TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1160
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.... found that the Appellant had raised funds through Global Depository Receipts (GDRs) to the tune of 25 million US Dollars vide two Offer Letters dated 20.04.2006 and 9 million Euros vide Offer Letter dated 23.10.2006. For raising the above funds, the Appellant availed the services of Lead Managers, Legal Advisors, Marketing Consultants, Placement Agents, Merchant Bankers, etc., located outside India and incurred expenditure in convertible foreign currency. The Department was of the view that the above services provided by the overseas service providers are classifiable under Banking and Other Financial Services' and consequently, the Appellant was liable to pay Service Tax, as the Receiver of service in terms of Section 66A of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of the Service Rules, 1994. 1.3 Further, it was also noticed that the Appellant has sold time slots - free commercial time on television classifiable under sale of space or time for advertisement service' and are liable to pay Service Tax on the same. As-the Appellant did not pay service tax on the above services, the Show Cause Notice No. 561/2011 dated 22.10.2011 was issued to them: demanding Servi....
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....ive of the principles of natural justice hence not tenable in law. iv. Service tax is destination-based consumption-based tax. When the service was consumed outside India and not received and consumed in India such service cannot be taxed. v. In telecasting the TV serial, the TV channels have allowed the advertisements of the various sponsors which were telecast during the allotted time in half an hour slot and had also collected the charges towards such allotment of time. The TV channels namely Jaya TV had shared the revenue with the appellant in the ratio of 35% to the Channels and 65% to the appellant which according to the appellant is the consideration received by them for granting the right to telecast the serial. There was however no such sharing with the other television channels namely Zee TV and Malayalam Communication Ltd., who have telecasted the dubbed version of the above tele serial on making the payment to them for granting them the right to telecast the said serial owned by them, The notice however alleged that the receipt of 65% revenue from the Jaya TV and the consideration received from ZEE TV and Malayalam Communications Ltd. are towards provi....
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....sioner (AR) appeared for the Department and re-iterated the contentions made in the Impugned order and furnished written submissions dated 10.12.2024. He has mainly stressed that the GDR/FCCB funds raised were utilised for developing their business in India like acquiring multiplex theatres, acquiring rights for various movies etc., and in such a situation the appellant's claim that they received and consumed the impugned services abroad appears not be false and misrepresentation of facts. and all the conditions prescribed under Section 66A of the Act read with Rule 3(iii) are fully satisfied and the appellants are liable to pay ST under Section 66A (1)(b) of the Act. 4.2 The Appellants have produced a TV serial and telecasted the same on Jaya TV, for which they entered into a MOU with M/s Mavis Satcom, who owns Jaya TV. As per the agreement, Mavis would allot a time slot and the Appellants have to pay a slot fee in the allotted time and there would be advertisements and Mavis would market the free commercial time for advertisements and the Net revenue would be shared in the ratio of 35:65 by Mavis and the Appellants. The agreements entered into by the Appellants with the va....
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....ry receipt issued by a foreign depository bank outside India, against ordinary shares or FCCBs of an Indian company. It allows non-resident investors to hold shares of an Indian company without directly owning the underlying shares. FCCB: An FCCB is a bond issued by an Indian company, denominated in a foreign currency, with principal and interest also payable in foreign currency. These bonds can be converted into ordinary shares of the issuing company, either in whole or in part, at the option of the bondholder. The 1993 Scheme: This scheme provides the framework for Indian companies to issue both GDRs and FCCBs. It outlines the procedures, regulations, and guidelines for such issuances. 7. Before considering the rival contentions, it is also necessary to examine the relevant provisions of Finance Act, 1994 which read as follows: - "Section 65(12) "Banking and other financial services" means - (a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern namely: - (i) financial leasing services including equipm....
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....than has contended that Revenue has classified the services as BOFS under Section 65(105) (zm) of Finance Act 1994 in relation to issue of GDR under "Banking and Other Financial Services as a taxable service and that the alleged taxable BOFS service as defined in Sec. 65 [12] of the Act is not a single service but a complete code comprising of various sub classifications such as equipment or financial leasing and hire purchase, credit card, merchant banking, forex trading, asset management, banking services, advisory services on merger and acquisitions, bankers to issue and other data processing management services showing that each one of the sub classification is unique in its own way and not related to each other and it is but necessary for the Notice to have brought out the appropriate sub-classification and failure of which rendered the notice void ab-initio and vitiated. Besides no cogent reasons were adduced in the Notice as to how the levy is attracted under RCM. 9.1 We have considered the rival submissions. As the first and second question framed by us are interlinked, we club the same together for a common decision. From the impugned order, we find that the appellant h....
