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TMI Blog2008 (9) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... erabad in terms of which the Commissioner (Appeals) has set aside the Order-in-Original No.25/2006 (Service Tax), dated 6-12-2006 which had confirmed the demand of Service Tax of Rs. 15,90,758 and Education Cess of Rs. 31,815 for the period from 16-6-2005 to 30-4-2006 and also confirmed interest under section 75 of the Finance Act and imposed penalties under sections 76,77 and 78 of the Finance Act, 1994. 2. The revenue is aggrieved over the impugned order of the Commissioner (Appeals) who has dropped the proceedings against the appellants by setting aside the Order-in-Original. 3. Shri G. Shivadass, learned advocate and Shri G. Venkatesh, learned Consultant appeared on behalf of the respondents and Mrs. Sudha Koka, learned SDR appeared for the department. 4. We heard both sides. The respondents are Worldspace India Private Limited. They are incorporated under the Indian Companies Act with its registered office at Bangalore and Branch Office at Hyderabad. It is also a subsidiary of Worldspace Inc. (WSI), which is based in USA. It is also known as WSIP. WSI has the facility to broadcast audio channels to various regions in the world including India. WSI channels are avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force. Therefore, the Commissioner (Appeals) took a view that the subscribers are the listeners who subscribe to the Worldspace and they cannot be called as "clients" and if a service is not rendered to client, it would not amount to a taxable service. Taking this view, he has dropped the proceedings. However, in the Adjudicating Order and also in the department's appeal, it has been stated that the scope of 'broadcasting service' has been expanded with effect from 2005 and after the expansion of the scope of the 'broadcasting service', even the customers or the subscribers would come within the scope of 'client'. The 'broadcasting service' would cover even sending signals in any form including sound to the customers. This is the stand taken by the department and also the Adjudicating Authority. In other words, it has been stated that amendments have been made in the provisions relating to 'taxable service', 'broadcasting service' and 'broadcasting agency'. In the light of the amendments, Board has also issued certain clarifications. All these things have been taken into account by the Adjudicating Authority to hold that the services rendered by WSI would amount to 'broadcasting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serials, programmes or live events. It was also strongly urged that client is a person who wants an advertisement to be broadcast or is a sponsor of a serial or programme or event, who wants the serial or programme or the events to be broadcast. The learned advocate stated that this Circular has not at all been withdrawn even when a Committee headed by Shri T.R. Rustagi examined all the earlier circulars and certain circulars were deleted or withdrawn but this circular was not withdrawn. Therefore, he said that 'broadcasting service' is always a service rendered to a client and a client is not a listener. It was also urged that the listener has to listen to the programme aired by the broadcasting agency and they would not have any say in the matter. Whereas, a client would pay money to broadcasting agency and then would buy the time slot and would say such and such a programme has to be aired. In other words, he has a choice on payment of certain consideration. This choice is not available to a listener. So it was strongly urged that a listener can never be treated as a client within the meaning of 'client' as clarified in the Board's Circular of 2001. Our attention was also invite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65(105)(zk) refers to a client. If the intention of the Government is to cover the listeners also as service receiver, they could have referred to a subscriber/listener or any other person also, which has not been done so. In the Finance Act, 2008, many taxable services were amended by incorporating the word 'any person' but in the case of 'broadcasting service', it has not been done so. These were the points urged by the learned advocate. 7.5 It was also stated that the department is bound by its own Circular dated 9-7-2001. Reliance was placed on the following case laws: * Pradip J. Mehta v. CIT [2008]169 Taxman 454 (SC); * CCE v. Dhiren Chemical Industries 2002 (139) ELT 3 (SC); * CCE v. Kores India Ltd. 1997 (89) ELT 441 (SC); * UOI v. Arviva Industries ( India ) Ltd. 2007 (209) ELT 5 (SC); * Fenner India Ltd. v. CCE 2004 (167) ELT 18 (SC); * CC v. IOCL 2005 (186) ELT A119 (SC). 7.6 Another point made by the learned advocate was that various auxiliary services rendered by the respondents to WSI would amount to export of services and they would not be liable to Service Tax in terms of the Export of Service Rules, 2005 which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broadcasting agency. This is the gist of the argument of the respondent. While the respondent heavily relies on the Board's Circular of 2001, he has not said much about the circular issued in 2005. 9.1 In 2005, after the amendment of the provisions relating to 'broadcasting agency', etc., the following Circular dated 27-7-2005 had been issued: "17. Broadcasting Services 17.1 In the case of radio or TV broadcasting services, the services are subject to tax where the services are effectively used and enjoyed. Multi System Operators (MSOs) are permitted to receive signals from the broadcasting agencies on payment of prescribed amount. Cable operators transmit programmes to customers through cable network after receiving signals from the Multi System Operators (MSOs). Prior to 16-6-2005, service tax was leviable on services provided by cable operators to their customers and multi-system operators to cable operators. In this year's Budget, the charges recovered by the broadcasting agencies from the multi-system operator for providing the signals have been specifically made liable to service tax. This completes the service tax chain from the customer to the broadcaster. 17.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the customer. They have also referred to in Para 17.2 to the direct home signals by broadcasting agency to the customers. In the present case, the Worldspace Inc., are directly sending signals to the listeners. There is an agreement also in terms of which subscription is collected. So, this subscription is definitely for the services rendered to the listeners. We cannot say listeners are not the clients because they do not have the choice of the programme, in order to enjoy the available programme, they have to pay the money and it is not free. The Original Authority has dealt with all these points elaborately. For clarity let us take the amendment to the definition of broadcasting and broadcasting agency or organization and also the definition of taxable services. In all these cases for the words "collecting the broadcasting charges on behalf of the agency", the words "collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electromagnetic waves through space or through cables, direct to home signals or by any other means to cable operator including ..... 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