Customs, Excise and Gold Tribunal - Delhi
Zee Telefilms Ltd. And Star India Pvt. ... vs Cce on 11 March, 2004
Equivalent citations: 2004(93)ECC553, 2004(166)ELT34(TRI-DEL), 2006[3]S.T.R.252, [2007]6STT529
ORDER
K.K. Usha, J. (President)
1. The appellant-assessees who are held liable to pay service tax challenge the orders passed by the Commissioner of Central Excise (Appeals) Mumbai dated 18.11.2002 rejecting their appeals against the orders of adjudication. Since both the appellants raised a common contention that their activities cannot be termed as 'taxable service' as defined under section 65(72), as it stood during the relevant period, the appeals are disposed off by a common order. According to them they are not providing any service to a client as a broadcasting agency or organization in relation to braodcasting in India. Therefore, the demand of service tax is not sustainable.
2. M/s Zee Telefilms Ltd., appellant in ST/4/2003, are representatives of M/s. Asia Today Ltd. (ATL) and M/s. Expand Fast Holdings Ltd. (EXPAND), Mauritius, in India for selling time slot for advertisement and for obtaining sponsors for serials, programmes, events, etc. which would be played out by ATL/EXPAND in the various channels like Zee TV, ZEE CINEMA, MUSIC ASIA. Appellant in ST/5/2003 are representative of M/s. Satellite Television Region Limited (STAR) Hong Kong in India for selling time slot for advertisement and for obtaining sponsors in India for selling time slot for advertisement and for obtaining sponsor for serials, programmes, events, etc. which would be telecast by STAR in various channels like STAR PLUS, STAR NEWS, STAR WORLD etc. It is the case of the appellants that their programmes are telecast from satellite situated outside India. The signals are encypted and beamed from outside India. These signals are received by the Multi System Operators (MSO) and Cable TV operators through decoders. These decoders enable MSOs and Cable TV operators to re-transmit the signals to the viewers subscribing them. The signals that are broadcast may be of advertisements, serials, programmes or live events. The advertisements recorded in videotapes by the advertising agencies and program/serials recorded in the videotapes by or on behalf of the sponsor are procured from advertisement agencies in India and sponsors and sent to ATL/EXPAND, Mauritius in the case of the appellant in ST/4/2003 and to Star Ltd., Hong Kong in the case of appellant in ST/5/2003.
3. M/s. Zee Telefilms submits that they are engaged in collecting money due to ATL/EXPAND from its clients in India and the same is remitted to ATL/Expand after deducting its commission. So also M/s. Star India Pvt. Ltd. collects amounts due to STAR from clients in India and remit the same to STAR and get a commission paid for its activity of broadcasting and that broadcasting done by ATL/EXPAND and STAR are from outside India and therefore no service tax can be demanded from the appellants as agents of broadcasting agency or organisation.
4. A show cause notice dated 7.12.2001 was issued to M/s.Zee Telefilms Ltd. proposing to levy service tax for the reason -
(a) ATL/EXPAND is engaged in the business of braodcasting services in India since ATL/EXPAND telecasts channels like ZEE TV, ZEE CINEMA, MUSIC ASIA, etc.;
(b) Since Zee Telefilms Ltd. are appointed as a non-exclusive independant representatives in India by ATL/EXPAND they are rendering service of broadcasting in the capacity of broadcasting agency/organisation in identifying the clients wanting to broadcast advertisements for obtaining sponsors for serials/programmers, events, live events, etc. for broadcasting on foreign TV channels in India; and
(c) Zee telefims are rendering services in relation to broadcasting in India and broadcasting services rendered by them would come within the ambit of service tax in terms of Section 137 of the Finance Act, 1994.
