2007 (9) TMI 52 - AT - Service Tax

CESTAT Chennai: Service tax on broadcasting services waived due to foreign Head Office requirement

VIJAY TELEVISION (P) LTD. Versus COMMISSIONER OF SERVICE TAX, CHENNAI

The Appellate Tribunal CESTAT, CHENNAI ruled in favor of the appellants in a case concerning the demand of service tax on broadcasting services provided ... Inclusion definition to the broadcasting services u/s 65(105) (zk) read with 65(14) is applicable only if the office is situated outside India - stay granted Issues:Demand of service tax on broadcasting service rendered by the appellants. Interpretation of the definition of 'broadcasting' under Section 65 of the Finance Act, 1994. Applicability of the inclusive part of the definition of 'broadcasting' in case of a broadcasting agency or organization with its Head Office outside India. Invocation of penalties on the appellants.Analysis:The judgment by Appellate Tribunal CESTAT, CHENNAI addressed the demand of service tax amounting to over Rs. 6 crores along with penalties imposed on the appellants for providing what was deemed as 'Broadcasting Service' during the period 16-7-2001 to 30-4-2005. The appellants were purchasing broadcasting time from a company and selling advertising slots to clients. The Commissioner considered the appellants to be a 'broadcasting agency' or 'organisation' as per the definitions under the Finance Act, 1994. The appellants argued that the department could not apply the inclusive part of the definition of 'broadcasting' against them since the broadcasting company did not have its Head Office outside India. The appellants contended that for their activity to be taxable, the broadcasting company must have an office outside India. However, the department argued that this plea was not raised before the Commissioner, which the appellants disputed, stating it was raised in the present appeal.The Tribunal analyzed whether the activity in question fell under the inclusive part of the definition of 'broadcasting' under Section 65 (14) of the Finance Act. It was noted that this part of the definition applied only if the broadcasting agency or organization had its Head Office outside India during the disputed period. The appellants and the broadcasting company did not have any office outside India. The department relied on a Supreme Court judgment where service tax was held recoverable from an assessee for providing 'broadcasting service' under the Finance Act, 1994. However, the cited case was distinguished as the assessee had an office abroad, unlike the present case.The Tribunal found a prima facie case in favor of the appellants against the tax demand and penalties. Consequently, there was a waiver of pre-deposit and stay of recovery for the tax, interest, and penalties. Considering the significant stakes involved, the Tribunal agreed to expedite the appeal hearing, scheduled for 5-11-2007.