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TMI Blog2019 (10) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellants have contended that they are acting as agents of the service provider namely MSMPL and DCI for various purposes in relation to provisioning of services under the category of Broadcasting Services to MSOs/ COs. For rendering such service which include the collection of subscription charge they receive commission from MSMPL and DCI on which they discharge Service Tax under the category of Business Auxiliary Services . Revenue also do not dispute that fact that appellants were discharging service tax on the commission received by them under the category of Business Auxiliary Service. The appellant is joint venture of MSMPL and Discovery Communications India (DCI). Appellants have entered into agreement with MSO s/ CO s to provide the channels being distributed by MSMPL, DCI, TV Today Network etc. The channels being offered by the appellant are either in ala carte form or as bouquet of channel to the subscribers. In respect of the channels subscribed by the MSO/ CO, they are paying the subscription fee in respect of all the channels subscribed by them. The finding recorded by the Commissioner has been recorded ignoring the fact that Appellants were paying service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Section 65(15) and Section 65(16) ibid; ii. The demand of Service Tax totally amounting to ₹ 134,61,79,597/- (Rupees One Hundred and Thirty Four Crores Sixty One Lakhs Seventy Nine Thousand Five Hundred and Ninety Seven only) made under subject notice is determined and confirmed under Section 73(2) of the Finance Act, 1994, as payable by M/s MSM Discovery Pvt Ltd; iii. I order recovery of the interest at appropriate rate from the due date, on the amount confirmed at para 44(ii) above, from M/s MSM Discovery Pvt Ltd under the provisions of Section 75 of the Finance Act, 1994; iv. I impose penalty under Section 76 of the Finance Act, 1994 on M/s MSM Discovery Pvt Ltd for their failure to pay Service Tax for the period from 01.10.2006 to 09.05.2008 at the rate of 2% per month, subject to maximum service tax not paid for the period upto 09.05.2008; v. I do not impose any penalty under Section 76 of the Finance Act, 1994 on M/s MSM Discovery Pvt Ltd for failure to pay Service Tax in respect of the period 10.05.2008 onwards, as penalty is being imposed under Section 78; vi. I impose a penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax in respect of these service as they were paying service tax on the similar services rendered in case of TV Today Networks; Their representatives have admitted the fact about nonpayment of service tax on subscription charges collected towards provision of broadcasting services in respect of MSMPL and DCI; They had never disclosed the facts about not payment of service tax in respect of subscription charges for the MSMPL and DCI, and have thus suppressed the germane facts with intention to evade payment of service tax. Accordingly notice asked the Appellants to show cause as to why:- Extended period under sub section (1) of Section 73 of the Finance Act, 1994 should not be invoked to demand service tax evaded by them; The services provided by them in relation to distribution of television channels belonging to MSMPL and DCI should not be classified under broadcasting service as defined under Section 65(105)(zk) of the Finance Act, 1994, read with Section 65(15) and Section 65 (16) ibid; Service Tax of ₹ 134,61,79,597/- (Rupees One Hundred and Thirty Four Crores Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acting as a Broadcaster on his own account for third party broadcasters. They had as per the direction of Commissioner filed an affidavit, affirming that they acted as an agent for MSMPL and DCI for the purpose distributing specific channels. They had also submitted all the agreements also. They received agency commission for the services provided as an agent of MSMPL and DCI and on the agency commission received have discharged the service tax liability under the category of Business Auxiliary Service; Service Tax on the entire subscription revenue stands discharged under the category of Broadcasting services. As per the agreement dated 5.08.2002 they were required to collect the subscription charges on behalf of MSMPL and DCI and remit the same to tem along with service tax collected from MSOs/ Cos. At the end of every month a monthly statement was prepared by them in which the subscription revenue collected for a particular channel in that month was determined based on the information received from MSOs/ Cos. The said statement was then submitted to MSMPL and DCI stating that the amount collected for their respective channels. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been demanded under Section 75. 3.2 Revenue has filed the cross objections to the Appeal. The cross objections are filed only to support the impugned order. 4.1 We have heard Shri Prakash Shah with Shri Prasad Paranjape, Advocates for the appellants and Shri Bidhan Chandra, Additional Commissioner, Authorized Representative for the revenue. 4.2 Arguing for the appellants learned advocate submitted that- Appellants are a joint venture (JV) created in name and style of SET Discovery (Pvt) Ltd [ now MSM Discovery)], by SET India Private Limited (SET now MSMPL) and Discovery Communications India (Pvt Co with Unlimited Liability) (Discovery or in short DCI ), by the agreement dated 5th August 2002. At 4, the agreement provides Each partner appoints the JV Vehicle to provide the services in relation to the Channels and JV Vehicle shall, as from the date hereof, provide the services in relation to all of the channel on an exclusive basis. The services shall include in particular (but without limitation) marketing to operators of, the appointment of distributors to license (on behalf of JV Vehicle), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nth, the JV Vehicle shall deliver to each to each Partner a statement showing, in relation to each Channel, the total amount of Distribution Revenue and/ or A La Carte Revenues attributable to the distribution of such channel and collected by the JV Vehicle during the immediately preceding Account Month (together with cumulative figure for Distribution Revenues and A La Carte Revenues in respect of all Channels during such Accounting Month) (the Monthly Statement ) 8. Subject to Section 6(d) within ten (10) days after the end of each counting Month the JV Vehicle shall pay (a) to Discovery the Discovery Share (b) to SET the SET Share which (in each case) are attributable to the immediately preceding Accounting Month as set out in Monthly Statement. 