Expanded cable service definition made Multi System Operators liable for service tax; double taxation challenge failed.

The amended definition of taxable service under Section 65(105)(zs) of the Finance Act, 1994 extended service tax to cable services provided by a cable operator to any person, including a Multi System Operator, and not only to a consumer or viewer. Reading that provision with Section 65(22) of the Finance Act and Section 2(b) of the Cable Television Networks (Regulation) Act, 1995, the HC held that liability was not confined to direct service to end consumers. The challenge based on double taxation was rejected because input service tax credit was available under the Cenvat Credit Rules, 2004, as recognised in the departmental circular.

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Issues: Whether a Multi System Operator was liable to service tax under the amended definition of taxable service in relation to cable services.

Analysis: The amended clause in Section 65(105)(zs) of the Finance Act, 1994 expanded the taxable service entry from service provided to a consumer by a cable operator to service provided to any person by a cable operator including a Multi System Operator. The definition of cable service was read with Section 65(22) of the Finance Act, 1994 and the corresponding statutory meaning of cable service under Section 2(b) of the Cable Television Networks (Regulation) Act, 1995. On that basis, the Court rejected the contention that liability arose only when service was rendered directly to the viewer or consumer. The objection that the levy resulted in double taxation was also rejected because credit of input service tax was available under the Cenvat Credit Rules, 2004, as reflected in the departmental circular.

Conclusion: A Multi System Operator was liable to service tax on cable services under the amended provision, and the challenge to the levy failed.

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