TaxTMI 
TaxTMI 
2019 (4) TMI 1812
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....t, 1994 as Service Tax payable by recoverable from M/s Phonographic Performance Ltd., Andheri (West) Mumbai 400053. 23.2 I order recovery of interest at the appropriate rate on the amount confirmed at para 23.1 above from the due date9s0 under provisions of Section 75 of the Finance Act, 1994 from M/s Phonographic Performance Ltd., Andheri (West) Mumbai 400053. 23.2 I impose penalty on M/s Phonographic Performance Ltd., Andheri (West) Mumbai 400053 under Section 76 of the Finance Act, 1994 as it existed at the material time which shall be i. Rs. 200/- every day during which such failure continues or at the rate of 2 (two) percent of such tax per month, whichever is higher, starting from the first day after the due date till the date of actual payment of the outstanding amount of Service Tax for the period from April 2010 to 07.04.2011 subject to a maximum of total Service Tax payable but not paid for the said period. ii. Rs. 100/- every day during which such failure continues or at the rate of 1 (two) percent of such tax per month, whichever is higher, starting from the first day after the due date till the date of actual payment of the outstanding amount of....
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.... laid down by under Section 33 of the Copyright Act, 1957. As per the certificate of Registration issued by the Registrar of copyright they are permitted to commence and carry on copyright business in sound recording. 2.2 As per the provision of Section (25a) and Section 65 (105)9zzze) of the Finance act, 1994, revenue was of the view that appellants are providing services that fall under this taxable category i.e. "Club or Association Service". A proportionate amount of income generated as license fee or royalty for the consideration for the service and the balance was passed on to the members. The service so rendered by appellants appeared to be in the nature of facilities or advantages extended to their member by way of privilege of conducting their business of licensing of copyright. 2.3 Based on the above facts three show cause notices as detailed below have been issued to the Appellant; Show-cause Notice No. Date Period Amount Rs. ST/HQ Prev/295/2006 (1) 13.10.2008 16.6.2005 to 30.6.2008 2,78,69,195 ST/Dn.IV/Phonographic/SCN/157/09/ST/HQ. Prev/295/2006(1) 22.10.2009 1.7.2008 to 31.03.2009 1,95,66,744 V-Adj/ST-ii/PPL/15-280/2010 ....
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....ax under that category and they pay tax at the applicable rate. Thus the demand of tax under category of Club or Association Service is bad in law. iii. Commissioner failed to appreciate the nature of activities undertaken by them and also the provisions of Copyright Act. The activity of administering copyright is specifically covered under the category of "Copyright Services". The consideration received by the appellants towards the provision of the said service has also been taxed, in toto, under the said category. iv. As per the provisions of Copyright Act, 1957 the copyright society is enjoined to collect fees in pursuance of issue of license and to distribute such fees among the owners of rights after making deduction for its expenses. The deductions of expenses of the society while distributing the fees to its members is a part and parcel of the gross amount received towards license fees/ royalty for the usage of sound recordings by the licensees and the said gross amount in its entirety has been subjected to service tax under the category of copyright services. The amount retained as expenses from the licenses cannot be construed as either subscription or a....
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....tative, sought to distinguish the tribunal order and stated that this order is not applicable to the facts of instant case for following reasons. i. As per the agreement between the owners and the society, the owners have agreed to avail the services of appellant as per tariff specified therein. As per provision of Section 33 of the Act, the Owner in his individual capacity continue to have the right to grant license in respect of his own work. Hence the conclusion that it is legal mandate thus ceases to be service is not correct. ii. As per the decision in case of Deposit Insurance & Credit Guarantee Corpn [2015-TIOL-629-CESTATMum], the issue of taking deposit insurance as per statutory mandate being sovereign/ statutory function not amenable to service tax was rejected, while holding that service tax is leviable. iii. Merely because the appellants have sought registration under Section 33 of Copyright Act, 1957, they cannot be said to be constituted under the said Act. iv. Appellant is discharging service tax under the category of 'Copyright Service' on behalf of the owner and is not the service provider for the said service. Even as per the ap....
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....by the society. The society is registered under Section 33 of Copyright Act, 1957 as 'copyright society' and permits the rights assigned to it through license agreements to be used by entities such as restaurants, malls, hotels, airlines, etc. These blanket licenses are issued for a prescribed period. In the disposition of its earnings, the society deducts its administrative expenditure and may retain some part for specific purposes as well as in the reserve fund before distributing the rest. The society was issued with a show cause notice demanding Rs. 76,90,150 as tax for providing 'club or association service' for the period from 16th June, 2005 to 31st March, 2008. Two more show cause notices for 2008-09 demanding Rs. 50,92,097 and for 2009-10 demanding Rs. 55,79,902 were also issued. The total liability sought to be fastened on the appellant was Rs. 1,83,62,149. 4. The membership fees received by M/s. Indian Performing Rights Society for the period in dispute is Rs. 4,37,797. The administrative fees expenses deducted by them from the fees obtained for assigning copyrights by license given is Rs. 34,15,540. 5. The appeal of Revenue pertains only to imposition ....
