Custom, Excise & Service Tax Tribunal
G V Films Ltd vs Cst Ch on 11 August, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Service Tax Appeal No. 40458 of 2014
(Arising out of Order-in-Original No. 33/2013 dated 29.03.2013 passed by Commissioner of
Service Tax, Newry Towers, No. 2054-1, II Avenue, Anna Nagar, Chennai - 600 040)
M/s. G.V. Films Ltd. ...Appellant
New No. 9, Old No. 5,
2nd Floor, R.K. Puram,
4th Cross Street,
R.A. Puram,
Chennai - 600 028.
Versus
Commissioner of GST and Central Excise ...Respondent
Chennai North Commissionerate,
Newry Towers, No. 2054-I,
2nd Avenue, 12th Main Road,
Anna Nagar,
Chennai - 600 040.
APPEARANCE:
For the Appellant : Mr. N. Viswanathan, Advocate
For the Respondent : Ms. Anandalakshmi Ganeshram, Authorised Representative
CORAM:
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON'BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)
FINAL ORDER No. 40807 / 2025
DATE OF HEARING : 18.02.2025
DATE OF DECISION : 11.08.2025
Per Mr. VASA SESHAGIRI RAO
This Service Tax Appeal No. ST/40458/2014 was
filed by M/s. G.V. Films Ltd., R.A. Puram, Chennai
(hereinafter referred to as the 'Appellant') assailing the
Order-in-Original No. 33/2013 dated 29.03.2013 passed by
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the Commissioner of Service Tax, Anna Nagar, Chennai who
have confirmed the demand of service tax of Rs. 53,52,586/-
for the period from April 2006 to March 2009 invoking
proviso to Section 73(1) of the Finance Act, 1994 and also
imposed penalties under Section 77(2) and Section 78 of the
Act ibid.
1.2 During the audit of the accounts of the Appellant
and subsequent investigation carried out by the Service Tax
Commissionerate, Chennai it was 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.
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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 Service Tax of Rs 53,52,586/-
under proviso to Section 73(1) of the Finance Act, 1994
along with interest under Section 75 besides seeking to
impose penalties under Sections 76, 77 and 78 of the Act.
1.4 After due process of Law, the case was
Adjudicated by the Commissioner of Service Tax, Chennai
vide Order-in-Original No. 33/2013 dated 29.03.2013
(hereinafter referred to as the impugned order) and the
demand as proposed in the SCN was confirmed along with
appropriate interest and penalties were imposed under
Section 78 and 77(2) of Finance Act, 1994.
2. Aggrieved by the above order, the Appellant filed
this Appeal No. ST/40458/2014 against the impugned order
before this forum.
3. The Ld. Advocate Shri N. Viswanathan has
argued for the Appellant. He submits that: -
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i. The officers attached to the DGCEI initially vide their
letters dated 08.05.2007 and 04.07.2007 called for
various information from them relating to their foreign
currency transactions relating to the FCCB/GDR issues
which they promptly provided vide their letter dated
24.08.2007. On examination, the DGCEI officers then
choose not to proceed further in this matter finding that
no case of loss of revenue has been made out. Thus,
the officers of the DGCEI were fully aware of all their
transactions. He further submits that subsequent to the
audit of their accounts, the service tax authorities
attached to the SIR (Survey, Investigation and
Research) of the erstwhile service tax Commissionerate
on the same set of facts have enquired with them
about their above transactions accounted in their books
of accounts and other statutory records for the period
2008/09. Pursuant to the said audit and subsequent
enquiry carried out by the SIR a Show Cause Notice
dated 22.10.2011 thus came to be issued.
ii. Banking and Financial Service as defined in Sec. 65
[12] of the Act is not a single service code but
comprises of various sub classifications and the notice
should have brought out the appropriate sub-
classification, failure of which rendered the notice void
ab-initio and vitiated.
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iii. The respondent has gone beyond the scope of the
notice by classifying the service under merchant
banking service without putting the appellant to notice
and without providing any opportunity to rebut the said
sub classification and the impugned order got passed
behind their back which is violative 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
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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
provision of the Sale of space to display, advertisement
in television programs under Section 65 [105] [zzzm]
of the Finance Act 1994, brushing aside the objections
raised by the appellant.