A show cause notice dated 7.12.2001 was issued to M/s Star India Pvt. Ltd. on the similar allegation regarding the services rendered by them as non-exclusive representative of STAR. The adjudicating authority as well as the Commissioner (Appeals) rejected the contentions taken by the appellants that the services provided by them would not come within the term 'broadcasting' as defined under the relevant provisions for the purpose of imposing service tax. Commissioner (Appeals) took the view that the activity of broadcasting by the principals of the appellants is performed in India. He further held that the activites carried out by the appellants are integrally connected to the activities of braodcasting and are performed in relation to broadcasting.
5. Aggrieved by the above, the asseesses have come up in appeal. According to the appellants they are not engaged in dissemination of any form of communication by transmission of electro-magnetic waves through space or through cables. They collect amounts due to their principals and remit the same to them and get the commission paid for their activity. They are only providing service of selling time slot for advertisement and for obtaining sponsors for serials etc. for their principal for which they are paid an agreed commission. Therefore, it cannot be held that they are providing broadcasting service to their clients. It is further contended that the activity of ATL/EXPAND and STAR is carried out outsie India and hence is not taxable. The appellants submit that the amendment which was brought under the Finance Act, 2002 with retrospective effect could at the most make the appellants liable to pay service tax on the amount received by then from ATL/EXPAND/STAR as the case may be. The learned counsel for the appellants further submitted that explanation 65(90)(zk) cannot have the effect of enlarging the scope of the definition of the term "taxable service".
6. The learned DR made elaborate submissions supporting the view taken by the Commissioner. She contended that the word "dissemination" would take in both transmission of electro-magnetic waves through space or through cables and reception of the same. She submitted that the dictionary meaning relied by the appellants clearly supports the Revenue's case. Following are the meanings given, in different dictionaries for the word 'disseminate' :-
Concise Oxford Dictionary - spread widely.
Chambers English Dictionary - to sow or scatter abroad to propogate to diffuse Penguin English Dictionary - Spread about freely or widely The New Lexicon Webster's Dictionary of the Englsih Language - to spread abroad, scatter, disperse, wisdom, belief etc. Collins Cobuild Englsih Dictionary for Advanced Learners meaning - to disseminate information or knowledge means to distribute it so that it reaches many people or organisations.
The learned DR pointed out that the meaning given as above in different dictionaries would show that it is not enough that the information or knowledge is transmitted but it has to reach the destination so as to come within the meaning of "dissemination". Therefore, she contends that even before the amendment which was brought under the Finance Bill 2002 the legal position was such that if the broadcast is received in India even though the encryption of signals or beaming, therof through the satellite might have taken place outside India, it would come within the definition of the term "broadcasting" in India and such service shall be taxable service as defined under the Act. In support of her contention on the meaning of the word "broadcasting" she brought to our notice the following from Encyclopaedia Britanice:-
"broadcasting - electronic transmission of radio and television signals that are intended for general public reception, as distinguished from private signals that are directed to specific receivers. In its most common form broadcasting may be described as the system of entertainment, information, educational programming and other features for simultaneous reception by a scattered audience with appropriate receiving apparatus. Broadcasts may be audible only, as in radio, or visual or a combination of both, as in television."
She further submitted that even though the transmission of signals by electro magnetic wave and uplinking in the Satellite Tranporter by ATL/Expand and STAR are outside India, their activity will still come under the definition of 'Broadcasting" and a Taxable Service rendered in India.
7. We will now refer to the relevant provisions as it stood on the date of show cause notices were as follows:
"Section 65(13) 'broadcasting' has the meaning assigned to it in clause (c) of Section 2 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 (25 of 1990);
'Section 65(72) 'taxable service' means any service provided:
(zk) to a client, by a broadcasting agency or organisation in relation to broadcasting, in any manner";
8. Clause (c) of section 2 of the Prasar Bharati (broadcasting Corporation of India ) Act, 1990 defines "Broadcasting" as under:
" Broadcasting' means the dissemination of any form of communication like signs, signals, signals, writing, pictures, images and sound of all kinds by transmission of electromagnetic waves through space or through cables intended to be received by the general public either diirectly or indirectly through the medium of relay stations and all its grammatical variation and cognate expressions shall be construed accordingly."