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....r GDR / FCCB issue are clearly covered under Banking and Other Financial Service as per sub clause (iii) of Section 65(12) of the Finance Act, 1994. Further, as per 65(105) (zm) "taxable service' means any service provided or to be provided to by a banking company or a financial institution including a non-banking financial company, or any other body corporate or any other person, in relation to banking and other financial services. 9.5 We note that the impugned order makes a mention in Para 6.2 that from the Company Profile given by the Appellant to the internal Audit group, it was noticed that M/s. G.V Films Ltd have raised funds by GDRs for acquiring multiplex theatres, rights for various movies and capex for TV serial production. Para 4.1 of the said profile reads as: "Para 4.1 The capital Expenditure: They successfully made two GDR issues for a total of USD 60.5 million and two FCCB issues of USD 8.27 million and raised funds to part finance the capital Expenditure program of acquiring multiplex theatres, rights for various movies and capex for TV serial production. Both the GDR's and FCCB's are listed at the Luxemburg Stock Exchange, the present paid up capita....
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....STAT Allahabad) is also about broadcasting cricket matches telecasting rights to be played at Bangladesh. In all the above cases, the services were not received in India and therefore, the above orders are distinguished and have no persuasive value as the facts are not only dissimilar, but in the present case the services were received by the Appellant for expanding their business in India, which is contrary to the decisions cited above. Hence, we have no hesitation to term these decisions as not applicable to the facts of this appeal. 9.9 We further observe that the taxable services of Banking and other financial services falling under Section 65 (105) (zm) of the Finance Act, 1994 are covered under the category (iii) of Rule 3 of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. The services falling under this category (iii) become taxable and liable for payment of service tax if the recipient of services is located in India for use in relation to business or commerce irrespective of the place where the Services are rendered. In respect of category (iii) service, it will suffice that the service receiver is located in India and used the s....
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....6A of the Finance Act, 1994. Revenue is demanding the Service Tax as "Merchant Banking Services" listed at (iii) under the category of "Banking and other Financial Services" under Section 65(12) of the Finance Act, 1994 while the appellant claims the service to be "underwriting service" under Section 65(105)(z) and 65(117) of the Finance Act, 1994. The Tribunal In Para 16 of the order, had held that "16.................................................................................................................................................................................................................................... Further, Section 65(105)(zm) is as under: - "(105)" Taxable service" means any service provided or to be provided - (zm) To any person, by a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern, in relation to banking and other financial services;" A perusal of above provisions do not indicate that for charging Service Tax, merchant bankers or body corporate or commercial concern is required to be registered with SEBI. As long as t....
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....nding (MOU) with M/s. Mavis Satcom Ltd. (Mavis) (who owns Jaya TV Channel) it is revealed that (i) Mavis would allot a time slot of half an hour on Saturdays every week for 26 weeks for telecast of the tele serial and the Appellant has to pay Rs.50,000/- as Slot fee for half an hour to Mavis, (ii) in the allotted half an hour, there would be 9 minutes for marketing of Commercial advertisements iii) Mavis would market the free commercial time for advertisements and the net revenue would be shared in the ratio of 35:65 by the Mavis and the Appellant respectively . 10.4 From the above, it is clear that the Appellant has received income @ 65% Of the revenue earned by Mavis from Commercial advertisements. It is also a fact that the Appellant entered into similar agreements with M/s, Zee TV and M/s. Malayalam Communications Ltd. and received income from them. 10.5 As per Section 65 (105) (zzzm) of the Finance 1994, "taxable service" means: - "any services provided or to be provided to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time sl....
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.... alleging that they had suppressed the facts of expenditure incurred in convertible foreign currency for availing the taxable services from overseas service providers and the details of income collected towards sale of space or time for advertisement with the department in any manner besides alleging that they had also collected the service tax on sale of space for the year 2008-09 is not legally maintainable as it does not meet the requirement of the proviso to Sec. 73 [1] of the Act. 11.2 The Appellant also submitted that the expenses incurred by them in foreign exchange as well as the information about raising the GDR and FCCB were all reported in their annual financial statements for the year 2006-07 and 2007-08 which are public documents available on the public domain and hence the charge of wilful suppression of facts on this score cannot survive. Further the officers attached to the DGCEI were earlier seized of the matter and they had vide their letters dated 08.05.2007 and 04.07.2007 called for various information and documents relating to the foreign currency transaction relating to FCCB/GDR which they had promptly furnished vide their letter dated 24.08.2007 along with....
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....ublic listed company cannot access funds abroad. We observe that upon completion or during the midst of the GDR/FCCB issue, the Appellant was visited by the Departmental officers DGCEI/AUDIT/SIR and regular correspondences were entered into between the various Departmental Authorities and the Appellant at regular intervals. All the said correspondences form part of the Appeal paper book pages from 34 to 65 which is extracted below: - Sl No Dept/Agency First letter Second letter Reply 1 DGCEI 08.05.2007 (Page 34) 04.07.2007 (page 35) 24.08.2007 (Page 36) 2 AUDIT 11.09.2008 (Page 38-39) 3 CHENNAI IV DIVN 05.11.2008(Communication of discrepancies) 24.09.2009 3 SIR 17.04.2009 (Pg 44) 11.6 The period covered in the Demand is from April 2006 to March 2009. The first correspondence was entered into with the Appellant as early as 08.05.2007 and the next on 24.07.2007 by DGCEI. The Appellant had responded on 24.08.2007. Thereafter Audit was conducted from 9th June 2008 and discrepancies were communicated on 05.11.2008. Thus the above sequence of events happened when the company w....