The levy on the sale of space in the visual media for
advertisement could only befall on the TV channels who
had sold the space in their TV channels and not on the
persons whose TV program was telecasted during that
time.
vi. The invocation of extended period of time by merely
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 is not tenable
in the absence of any evidence and so would not meet
the requirement of the proviso to Sec. 73 [1] of the
Act.
vii. 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
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for the years 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 informations and documents relating
to the foreign currency transactions relating to
FCCB/GDR which they had promptly furnished vide
their letter dated 24.08.2007 along with all documents
as called for. On examination of the entire issue, they
choose not to proceed further since no case of loss of
revenue was made out. The Internal Audit and SIR of
service tax confirmed once again raising the same issue
while conducting the audit of their accounts during
2008-09 have decided to issue the impugned SCN after
four years of examination of their records by the
officers of DGGCEI and that too after they have
submitted their clarification which do not permit the
invocation of the extended period of time.
viii. Even if the tax was required to be paid by them, they
would be entitled to avail the credit of the same thus
making it a revenue neutral situation and render the
invocation of the extended period of time unavailable
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4.1 Per contra, the Ld. Authorized Representative
Shri N. Satyanarayanan, Assistant Commissioner (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 various parties with respect to the
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telecast of tele serial and the transactions undertaken by
them, makes it clear that the Appellants had sold time slots
on TV which is classifiable under Section 65(105)(zzzm)
Explanation 1(ii) selling of time slots on radio or TV by a
person, other than a broadcasting agency or organisation.
4.3 The Appellants have failed to disclose the funds
raised through GDRs for the development of their company
and also deliberately did not disclose the MOU with the TV
channel and the income received thereunder.
4.4 It is clear that BOFS are provided from outside
India and consumed inside India as the Appellants does not
have any business outside India and the expenditure is
accounted for in their Ledgers. MOU entered into with Mavis
and their terms are clinching evidence for the activity of sale
of space of time for advertisement service. The Appellants
have suppressed the above facts with an intent to evade
payment of duty and so invocation of extended period is
justified in this case.
5. We have heard both sides and carefully perused
the appeal records, as well as relied upon case laws. The
issues that arise for determination in this appeal are as to: -
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i. Whether the services provided by the overseas service
providers in relation to issue of GDR/FCCB is a taxable
service covered under "Banking and Other Financial
Services under Section 65(12) read with Section
65(105) (zm) of the Finance, Act, 1994 and whether
the Appellant is liable to pay service Tax on the same;
under Section 66A of the Finance Act?
ii. Whether the sale of time slots on TV is classifiable
under Section 65(105) (zzzm) of Finance Act 1994?
and,
iii. Whether invocation of extended period of limitation
under Proviso to Section 73(1) Finance Act is justified
in the facts of the case?
6. For better understanding of the issue we need to
know what a GDR/FCCB is, as these instruments are not
defined under the Finance Act 1994.
GDRs (Global Depository Receipts) and FCCBs (Foreign
Currency Convertible Bonds) are defined within the
Scheme for Issue of Foreign Currency Convertible Bonds
and Ordinary Shares (Through Depositary Receipt
Mechanism) Scheme, 1993. This scheme was notified by
the Indian government to allow Indian companies to
raise capital from international markets.
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GDR:
A GDR is a type of depository 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 -
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(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 equipment leasing
and hire-purchase.
Explanation - For the purposes of this item, "financial
leasing" means a lease transaction where -
(i) contract for lease is entered into between two parties
for leasing of a specific asset,
(ii) such contract is for use and occupation of the asset by
the lessee;
(iii) merchant banking services;
(iv) securities and foreign exchange (forex) broking;
(v) asset management including portfolio management, all
forms of fund management, pension fund management,
custodial, depository and trust services;
(vi) advisory and other auxiliary financial services including
investment and portfolio research and advice, advise on
mergers and acquisitions and advise on corporate
restructuring and strategy;
(vii) provision and transfer of information and data
processing;
(viii) banker to an issue service; and
(ix) other financial services, namely lending, issue of pay
order, demand draft, cheque, letter of credit and bill of
exchange; transfer of money including telegraphic transfer,
mail transfer and electronic transfer, providing bank
guarantee, over draft facility, bill discounting facility, safe
deposit locker, safe vaults, operation of bank accounts;
(b) foreign exchange broking and purchase or sale of foreign
currency, including money changing provided by a foreign
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exchange broker or an authorized dealer in foreign exchange or
an authorized money changer, other than those covered under
sub-clause (a);
Section 105(zm) reads 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 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 the said service is being provided. Service
Tax will be chargeable. Further, a perusal of the said
definition indicates that services received by the appellant
from M/s Citi and M/s Goldman Sach Ltd. will get covered by
the scope of the service. We therefore hold that services
received by the appellant is covered by the scope "Banking
and other financial services.
