubt that 'copyright societies' are established under law and hence not liable to be taxed on any receipts from its me ..... 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