TaxTMI 
TaxTMI 
2008 (9) TMI 140
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.... revenue is aggrieved over the impugned order of the Commissioner (Appeals) who has dropped the proceedings against the appellants by setting aside the Order-in-Original. 3. Shri G. Shivadass, learned advocate and Shri G. Venkatesh, learned Consultant appeared on behalf of the respondents and Mrs. Sudha Koka, learned SDR appeared for the department. 4. We heard both sides. The respondents are Worldspace India Private Limited. They are incorporated under the Indian Companies Act with its registered office at Bangalore and Branch Office at Hyderabad. It is also a subsidiary of Worldspace Inc. (WSI), which is based in USA. It is also known as WSIP. WSI has the facility to broadcast audio channels to various regions in the world including India. WSI channels are available on subscription basis in India. For the paid channels, WSI enters into an agreement with the subscriber. WSI has entered into a services agreement dated 20-3-2002 with the respondent. In terms of the agreement, the respondents render support services to WSI like assisting WSI in servicing its Indian customers, dispatching invoices to Indian customers, marketing, promotion, research, regulatory assistance and oth....
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....asting service' has been expanded with effect from 2005 and after the expansion of the scope of the 'broadcasting service', even the customers or the subscribers would come within the scope of 'client'. The 'broadcasting service' would cover even sending signals in any form including sound to the customers. This is the stand taken by the department and also the Adjudicating Authority. In other words, it has been stated that amendments have been made in the provisions relating to 'taxable service', 'broadcasting service' and 'broadcasting agency'. In the light of the amendments, Board has also issued certain clarifications. All these things have been taken into account by the Adjudicating Authority to hold that the services rendered by WSI would amount to 'broadcasting service'. In terms of the definition of the 'broadcasting agency', if a service provider is situated outside India, then his representative agent or subsidiary or any other person who would be acting on his behalf would also be covered by the definition of 'broadcasting agency'. In that sense, the respondents would be liable for Service Tax. This is in brief the conclusion of the Original Authority and this has been r....
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....rculars were deleted or withdrawn but this circular was not withdrawn. Therefore, he said that 'broadcasting service' is always a service rendered to a client and a client is not a listener. It was also urged that the listener has to listen to the programme aired by the broadcasting agency and they would not have any say in the matter. Whereas, a client would pay money to broadcasting agency and then would buy the time slot and would say such and such a programme has to be aired. In other words, he has a choice on payment of certain consideration. This choice is not available to a listener. So it was strongly urged that a listener can never be treated as a client within the meaning of 'client' as clarified in the Board's Circular of 2001. Our attention was also invited to the agreement entered into between the WSI and subscriber in India in Para 1.5, the following is stated:- "1.5. Service Offering.-Worldspace will provide the service as available from time to time. Customer recognizes the service may be varied, altered or replaced by Worldspace, at its sole discretion, from time to time without notice to the subscriber. In particular Worldspace will be free to change the conten....
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.... learned advocate. 7.5 It was also stated that the department is bound by its own Circular dated 9-7-2001. Reliance was placed on the following case laws: * Pradip J. Mehta v. CIT [2008]169 Taxman 454 (SC); * CCE v. Dhiren Chemical Industries 2002 (139) ELT 3 (SC); * CCE v. Kores India Ltd. 1997 (89) ELT 441 (SC); * UOI v. Arviva Industries (India) Ltd. 2007 (209) ELT 5 (SC); * Fenner India Ltd. v. CCE 2004 (167) ELT 18 (SC); * CC v. IOCL 2005 (186) ELT A119 (SC). 7.6 Another point made by the learned advocate was that various auxiliary services rendered by the respondents to WSI would amount to export of services and they would not be liable to Service Tax in terms of the Export of Service Rules, 2005 which is effective from 15-3-2005. 7.7 As the issue is one of the legal interpretation and as the Commissioner (Appeals), Hyderabad has already held that the subscription charges collected by the respondents are not liable for Service Tax under the 'broadcasting service', it was urged that the respondent is not liable to any penalty. They relied on the decision of the Hon'ble Apex Court in the case of Hindustan Steel Ltd. v. State of Orissa AIR ....
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....bject to tax where the services are effectively used and enjoyed. Multi System Operators (MSOs) are permitted to receive signals from the broadcasting agencies on payment of prescribed amount. Cable operators transmit programmes to customers through cable network after receiving signals from the Multi System Operators (MSOs). Prior to 16-6-2005, service tax was leviable on services provided by cable operators to their customers and multi-system operators to cable operators. In this year's Budget, the charges recovered by the broadcasting agencies from the multi-system operator for providing the signals have been specifically made liable to service tax. This completes the service tax chain from the customer to the broadcaster. 17.2 In view of the advent of set top boxes, the customers can now access the signals directly without the interface of MSO and cable operators. Service Tax is leviable on provision of direct to home (DTH) signals by the broadcasting agencies to the customers. The liability for payment of service tax in case of,broadcasting agencies or organizations having their head office outside India would be on the branch office, subsidiary or any representative or any....
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.... programme, in order to enjoy the available programme, they have to pay the money and it is not free. The Original Authority has dealt with all these points elaborately. For clarity let us take the amendment to the definition of broadcasting and broadcasting agency or organization and also the definition of taxable services. In all these cases for the words "collecting the broadcasting charges on behalf of the agency", the words "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 electromagnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multi-system operator or any other person on behalf of the said agency" were substituted. This has to be noted and in the light of this amendment to the provisions and also the clarification issued by the Board, we are of the view that the respondents would definitely be covered under the category of 'broadcasting agency' and the services rendered by them would amount to 'broadcasting services'. Hence, simply relying on the Board Circular dated 9-7-2....