8. The Ld. Advocate Shri N. Viswanathan 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
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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 had raised funds
outside India by Global Depository Receipts (GDRs/FCCB's)
by availing the services of Lead Managers, Legal advisors,
Marketing consultants, Placement agents, Merchant Bankers,
etc. who were located abroad and the appellant incurred
expenditure in freely convertible foreign currency for getting
such services from them as shown below.
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Offer Amount Lead Managers Legal Listing Agent
Letter Advisors
Sl. Reference
No
USD Bugmann Seiler Brunner & The bank of New York
20.5 Corporate Finance Decurtins, Europe Ltd./
1 20.04.2006
Million AG, Switzerland Switzerland United Kingdom
Bugmann Seiler Brunner & Bank of New
4.5
2 20.04.2006 Corporate Finance Decurtins, York Europe Ltd.
Million
AG, Switzerland Switzerland United Kingdom
EURO Hythe Securities Ltd, Finers
Bank of New
9 Million London and Daewoo Stephens
23.10.2006 York Europe Ltd.
3 Securities (Europe) Ltd, Innocent
United Kingdom
London LLP London
9.2 In the impugned order, the expenditure incurred
on import of services has been computed as follows: -
Description 2006-07 (Amount in Rs.) 2007-08( Amount in Rs. )
1 Issue expenses 2,66,63,884 65,22,759
2 Bugmann (lead manager) 0 17,92,200
3 Tony Singh (overseas rep) 0 58,24,650
4 Total 2,66,63,884 1,41,39,609
9.3 Further we take note that para 2.3 of CBIC
Circular F.No: B11/1/2000 TRU dated 09.07.2001 made a
specific reference to Merchant Banking Regulations 1992
while explaining the scope of the service in terms of which,
the various activities performed by an NBFC and other body
corporates in connection with the issue management is
covered under the scope of Merchant Banking Services. The
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Appellant has not produced any evidence for alternative
classification.
A plain reading of the above Circular makes it very clear that
the overseas agents who handle the issue of GDR/FCCB
abroad are covered under Issue management and the
services rendered by them are covered under 'Merchant
Banking Services' as defined in Section 65(12) of FA 1994.
9.4 Therefore, the services received by the Appellant
from the service providers located abroad with regard to
their 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:
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"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
capital of the Company is Rs. 348.22 crores."
9.6 The Authorized Representative in his written
submissions has stressed that the money raised abroad was
utilised in India. On the contrary, the Appellant did not come
up with any documentary evidence that funds raised abroad
were effectively deployed abroad.
9.7 The Appellant's contention was that service tax
is destination-based consumption-based tax. So, to impose
service tax on import of services the service should be
rendered in India or provided to a person located in India
and received in the taxable territory to satisfy the mandate
of Service Tax Law. In the present case, the Ld. Advocate
submits that the funds raised through issue of GDR and
FCCB abroad were not brought to India but was kept in the
foreign currency account maintained by them abroad for
their overseas operations. The expenses incurred for issuing
or raising Bond and GDR were said to have been incurred out
of the funds kept abroad and was not incurred for obtaining
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foreign exchange from the financial institutions located in
India. Secondly the said persons namely Luxemburg Stock
Exchange, International Depositories, International
Solicitors, International Merchant Bankers, custodians,
Placement Agents who are alleged to have provided the
services for listing the GDR/FCCB have only rendered the
service/ s outside India and no portion of the said service
was rendered or received or provided in India. When the
service was consumed outside India and not received and
consumed in India such service cannot be taxed as Service
tax law cannot cover an activity done outside its territorial
jurisdiction. The Appellants have relied upon the decisions in
the following case Laws:-
i. Sporty Solutionz Pvt. Ltd. [2022 (58) G.S.T.L. 336 (Tri. -
All.)]
ii. Intas Pharmaceuticals 2009 [16] STR 748 [T/AIII];
iii. K.G. DENIM LTD -[2015 (37) S.T.R. 616 (Tri. Chennai)].
