2016 (9) TMI 188 - AT - Service Tax

Appellate tribunal upholds service tax liabilities on set-top boxes and cable services

The appellate tribunal upheld the impugned order in its entirety, confirming the service tax liabilities, interest, and penalties imposed on the appellant ... Evasion of service tax – business auxiliary services – broadcasting services - multi system operator - cable operator services – erection, installation and commissioning – advertisement and channel promotion receipts - Demand of service tax on set top boxes – Held that: - the amount is charged as lease rentals from the customers and the same is received by the appellant. Set top boxes are integral part of the services provided by the appellant as the same enhanced the receipt of the signals by the customers of the appellant – service tax to be levied. Extended period of limitation – interest – Held that: - appellant had not recorded the amounts received by him and declared to the department in the returns filed by them. In the absence of any such declaration of the amounts in their returns, Revenue would not be in a position to come to a conclusion that the said amounts are taxable - extended period correctly invoked – demand of interest upheld. Imposition of penalties – Section 76, 77 and 78 of the Finance Act, 1994 – Held that: - penalties cannot be imposed simultaneously under Sections 76 and 78. Here, penalty is imposed under Section 76 up to May 2008 and for the subsequent period he has not imposed any penalty under Section 76 but under Section 78 – penalty rightly imposed. Appeal rejected – decided against appellant. Issues involved:Escapement of service tax liability under 'Multi System Operator' and 'Cable Operator' services.Detailed Analysis:1. Tax Liability on Set Top Boxes:The appellant argued that the service tax liability does not arise on them as it is related to set top boxes, which they considered an integral part of their service. However, the adjudicating authority correctly held that set top boxes enhance the receipt of signals by customers and are liable to be taxed under the services provided by the appellant.2. Service Tax Liability on Cable Operator Service:There was no dispute regarding the service tax liability on amounts received for cable operator service, and the appellant did not contest this demand, indicating agreement with the tax liability.3. Tax Liability on Laying of Cables:The service tax liability on laying of cables under the category of 'erection, installation and commissioning' was found to be correct as the appellant did not contest this demand, further supporting the confirmation of this tax liability.4. Demand for Advertisements and Channel Promotion Receipts:The major demand related to advertisements and channel promotion receipts was confirmed as correct since the appellant, being a cable operator, broadcast advertisements locally, and did not contest this allegation in the show cause notice.5. Invocation of Extended Period:The contention that the demand was time-barred was dismissed as the appellant did not declare the amounts received under this heading to the department in their returns. Consequently, the extended period was correctly invoked to determine the service tax liability along with interest.6. Penalties Imposed:Regarding the penalties imposed under Sections 76, 77, and 78, it was argued that penalties cannot be imposed simultaneously under Sections 76 and 78. The adjudicating authority imposed penalties under Section 76 up to May 2008 and under Section 78 for the subsequent period, which was deemed appropriate, leading to the rejection of this argument.In conclusion, the appellate tribunal upheld the impugned order in its entirety, rejecting the appellant's contentions and confirming the service tax liabilities, interest, and penalties imposed.