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....cts on its own behalf to negotiate with potential users and receives license fee which is then allocated to its members in accordance with its internal regulations. Tax authorities have sought to exact a levy on both the membership fee and the amount retained on account of expenditure incurred. 8. Learned Counsel for M/s. Phonographic Performance Ltd. places before us a sample of invoices issued by them to licensees. It is seen from these invoices that they are issued on their own account towards the use of copyright material. These invoices carry the endorsement that the taxable service is 'copyright' [taxable under Section 65(105)(zzzzt) of Finance Act, 1994] and by citing the decision of the Hon'ble High Court of Bombay in Indian National Shipowners' Association v. Union of India [2009 (14) S.T.R. 289 (Bom.)], which has been affirmed by the Hon'ble Supreme Court, argued that the taxability as 'copyright service' having been accepted would preclude recovery of tax under any other previously existing category 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 su....
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....vice Tax, Chennai [2008 (11) S.T.R. 161 (Tri.-Chennai)] and Commissioner of Service Tax, Ahmedabad v. Trumac Engg. Co. Pvt. Ltd. [2008 (10) S.T.R. 148 (Tri.-Ahmd.)]. Learned Authorised Representative urged us to accept the conclusions in the impugned order. Notwithstanding these urgings, we are convinced that the activity of rendering 'copyright service' from July, 2010 would detract from taxability as provider of 'club or association service'. 10. There is no doubt that the other appellant, M/s. Indian Performing Rights Society, is an association comprising of members who have come together for a common purpose. The conclusions in the impugned order have been reiterated by learned Authorised Representative to assert that an association receiving consideration from its members cannot but be held to be taxable under Finance Act, 1994. However, learned Counsel for the appellant contends that no service has been rendered for a consideration and that the transaction of the appellant, as the owner of copyright 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 d....
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....ry mandate in force, the option of transaction except through societies such as the two appellants is non-existent. A transaction in services, particularly of a taxable service, carries with it the characteristic of voluntariness and exercise of option to execute that activity by oneself or through another entity; it is upon the exercise of the option to source such activity that taxability arises. A legal mandate to act only through a society erases the exercise of option and such activity ceases to be a service. Moreover, the definition of 'club or association service' specifically excludes 'any body established or constituted under any law for the time being in force' There can be no doubt that 'copyright societies' are established under law and hence not liable to be taxed on any receipts from its members." 5.3 Learned Authorized representative, sought to challenge the order of the Tribunal in appellants own case and argued that Hon'ble Supreme Court has in case of State of West Bengal & Others vs Calcutta Club Ltd [(2016) 5 SCC 356], referred the following issue to larger bench: "i. Whether the doctrine of mutuality is still applicable to incorporate....
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.... (2) Any association of persons who fulfils such conditions as may be prescribed may apply for permission to do the business specified in sub-section (1) to the Registrar of Copyrights who shall submit the application to the Central Government. (3) The Central Government may, having regard to the interests of the authors and other owners of rights under this Act, the interest and convenience of the public and in particular of the groups of persons who are most likely to seek licences in respect of the relevant rights and the ability and professional competence of the applicants, register such association of persons as a copyright society subject to such conditions as may be prescribed: Provided that the Central Government shall not ordinarily register more than one copyright society to do business in respect of the same class of works. 3A) .......... (4) ........... (5) ..................... 33A. Tariff Scheme by copyright societies.- (1) Every copyright society shall publish its tariff scheme in such manner as may be prescribed. (2) ..................... 34. Administration of rights of owner b....
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....he case of the assignment of copyright in any future work, the assignment shall take effect only when the work comes into existence. Provided further that ......... Provided also that ........ Provided also that ....... (2) Where the assignee of a copyright becomes entitled to any right comprised in the copyright, the assignee as respects the rights so assigned, and the assignor as respects the rights not assigned, shall be treated for the purposes of this Act as the owner of copyright and the provisions of this Act shall have effect accordingly. (3) In this section, the expression "assignee" as respects the assignment of the copyright in any future work includes the legal representatives of the assignee, if the assignee dies before the work comes into existence. 19. Mode of assignment.- (1) No assignment of the copyright in any work shall be valid unless it is in writing signed by the assignor or by his duly authorised agent. (2) The assignment of copyright in any work shall identify such work, and shall specify the rights assigned and the duration and territorial extent of such assignment. (3) The assig....