9.8 We have perused all the above decisions. The
case of M/s. Intas Pharmaceuticals Ltd., vs. CST Ahmedabad
[2009 (16) STR 748 (Tri.-Ahmd.)] deals with Technical
Testing and Analysis Service rendered outside India; Further
the case of K.G. Denim Ltd. [2015 (37) S.T.R. 616 (Tri.
Chennai)] is about Business Exhibitions and Technical
Inspection and Certification Service carried out abroad
Sporty Solutionz Pvt. Limited Vs Commissioner, Central
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Goods and Service Tax (CESTAT 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 said services for
business or commerce. In the present case, all the conditions
prescribed under Section 66A of the Act read with Rule 3(iii)
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of Taxation of Services Rules, 2006 are fully satisfied as the
Appellant company has permanent base in India, and
consequently the Appellant is liable to pay Service tax in
terms of Section 68(2) read with Rule 2(1)(d)(iv) of Service
Tax Rules.1994.
9.10 On the contrary, we find that the Appellant has
not submitted any evidence that the funds were deployed
abroad for development of a web casting portal, to re-group
internet rights, acquire rights of Hollywood films for web
casting outside India which is only a statement and will not
stand to scrutiny in the eyes of the Law. On the other hand,
the Appellant's profile submitted to Audit clearly states that
the funds are for deployment in India i.e, to part finance the
capital Expenditure program of acquiring multiplex theatres,
rights for various movies and capex for TV serial production.
9.11 The Appellant did not furnish details of how the
GDR/FCCB funds were deployed. They have not furnished
any offer document for issue of GDR/FCCB for deployment of
funds. Therefore, the reasoning given by the Appellant that
no services were received from Abroad cannot be accepted
and we are inclined to accept the findings of the Adjudicating
Authority in the impugned order on this score.
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9.12 After coming to a conclusion that services were
delivered/imported into India by a Non -Taxable person from
a Non-Taxable territory, Section 66A of Finance Act will come
into play.
9.13 Before we dwell on this further, we will see what
the classification of services is all about. The impugned order
in Para 6,2 makes a mention of the names of the Lead
Managers, Legal Advisors, Listing agents for the GDR/FCCB
issue. The Appellant has also not disputed this fact in appeal.
Only point of contention is that they were not put to Notice
while deciding the classification under Merchant Banking sub
clause of the BOFS. Both the Appellant and the Respondent
have relied upon the decision of CESTAT Mumbai in the case
of Axis Bank Ltd. Versus Commissioner of Service Tax,
Mumbai-I 2015 (40) S.T.R. 993 (Tri. - Mumbai).
This decision is about levy of Service Tax on issue expenses
on GDR/FCCB issue. We observe that in this case, Service
Tax was demanded under reverse charge mechanism under
Section 66A 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"
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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 the said service is being provided, Service Tax will be chargeable. Further, a perusal of the said definition indicates that services received by the appellant from. M/s. Citi and M/s. Goldman Sach Ltd. will get covered by the scope of the service. We therefore hold that services by the appellant is covered by the scope "Banking and other financial services".
9.14 The above decision also fortifies the stand taken by us and we apply the ratio of the same decision to this case also; and the services are to be classified as "Banking and other financial services" and as the same is provided to the receiver in India, the Appellant becomes liable to pay the same under Reverse charge as discussed supra. 23
ST/40458/2014 9.15 Therefore, the questions (i) &(ii) framed by us are answered in favour of the Revenue and against the Appellant.
