TaxTMI 
TaxTMI 
2019 (4) TMI 1812
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.... 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 Service Tax for the period from 08.04.2011 to 31.03.2013 subje....
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....e 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 28.9.2010 1.4.2009 to 31.03.2010 19572650 These Show Cause Notices were adjudicated by the Commissioner Servi....
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....e 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 any other amount paid by the members of the Appellants, especially when the members are not required to make any payments to the appellants. v. It is settled law that introduction of a new entry clearly shows t....
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....in. 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 appellants themselves owners have authorized by assignment to deal with copyright, and tariff for providing the service is also specified. Thus the conclusion that appellant is not providing service to music companies cannot be faulted with. Thus the finding that the appellants were providing club or association Services to....
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.... 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 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 proceeding further, it is necessary to recall the taxable service itself, i.e., '65(zzze) ....
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....ount 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 supra in re Indian National Ship owners' Association has held that '38. If the Department's contention is accepted that would mean that the activities of the members of the 1st 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.....
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....ng 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 decision of the Hon'ble Supreme Court in Performing Rights Society v. Commissioner of Income Tax [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 Cour....
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....tion 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 incorporated clubs or any club after the 46th amendment to Article 366 (29A) of the Constitution of India? ii. Whether the judgment of this Court in Young Men's Indian Association (supra) still holds the field even after the 46th amendment of the Constitution of India; and whether the decisions in Cosmopolitan Club (supra) and Fateh Maidan Club (supra) which remitted the matter applying the doctrine of mutuality after the constitutional amendment can be treated to be stating the correct principle of law? iii. Whether the 46th amendment to the Constitution, by de....
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.... 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 by copyright society.- (1) Subject to such conditions as may be prescribed,- (a) a copyright society may accept from an author and other owners of right exclusive authorisation to administer any right in any work by issue of licences or collection of licence fees or both; and (b) an author and other owners of right shall have the right to withdraw such authorisation without prejudice to the rights of the copyright society under any contract. (2) ................ (3) Subject to such conditions as may be prescribed, a copyright society may- (i) issue licences under section 30 in respect of any rights under this Act; (ii) collect fees in pursuance of such licences; (i....
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....ent.- (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 assignment of copyright in any work shall also specify the amount of royalty and any other consideration payable, to the author or his legal heirs during the currency of the assignment and the assignment shall be subject to revision, extension or termination on terms mutually agreed upon by the parties. (4) ......... (5) ......... (6) .......... (7) .......... (8) The assignment of copyright in any work contrary to the terms and conditions of the rights already assigned to a copyright society in which the author of the work is a member shall be void. (9) .......... (10) ........." 5.6 From the provisions of Section 18 and 19 reproduced above it is quite evident that every owner of the copyright could have assigned the right to any other person by way of writing subject to the terms and conditions as may stated by the assignor. But once ....