TaxTMI 
TaxTMI 
2017 (4) TMI 337
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....ance Ltd is a company limited by guarantee incorporated under the erstwhile Indian Companies Act 1930 and has been registered with the Central Government as a 'copyright society' under the Copyright Act, 1957. Its membership comprises of music companies that own copyright in various sound recordings; there is no membership fee or subscription fee. Neither is any payment received from its members nor are rights are assigned to the appellant by the owners of copyright. It acts a license issuing authority for public performance and broadcasting of sound recordings belonging to its members and, in accordance with the Copyright Act, 1957 collects license fee/royalty from the licensees. The fees so collected are distributed to the owners of the rights after deducting administration expenditure incurred. The society was issued with a demand of Rs. 2,78,69,195/- for having rendered 'club or association service' for the period from 16^th June 2005 to 30^th June 2008. Further show cause notices demanding tax of Rs. 1,99,66,744/- for the period from July 2008 to March 2009 and Rs. 1,95,72,650/- for the period from April 2009 to March 2010 were also issued. Liability of Rs. 6,01,70....
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....e period in dispute is Rs. 4,37,797/-. The administrative fees expenses deducted by them from the fees obtained for assigning copyrights by license gives is Rs. 34,15,540/-. 5. The appeal of Revenue pertains only to imposition of penalty on M/s Phonographic Performance Ltd whereas the appeals of the assessees challenge the taxability itself. 6. The issue in dispute pertaining to the assessees is the taxability of the amount received and/or retained by them towards expenditure as consideration for rendering of 'club or association service.' Before is necessary to recall the taxable service itself, i.e. '65 (zzze)-to its members by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount' and the definition of the service, i.e., '65 (25 aa)- "club or association " means any person or body of persons providing services, facilities or advantages, primarily to its members for a subscription or any other amount but does not include- (i) any body established or constituted under any law for the time being in force; or (ii) any person or body of persons engaged in the activities of....
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.... of taxable service. The invoices that are furnished indicate acceptance of the taxable services as 'copyright' for the period beyond that in dispute. The decision supra in re Indian National Shipowners' Association has held that '38. If the Department's contention is accepted that would mean that the activities of the members of the 1^st petitioner are covered by entry (zzzy) and entry (zzzzj). Such a result is difficult to comprehend because entry (zzzzj) is not a specie of what is covered by entry (zzzy). Introduction of new entry and inclusion of certain services in that entry would presuppose that there was no earlier entry covering the said services. Therefore, prior to introduction of entry (zzzzj), the services rendered by the members of the 1^st petitioner were not taxable. Creation of new entry is not by way of amending the earlier entry. It is not a carveout of the earlier entry. Therefore, the services rendered by the members of the 1^st petitioner cannot be brought to tax under that entry. 39. At this stage, we may usefully refer to the judgement of the Assam High Court in Magus Corporation's case (supra). While discussing what is tax on servi....
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....right by deed of assignment, is akin to a sale by the member to the appellant and thereafter by the appellant to the user of the copyright material. Reliance is placed on the decision of the Hon'ble Supreme Court in Performing Rights Society v. Commissioner of Income Tax [CIT AIR 1976 SC 1973]. It is argued that an existing taxable service, 'intellectual property right service', specifically excludes copyright material and hence precludes being subjected tax as provider of any other service. Drawing attention to the decision of the Hon'ble Supreme Court in Joint Commercial Tax Officer v. the Young Men's Indian Association [AIR 1970 SC 1212] and its contemporary application by the Hon'ble High Court of Jharkhand in Ranchi Sports Club Ltd v. Chief Commissioner of Central Excise and Service Tax, Ranchi Zone [2012 (26) STR 401 (Jhar.)], it is contended that the principle of mutuality would render any transaction between its members and itself outside the ambit of taxation. 11. We have observed that this appellant is an association of persons. Doubtlessly, the members have paid a certain amount for the privilege of membership. They have likewise participated i....