10.1 Next, we come to the issue of demand of Service Tax on sale of time slot for advertisement. The Appellant has contended that the amount realised by the TV Channels from the advertisers the levy should be addressed to the TV channels and not to them. In any case, they cannot sell the time slot to the sponsors since they were not the owners of the TV channels who had space for such sales. If at all there is any levy on the consideration received for the sale of space it should be on the TV channels who ought to have shared the revenue after factoring the tax component. The appellant has clarified that the income accounted for on the above account in their books related to the grant of the right to use their TV serial in respect of which they owned the copy right and as such the consideration received is towards sale of copy right and hence they had accounted for the same in their books as sales revenue of time slot sold to them by M/S. Mavis Satcom Ltd and in these circumstances, the notice proposing to levy service tax on them is not sustainable.
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ST/40458/2014 10.2 We have perused all the three MOU's entered into by the Appellants with respect to the telecast of "Mayavi" 3D serial in TV Channels. The Appellant contended that they had only produced the said serial and had assigned their right for telecast of the same / market the time slots arising out of the telecasting of the said serial in the TV Channels in favour of M/s. Mavis Satcom Ltd., M/s. Zec Television and M/s. Malayalam Communications Ltd. 10.3 On perusal of the Memorandum Of Understanding (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 25 ST/40458/2014 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 slots by a broadcasting agency or organization. Explanation-I For the purpose of this sub-clause, 'sale of space or time for advertisement' includes (i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;
(ii) selling of time slots on radio or television by a person, other than a broadcasting agency or organisation;"
10.6 It is evident from the terms of the agreements entered into by the Appellant with the various parties with respect to the telecast of the tele-serial 'Maayavi', and the transactions undertaken by them, it is clear that the Appellant has sold the time slots on television which is classifiable under 'sale of space of time for advertisement service' and also received income for the same. 26
ST/40458/2014 10.7 The Appellant's another contention is that the sale of time slots for advertisements was not done by them but it was done only by Mavis / TV Channels and that they have only assigned their right to Mavis / Channels for telecast of the serial as per the agreements. They also contended that the portion of the amount received by them from Mavis / TV Channels represented only the value for the assignment of their right to telecast the serial. On the other hand, we have noticed that from the terms of the MOU, the Appellant has received 65% of the money from Mavis/ 'IV Channele towards sale of free commercial time. None of the terms of the MOU indicates, that the Appellant has assigned their rights to telecast. Therefore, there is no merit in the Appellant's contention, and the same is liable for rejection. Accordingly, we hold that the income received by the Appellant from Mavis is taxable under the category of "sale of space or time for advertisement" and they are liable to pay service tax on the said service. The demand of the service Tax of Rs 3,34,949/- confirmed in the impugned Order for the period 2007-08 to 2008-09 is to be sustained. Therefore, the third question framed by us is also answered against the Appellant.
11.1 Finally now coming to the aspect of limitation, we see that the appellant has submitted that the invocation 27 ST/40458/2014 of extended period of time by merely 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 all documents as called for. On examination of the entire issue, they choose not to 28 ST/40458/2014 proceed further as they were of the opinion that no case of loss of revenue was made out. Thus the officers of the DGCEI who are designated Central Excise Officers with all India jurisdiction were fully aware of all their transactions and in spite of the said fact the local officials of the Internal Audit and SIR once again raising the same issue while conducting audit of their accounts during 2008-09 have issued the impugned notice after four years of the examination of their records by the officers of DGGCEI and that too after they submitted their clarification which do not permit the invocation of the extended period of time. 11.3 It was further submitted that even if the tax was required to be paid by them, then they would be entitled to avail the same as input tax credit thus making it a revenue neutral situation which should render the invocation of the extended period of time unavailable. Furthermore, as the issue raised by the revenue only related to a pure question of law and does not rely upon any contumacious conduct on their part all the more the invocation of the extended time is not permissible.
11.4 We find that Proviso to Section 73(1) of Finance Act 1994 reads as hereunder: -
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ST/40458/2014 "Provided that where any Service Tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of -
(a) fraud; or
(b) collusion; or
(c) wilful misstatement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of Service Tax, by the person chargeable with the Service Tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted."