9. Finance Act, 2002 made amendments to the provisions relating to broadcasting with retrospective effect from 16th July, 2001. The amended provisions read as follows:
Section 65(1)(14) 'broadcasting' has the meaning assigned to it in clause (c) of section 2 of the Prasar Bharti (Broadcasting Corporation of India) Act, 1990 and also includes programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intended for public listening or viewing, as the case may be; and in the case of a broadcasrting agency or organisation, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorhips for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner.
Section 65(1)(15) 'broadcasting agency or organisation' means any agency or organization engaged in providing service in relation to broadcasting in any manner and, in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting broadcasting charges on behalf of the said agency or organisation.
Section 65(1) (90) 'taxable service' means any service provided:
(zk) to a client, by broadcasting agency or organisation in relation to broadcasting in any manner and, in the case of broadcasting agency or organisation, having its head office situated in any place outside India, includes service provided by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner, engagedin the activity of selling of time slots for broadcasting of any programme or obtaining sponserships for programme or collecting broadcasting charges on behalf of the said agency or organisation.
'Explanation':- for the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India intended for listening or viewing, as the case may be, by the public such service shall be a taxable service in relation to broadcasting, even if the encryption for the signals of beaming thereof through the satellite might have taken place outside India."
We are not able to accept the contention raised by the appellant and give a restricted meaning to the word "broadcasting" or "dissemination of any form of communication" even as they stood prior to amendment by the Finance Bill 2002. As pointe out by the learned DR meaning given to the word "disseminate" in all the dictionaries reffered by the appellants would clearly show that unless the information or knowledge reaches the receiving end dissemination will not be complete. Meaning given to the word "dissemination" in Indian Edition 2001 the New oxford Dictionary is 'spread or disperse (something especially information) widely'. Therefore, when the television programme and advertisements in the form of signals are encrypted and beamed from outside India and telecast outside India but are received in India through decoders by Multi System Operators and Cable TV operators, it would come within the meaning of defination of "broadcasting" under Section 2(c) of Prasar Bharti Corporation Act, 1990. Under the amended defination, the word "broadcasting" includes programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intented for public listening or viewing, as the case may. In the case of broadcasting agency or organisation, having its head office situated in any place outside India, the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner are also brought under net of the term "broadcasting". The activities as carried on by the appellants herein are not in dispute. Such activities as carried on by the appellants herein are not in dispute. Such activities would strictly come within the defination of the term "broadcasting" as amended. They will also come within the defination of the term "broadcasting agency or organisation" in view of the nature of activities carried on by them. It is not disputed that the appellants are engaged in the activity of selling of time lots or obtaining sponsorships for broadcasting of any programme and are collecting braodcasting charges on ATL/EXPAND/STAR. Therefore, there is no merit in the contention of the appellants that they are not providing taxable service.
10. In the light of the above which we are inclined to take on the status of ATL/Expand/Star and the appellants with reference to the term 'broadcasting' and 'broadcasting agency', we find no merit in the contention of the appellant that the value of their service has to be limited to the payment made to it by ATL/Expand/Star. The entire amount paid by the advertiser/sponsor to ATL/Expand/Star has to be treated as value of Taxable Service.
11. It is contention on behalf of the appellants that in the facts of their case no penalty should have been imposed on them. The legal position as to their liability as 'broadcasting agency' was not clear during the relevant period. It was, therefore, felt that am amendment has to be brought in the statute with restropective effect. Under these circumstances no intention to evade duty could be read into their conduct. They, therefore, pray for setting aside the imposition of penalty. We find merit in the above contention. In the nature of dispute which related to a legal issue regarding interpretation of provisions of different Statues and also taking into account the conduct of the appellants in taking out registration and submitting returns under protest, we are inclined to vacate imposition of penalty on the appellants under section 76. Therefore, while affirming the duty demand and interest against the appellants we set aside the imposition of penalty under the impugned order.
12. Appeals are disposed off as above.