TaxTMI 
TaxTMI 
2014 (10) TMI 66
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.... of Central Excise Intelligence (DGCIE in short) initiated investigation against the said firm. As part of the investigation, they examined an agreement dated 1-4-2009 entered into by the appellant with M/s Star Ltd., Hong Kong. Officials of the appellant firm as also one of the advertising agency were examined and their statements recorded. The agreement revealed that Star Hon Kong had appointed SIPL as their representative in India to solicit advertisements for the channels telecast by the former and also to collect and remit the advertisement charges. The invoices for the advertisements telecast would be raised by Star Hong Kong with instructions to the advertisers to make the payment to SIPL in Indian Rupees where such advertisers were Indian and directly to Star Hong Kong where such advertisers were not Indian. SIPL discharged service tax liability on such charges collected by it on behalf of Star Hong Kong under the taxable service category of "broadcasting services". Thereafter SIPL remitted the charges to Star Hong Kong after retaining their commission. However, in the case of charges collected in US dollars which was remitted directly to Star Hong Kong by the advertisers, ....
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.... STR 360] wherein it was held that service tax is destination based consumption tax in the sense that it was on commercial activities and was not a charge on the business but on the consumer. If the services rendered are consumed abroad, then there will not be any liability to pay service tax. Since the advertiser is outside India, it should be construed that the service has been consumed outside India. Since the service has been rendered by Star Hong Kong and the recipient is also located outside India, there is no liability to pay service tax. 3.4 Reliance is placed on Rule 3 of the Place of Provision of Service Rules, 2012 wherein it is provided that the place of provision of a service shall be the location of the recipient of service. If this principle is applied, then it can be seen that the transactions involved are not taxable in India. 3.5 Reliance is also placed on the circular No. 341/43/95-TRU dated 31-10-1996 wherein it has been clarified that in respect of courier service that where the goods or articles which have been received from abroad and delivered to a customer in India, the courier agency is not liable to pay any service tax provided that the customer in ....
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....indicated that foreign advertisers were paying directly to Star Hong Kong. Therefore, the said fact was very much known to the department. On this ground also, the appellant could not be alleged to have suppressed any facts necessitating invocation of extended period of time. 3.10 Reliance is placed on the decision of this Tribunal in the case of Cox & Kings Appeal No.915 of 2010,wherein it was held that services rendered abroad by a tour operator is not liable to tax in India in the case of outbound tourism. Reliance is also placed on the decision of the Court of Appeal in New Zealand in the case of Wilson & Horton Ltd. vs. Commissioner of Inland Revenue [(1996) 1 NZLR 26] wherein a question arose as to the applicability of GST in respect of advertisements placed in New Zealand by persons who were not resident in New Zealand and the court held that the said activity will not be leviable to GST. Reliance is also placed on the decision in Vodafore Essar Cellular case [2013 (31) STR 738] In the light of the above submissions, it is prayed that the appeal be allowed by setting aside the impugned order. 4. The ld. Special Consultant appearing for the Revenue made the following....
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....p; '(zk) to a client, by a broadcasting agency or organization in relation to broadcasting, in any manner and, in the case of broadcasting agency or organisation, having its head office situated in any place outside India, includes service provided by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or 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 electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator, including multisystem operator or any other person on behalf of the said agency or organisation. Explanation. - For the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India and intended for listening or viewing, as the case may be, by the public, such service shall be a taxa....
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....ble service the amount received by Star Hong Kong from the advertisers. In that case of Zee Telefilms decided by this Tribunal [2004 (166) ELT 34 (T)], an identical question arose and the Tribunal held that the entire amount paid by the advertiser to Star has to be treated as the value of taxable service. 4.6 The contention of SIPL that when the advertisers are stationed abroad and broadcasting also takes place abroad, there is no liability to pay service tax is completely misplaced. The explanation to taxable service make it abundantly clear that even if the encryption or beaming of signals might take place outside India, so long as the broadcasting is intended to be viewed in India, liability to pay service tax in India arise. 4.7 As regards the contention that the demand is time barred, the argument put forth in this regard are untenable. The ld. Counsel has referred to column (4) of the ST3 return to argue that only value of taxable service realized alone has to be declared. He has however overlooked that in column (3) of the said return, the assessee has to declare the value of taxable service charged or billed. Therefore, the appellant was duty bound to declare the part....
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....le service under section 65(105)(zk) was amended to specifically provide for the following:- "and, in the case of broadcasting agency or organisation, having its head office situated in any place outside India, includes service provided by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting broadcasting charges on behalf of the said agency or organization." Explanation. - For the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India and intended for listening or viewing, as the case may be, by the public, such service shall be a taxable service in relation to broadcasting, even if the encryption of signals or beaming thereof through the satellite might have taken place outside India" 5.4 The notes on clauses states that Clause 141 seeks to amend section 65 of the Finance Act, 1994 so as to give retrospective effect....