11.5 All along the Appellant made impassioned pleas against the invocation of Proviso to Section 73(1) of the Finance Act 1994. We proceed to examine this issue in depth. We believe that the offer document for the public /Private issue of FCCB/GDR is a public document and for which vide publicity through Media has to be done in India and abroad and they have successfully raised the funds for CAPEX in India. Without the approval/consent of SEBI and RBI (Statutory Bodies), a public 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 30 ST/40458/2014 regular intervals. All the said correspondences form part of the Appeal paper book pages from 34 to 65 which is extracted below: -
Sl Dept/Agency First letter Second Reply No letter 1 DGCEI 08.05.2007 04.07.2007 24.08.2007 (Page 34) (page 35) (Page 36) 2 AUDIT 11.09.2008 (Page 38-39) 3 CHENNAI IV 05.11.2008(Communication 24.09.2009 DIVN of discrepancies) 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 was raising funds through GDR/FCCB or just concluded the fund-raising process. The Department was in the knowledge of the issue during the period covered by the Demand itself, and in such a situation, attributing suppression of facts is not tenable. In such a situation, we do not find any evidence of Suppression /Fraud etc., to invoke the extended period under Proviso to Section 73(1) of FA 1994. The first visit by the Department was in 2007, but the 31 ST/40458/2014 SCN came to be issued in 2011 only. It appears that to camouflage the belated issue of SCN, the Department had to invoke the proviso to Section 73(1) to keep the demand alive. From the above facts, we are of the view that the demand should have been issued under normal period in terms of Section 73 of Finance Act, 1994. The Appellant has argued that the department has compiled the SCN based on figures furnished by the Appellant voluntarily when asked for. The Tax, if paid, will be available to the appellant as CENVAT Credit and the entire issue of Service Tax levy on MBS is revenue neutral to the Appellant. We also note that the Audit of the Appellant Company was also conducted for the period 2004-05 to 2007-08 and certain discrepancies were communicated. The Audit Commenced on 9th June 2008 (Page 47) of paper book. In such a situation, the facts are deemed to have been known to the Department and the theory of Suppression is ruled out. It is a genuine interpretational issue on classification of services and point of delivery of service and it has been held in a plethora of Decisions by Tribunals /Courts that extended period cannot be invoked in such a situation.
11.7 The Appellants have relied upon the following case laws: -
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ST/40458/2014 i. Chiripal Polyfilms Ltd. Versus Commr. of C. EX. & S.T., Vadodara-I (2022) 1 Centax 125 (Tri.-Ahmd.) ii. Maa Kalika Transport Pvt. Ltd. Versus Commissioner of CGST and Central Excise, Rourkela [(2023) 8 Centax 273 (Tri.-Cal)] iii. Collector of Central Excise Versus H.M.M. Limited [1995 (76) E.L.T. 497 (S.C.)] iv. Punj Lloyd Ltd. Versus Commissioner of C.EX. & S.T., Rohtak [015 (40) S.T.R. 1028 (Tri. - Del.)] v. V.N.K. MENON & CO. Versus CESTAT, CHENNAI [2015 (323) E.L.T. 524 (Mad.)] vi. Meenesh Construction Co. Versus Commissioner of C. EX., Jaipur-I [2018 (12) G.S.T.L. 97 (Tri. - Del.)] 11.8 We have perused all the above decisions of the Tribunal/Courts and the facts of the cases are squarely applicable to the issue at hand. We have no hesitation in holding that there are no ingredients for invoking the extended period in this case as the authorities are seized of the issue of GDR from 2007 onwards and the Notice came to be issued only in 2011 after an unusually long delay of 4 years.
11.9 After holding that Section 73(1) is not applicable, the only option is Section 73 covering the normal period of limitation, which during the disputed period stood at 1 year. The demand in this case is for the years 2006-07 and 2008- 09, which will be clearly hit by limitation of time as the SCN was issued only on 22.10.2011.
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ST/40458/2014 Therefore, we hold that the demand is hit by limitation of time.
12. Finally, we conclude that, though the demand survives on the grounds on Taxability of services, it fails to stand the test of limitation of time and deserves to be set Aside.
13. We allow the Appeal filed with consequential benefits as per Law.
(Order pronounced in open court on 11.08.2025) Sd/- Sd/-
(AJAYAN T.V.) (VASA SESHAGIRI RAO) MEMBER (JUDICIAL) MEMBER (TECHNICAL) MK