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TMI Blog2025 (2) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants submitted that they pay pre-decided amount, out of the charges collected from subscribers, to the MSO for getting channel signals. The appellants were under bona fide belief that they are not required to pay service tax on the subscription charges paid to the MSO. However, the Department during the verification of the data received from the Income Tax Department vide 26AS statement for the financial year 2014-2015 and the service tax return ST-3 filed by the appellants, observed that they had not declared the turnover of services to the extent of Rs.47,99,960/- and demanded service tax from the appellants. 2.3 The Department issued Show Cause Notice (SCN) dated 18.10.2019 to the appellants and proceeded to adjudicate a case. The original authority i.e., Assistant Commissioner, Division-III, Mumbai West Commissionerate in adjudication of the case had confirmed the demand of service tax amounting to Rs.5,32,686/- under Section 73(1) of the Finance Act, 1994 along with imposition of penalty under Sections 77, 78 ibid vide Order-in-Original dated 06.11.2020. Being aggrieved with the aforesaid order dated 06.11.2020, the appellants had filed an appeal before the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirm the amount of Service Tax of Rs.5,32,686/- (12.32%) (Five Lakhs Thirty-two Thousand Six Hundred Eighty-Six Only) for the period April 2014 to March 2015 and order recovery under the proviso to Section 73 (1) of the Finance Act, 1994 read with Section 174 of Central Goods and Services Tax Act, 2017 (CGST Act,2017). (ii) I order recovery of Interest under the provisions of Section 75 of the Finance Act, 1994; (iii) I impose penalty of Rs.5,32,686/- (Five Lakhs Thirty-two Thousand Six Hundred Eighty Six Only) under Section 78 of the Finance Act, 1994; (iv) I impose penalty of Rs.10,000/- (Ten Thousand Only) under Section 77 of the Finance Act, 1994 for the failure to declare the value of taxable service in their periodical ST-3 Returns and for failure to Pay the Service Tax electronically as prescribed." 4.2 In the appeal preferred by the appellants against the above Order-in-Original dated 06.11.2020, the learned Commissioner (Appeals) vide impugned order dated 15.04.2021, had rejected such appeal by upholding the order of the original authority as follows: "11. In the submission before me appellants have admitted the Service Tax liability of Rs,3,17,256/- and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Central Board of Indirect Taxes and Customs (CBIC) had considered the appropriate action to be taken by the filed formations, in similar situation as the one referred in this case and issued instructions dated 26.10.2021, which is extracted and given below: "Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes & Customs *** New Delhi dated 26.10.2021 Subject : Indiscreet Show Cause Notices (SCNs) issued by Service Tax Authorities - Reg. Representations have been received from various trade bodies and associations regarding instances of indiscriminate issuance of demand notices by the field formations on the basis of ITR-TDS data received from Income Tax Department. 2. In this regard, the undersigned is directed to inform that CBIC vide instructions dated 1-4-2021 and 23-4-2021 issued vide F.No. 137/472020-ST, has directed the field formations that while analysing ITR-TDS data received from Income Tax, a reconciliation statement has to be sought from the taxpayer for the difference and whether the service income earned by them for the corresponding period is attributable to any of the negative list services spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions concerning the telecommunication broadcasting and cable services, Direct to Home (DTH) services under the statute governing Telecom policy, relevant rules & regulations, orders issued by the Telecom Regulatory Authority of India (TRAI) as well as under the Finance Act, 1994 for determining the levy of tax on the services and the relevant rules and regulations framed thereunder. (b) It is seen that prior to the introduction of DTH services, the only source of distribution of TV Channels was through cable. To have an alternative to Cable and provide better services to the consumers, the Government of India rolled out the DTH License in the Year 2003 subsequent to which, DTH License was issued to eligible persons including the appellants who are one of such DTH license holder and DTH service provider to the subscribers. In India, DTH service was a recent entrant as compared to cable transmission. It has certain technical advantages over cable operations. DTH is an addressable system and covers the entire country. The authority to issue DTH license vests with the Government of India, Ministry of Information & Broadcasting. (c) Earlier, the Government had legislated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... management system', on the explicit choice and request of such subscriber; (f) We find from the plain reading of the above statutory provisions that every DTH operator is required to provide STBs to their subscribers in order to provide DTH service, inasmuch as STB is a necessary equipment to receive the DTH signals sent in encrypted form, to be received through the dish antenna, and which can be decoded and displayed on the television of the subscriber. From the above, we thus come to the conclusion that STB is a part of Customer Premises Equipment which is necessary for providing DTH service to a subscriber. It may be seen that STB is used as an equipment, being part of CPE, and that whenever the television channels are viewed by a subscriber, the said STB along with antenna are used for receiving and decoding the signals as a part of conditional access system. In other words, the broadcasting of signals by the appellants for viewing television channels are distinct by themselves from the STBs and other equipment. Thus, we conclude that the nature of activity undertaken by the DTH operator in providing STB to a subscriber, is provision of an equipment, which is one-time ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sale towards STBs which are leviable to Sales Tax and not chargeable to Service Tax 9,85,800 (ii)Entertainment tax collected and paid to the State Government 3,79,305 3 Gross amount of receipts excluding the Turnover value not taxable under service tax [ (1) - (2) ] 34,34,855 4 Taxable value for levy of service tax treating (3) as gross amount received for services i.e., 112.36% including service tax @ 12.36% 30,57,008 5 Less Turnover declared in ST-3 returns on which service tax already paid by appellants 4,90,204 6 Value of Turnover attributable to services provided by appellants as intermediary between MSO and subscribers for viewing channels 25,66,804 7 Service tax payable at 12.36% on (6) above 3,17,256 8 Interest on the service tax payable at (7) 3,23,549 9 100% Penalty paid on service tax amount in (6) 3,17,256 10 Total amount paid towards additional service tax along with interest, penalty through challans dated 06.02.2021,14.02.2021 & 02.03.2021. 9,58,061 10. In the above backdrop of the factual matrix of the present case, I find that the appellants themselves have correctly determined the service tax payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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