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....ase of payments to be made in US $, the advertisers also had the option of paying it in Indian Rupees to SIPL who shall responsible for remittance of such amount in US $ to Star Hong Kong after getting necessary approval from RBI. (iv) The duties of SIPL included soliciting advertisements at such terms as Star Hong Kong may declare from time to time and forwarding the advertisement orders to Star Hong Kong for acceptance. (v) For the services rendered, the Representatives was entitled to agency commission. (vi) Any Indian taxes or any other levies in respect of the advertisement charges other than that on agency commission was to be borne by Star Hong Kong. 5.7 Thus from the terms and conditions of the agreement as detailed above, it can be easily seen that SIPL was engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting broadcasting charges on behalf of Star Hong Kong as its Representative. Thus SIPL fell squarely within the definition of Broadcasting Agency or organization as defined in section 65(16) and the activity undertaken by ....
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....ffice is indicated as India-Mumbai and the address for correspondence is that the appellant at Mumbai. The advertiser is shown as World Gold Council c/o Ogilvy & Mather, Mumbai and payment instruction has been given as "Remit to Star, Hong Kong". It is also mentioned in the invoice that "in accordance with Order U/S 197 of the Income Tax Act, 1961, tax has to be deducted at 5.76% of the gross invoice amount. Similarly in respect of advertisement for Singapore Tourism Board, the advertising agency is Contract Advertising India Ltd., Mumbai who vide release order dated 26-4-2002 placed the release order on the appellant at Mumbai for the month of May 2002 during the News Programme of Reality Bites indicating the dates and time and the rate is specified in US $ per 10 sec. and the total cost is worked out in US $. It is also directed in the said order to raise the invoice for the above campaign on Batey Ads. Pvt. Ltd., Singapore in US $ and send the same to the advertising agency at Mumbai for onward transmission to Singapore for settlement. In the corresponding invoices raised by Star, the sales office is shown as India - Mumbai and the address for correspondence is that of the appel....
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....the measure of the levy. Any standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the levy." Therefore, merely because the measure of the levy is in a foreign currency, it cannot be said that the taxable event has not taken placed. 5.12 An argument has been made that since payment is received in US $ in respect of services rendered to foreign advertisers, the same should be considered as export of service. This argument is not tenable. During the period involved in the present appeal, to qualify as export of service, two conditions were required to be satisfied in terms of notifications 6/99-ST dated 9-4-99 and 21/2003-ST dated 20-11-2003. The conditions were that the payment for the service rendered should be received in convertible foreign exchange and no part of such payment is repatriated outside India. In the present case, payment for the service rendered has been made to Star Hong Kong which implies, no payment is received in India and even if it is assumed that the payment has been received, the same has been repatriated outside India. The same position would accrue when the Export of Servi....
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....ssible. It is a cardinal principle of construction of a statute that effort should be made in construing the different provisions so that each provision will have its play and in the event of any conflict a harmonious construction should be given. The well-known principle of harmonious construction is that effect shall be given to all the provisions and for that any provision of the statute should be construed with reference to the other provisions so as to make it workable." The same view was re-iterated by the apex court in the Grasim Industries Ltd. [2002 (141) ELT 593 (SC)]. If we apply the ratio of these decisions to the facts of the present case, the Representative of the Foreign Broadcaster (who undertakes broadcasting in India) engaged in selling time slots or obtaining sponsorships or collecting and remitting charges, on behalf of the broadcaster has to be made liable to service tax in India, which is the express intention of the Legislature while making retrospective amendments to sections 65 (15), 65 (16) and 65 (105) (zk) of the Finance Act, 1994. Therefore, this will of the legislature has to prevail and has to be given effect to. Viewed from this perspective, the a....
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.... only required to declare the consideration received in the ST3 return and in the case of foreign advertisers the consideration was paid directly to Star Hong Kong, there cannot be any mis-declaration on their part. This contention is obviously wrong. In the ST3 return, there was a column wherein the appellant was required to declare the amount charged to the service recipient, apart from the amount received. As per the agreement dated 1-4-1999, SIPL was appointed as non-exclusive independent Representative in the territory of India to solicit television advertising for the channels, namely, Channel V, Star World, Star Plus, Star News, Star Movies and such other channels as may be added in future and to collect and remit advertisement charges. The responsibility also included delivery of the invoices to the advertisers on a timely basis. Thus the appellant obviously knew the amount charged for the broadcasting services. Section 70 of the Finance Act, 1994, mandated that - "Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and ....