12. Each Partner warrants and represents to JV Vehicle: (a) that it has full right title and authority to enter in to this Agreement and to appoint the JV Vehicle as its sole an exclusive agent to provide the service. (b) that neither it nor any of its Affiliates shall itself, or shall directly or indirectly au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them on such invoices under the category of Broadcasting Services has been remitted to the government account either directly by them or by Multi Screen Media Pvt Ltd and DCI. On the basis of the monthly statements prepared by them as per the agreement dated 5th October 2002, they have remitted the subscription charges including service tax recovered as agent of Multi Screen Media Pvt Ltd and DCI to them. Both Multi Screen Media Pvt Ltd and DCI have in turn discharged the service tax liability in respect of the amounts remitted to them. On the remaining amount where the Broadcasting services were provided by them on their account i.e. in case of India Today TV Networks etc. they have paid the service tax. Thus entire amount of service tax has been paid. This fact has been supported by the CA Certificate produced by them before Commissioner. Further this fact is also verifiable fact from the jurisdictional officers of Multi Screen Media Pvt Ltd and DCI It is settled law that in respect of the same service transaction, service tax cannot be demanded both from the principal and agent. Undisputedly they have discharged the service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts have only declared the agency commission received by them from MSMPL and DCI under business auxiliary services and paid service tax thereon. In the impugned order adjudicating authority has rightly held that obligation to pay the service tax I s on service provider and cannot be shifted to any other person. Since appellants have suppressed the value of taxable service provided by them while filing the ST- 3 returns, adjudicating authority has rightly upheld the charge of suppression with intention to evade payment of tax. According extended period of limitation as per proviso to Section 73(1) has been rightly invoked. Penalty under Section 76 has been invoked for period prior to 10.05.2008, i.e. prior to amendment made in section 78, barring imposing penalty under section 76 and 78 simultaneously. Penalty under Section 78 has been rightly imposed as the appellants have suppressed the vital facts about the value of taxable service in their return and had not disclosed the correct aggregate taxable value and service tax payable as reflected in their invoices. Since appellants have failed to furnish co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant are the service provider whereas appellant contend that MSMPL and DCI are the service provider who have also discharged the service tax liability in respect of the services provided under the category of Broadcasting Services. 5.4 Appellants have contended that they are acting as agents of the service provider namely MSMPL and DCI for various purposes in relation to provisioning of services under the category of Broadcasting Services to MSOs/ COs. For rendering such service which include the collection of subscription charge they receive commission from MSMPL and DCI on which they discharge Service Tax under the category of Business Auxiliary Services . Revenue also do not dispute that fact that appellants were discharging service tax on the commission received by them under the category of Business Auxiliary Service. 5.5 Before we proceed further it is necessary to understand the business mode of the Appellants and the relationships between various parties on the stage. Flow chart as below indicates the relationships. 5.5 From the flow chart as above, it is quite evident that appellant is joint venture of MSMPL and Discover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards taxable broadcasting services provided by them by raising invoices, they are contending that they being agents of MSMPL and DCI they are not required to pay service tax so collected, and the liability for payment of service tax on services provided by noticee rests with MSMPL and DCI to whom the noticee have remitted the amount so collected. Noticee has obtained Service Tax registration for broadcasting services and they have provided the taxable services and collected Service Tax towards such service from their customers. As per Section 65(7) of the Finance Act, 1994, assessee means a person liable to pay service tax includes his agent. As per Section 66 of Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994, any person who have provided taxable service is required to pay service tax on or before the due date. Thus the noticee having undertaken to discharge their service tax liabilities cannot assign it to any other person and even if they were agents as being claimed they were required to pay service tax charged and collected by them to the department in terms of Section 65(7) of Finance Act, 1994 read with Section 68 ibid and Rule 6 of Service Tax Rules, 1994. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for collection of subscription charges. The finding recorded by the Commissioner has been recorded ignoring the fact that Appellants were paying service tax on the Commission received by them from their principals under the category of Business Auxiliary Services. The findings recorded by the Commissioner in this respect needs to be set aside and matter remanded back to him, to pass consider all the documents and arguments advanced by the appellants in this respect. 5.9 The second limb in support of the demand made is that appellants were paying the service tax in respect of the subscription charges collected in respect of the channels distributed by the TV Today Network under the category of Broadcasting Service . This argument advanced by the revenue in support of the demand made needs to be reconsidered specifically by referring to the business models adopted by the Appellants for extending the services to service recipients i.e. MSO s/ CO s. Secondly a categorical finding needs to be recorded whether in case of TV Today Network, whether TV Today Network was discharging the service tax liability on the services provided by them for which appellants were collecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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