Custom, Excise & Service Tax Tribunal
Sahara India Tv Network vs Commissioner Of Service Tax Mumbai-Ii on 26 February, 2020
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
COURT No. 2
Service Tax Appeal No. 85354 of 2015
(Arising out of Order-in-Original No. 101-102/ST-II/RS/2014 dated
14.10.2014 passed by Commissioner of Service Tax-II, Mumbai)
M/s. Sahara India TV Network Appellant
CTS 40-44, Sahara India Point,
S.V. Road, Goregaon (W),
Mumbai 400 104.
Vs.
Commissioner of Service Tax, Mumbai-II Respondent
4th floor, New Central Excise Bldg., Maharshi Karve Road, Churchgate, Mumbai 400 020.
WITH Service Tax Appeal No. 85355 of 2015 (Arising out of Order-in-Original No. 101-102/ST-II/RS/2014 dated 14.10.2014 passed by Commissioner of Service Tax-II, Mumbai) M/s. Sahara India TV Network Appellant CTS 40-44, Sahara India Point, S.V. Road, Goregaon (W), Mumbai 400 104.
Vs. Commissioner of Service Tax, Mumbai-II Respondent 4th floor, New Central Excise Bldg., Maharshi Karve Road, Churchgate, Mumbai 400 020.
Appearance:
Shri S.S. Gupta, C.A., for the Appellant Shri Suresh Merugu, Joint Commissioner, Authorised Representative for the Respondent CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO. A/85326-85327/2020 Date of Hearing: 06.01.2020 Date of Decision: 26.02.2020 2 ST/85354,85355/2015 PER: SANJIV SRIVASTAVA These appeals are directed against order in original No.101-102/ST-II/RS/2014 dated 14.10.2014 of the Commissioner of Service Tax -II, Mumbai. By the impugned order, the Commissioner held as follows:
"I. Show Cause Notice issued under F.No ST- II/Audit/Gr.6/98/SITV/11-12/Pt.I dated 08.04.2013
amounting to Rs 3,94,10,566/- for the period April 2008 to June 2012 48.1(a) I confirm, in terms of Section 73(2) of the Finance Act, 1994, the demand of Service Tax of Rs 3,94,10,566/-
(Rupees Three Crore Ninety Four Lakhs Ten Thousand Five Hundred and Sixty Six Only) made in the Show Cause Notice, as payable by/ recoverable from M/s Sahara India T V Network, Mumbai 400104.
48.2(a) I order recovery of interest at the appropriate rat, on the amount confirmed at par 48.1(a) above from the due date(s) under the provisions of Section 75 of the Finance Act, 1994, from M/s Sahara India T V Network, Mumbai 400104.
48.3(a) I impose penalty of Rs 10,000/- (Rupees Ten Thousand Only) under Section 77 of the M/s Sahara India T V Network, Mumbai 400104.
48.4(a) M/s Sahara India T V Network, Mumbai 400104, shall also pay appropriate late fee for each return at the rate specified in Rule 7C of the Service Tax Rules, 1994 during the relevant period, subject to a maximum of Rs 20,000/- (Rupees Twenty Thousand only), specified under Section 70 of the Finance Act, 1994, for their failure to file periodical returns.
48.5(a) I impose penalty of Rs 3,94,10,566/- (Rupees Three Crore Ninety Four Lakhs Ten Thousand Five Hundred and Sixty Six Only) on M/s Sahara India T V Network, Mumbai 400104, under Section 78 of the Finance Act, 1994 3 ST/85354,85355/2015 II. Statement of Demand/SCN under Section 73(1A) of The Finance Act, 1994 issued under F.No ST-II/Dn- IV/Gr.II/Shara/04/EA2000/SCN12-13/2013-14 dated 07.04.2014 amounting to Rs 1.41,31,667/- for the period June 2012 to June 2013 48.1(b) I confirm, in terms of Section 73(2) of the Finance Act, 1994, the demand of Service Tax of Rs 1,41,31,667/- (Rupees One Crore Forty One Lakhs Thirty One Thousand Six Hundred and Sixty Seven Only) made in the Show Cause Notice, as payable by/ recoverable from M/s Sahara India T V Network, Mumbai 400104.
48.2(a) I order recovery of interest at the appropriate rat, on the amount confirmed at par 48.1(b) above from the due date(s) under the provisions of Section 75 of the Finance Act, 1994, from M/s Sahara India T V Network, Mumbai 400104.
48.3(a) I impose penalty of Rs 10,000/- (Rupees Ten Thousand Only) under Section 77 of M/s Sahara India T V Network, Mumbai 400104.
48.4(b) I impose penalty under Section 76 of the Finance Act, 1994, which shall be,-
i) One hundred rupees for every day during which such failure continues or
ii) At the rate of two per cent of such tax, per month, Whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax, provided that the total amount of the penalty payable in terms of this section shall not exceed fifty percent of the service tax payable."
2.1 Appellants are registered with the department and are providing various taxable services namely "broadcasting services", "business auxiliary ser ices", "renting of immovable property services", "erection, commissioning and installation services", "advertising services" and "manpower recruitment/ supply agency services".
4 ST/85354,85355/2015 2.2 During the course of EA 2000 audit it was observed that they had incurred expenditure in foreign currency towards the services received from M/s Asia Satellite Telecommunication Company Ltd, Hong Kong (AsiaSat) for providing C-Band Transponder on Asisset-3S Satellite, as per the agreement commencing from 15.06.2005.
2.3 The said transponder was used for uplinking the programme to be broadcasted to the satellite and the same was essential for broadcasting operations. Appellant were uplinking the programmes from the teleport situated at their complex in NOIDA. The satellite transformer was an infrastructural requirement for providing the broadcasting services. The aforesaid activity of providing the C-Band Transponder, appeared to be provision of an infrastructural support to the business of the appellant i.e. broadcast of T V channel, and the service was appropriately classifiable as "Support Services for Business or Commerce" as defined under Section 65(105)(zzzq) of the Finance Act, 1994.
2.4 Since AsiaSat was not having any establishment in India, Appellant was required to discharge the service tax liability as recipient of the services as per Section 66A of the Finance Act, 1994 read with Rule 3(iii) of the Taxation of Services (Provided from outside India and received in India) Rules, 2006.
2.5 By not discharging the service tax liability in respect of the services so received by them appellant had contravened various provisions of Finance Act, 1994 and Service Tax Rules, 1994. Thus a Show Cause Notice dated 08.04.2013 was issued to them asking them to show cause as to why:-
Service tax amounting to Rs 3,94,10,566/- not paid by them in respect of the said services received by them during the period April 2008 to June 2012 should not be demanded and recovered from them by invoking proviso to Section 73(1) of the Finance Act, 1994;
5 ST/85354,85355/2015 Interest on the amounts of service tax not paid by the due date be not demanded and recovered at appropriate rate as per Section 75 of the Finance Act, 1994 Penalty under Section 77 and 78 of the Finance Act, 1994 should not be imposed on them.
2.6 For the subsequent period June 2012 to June 2013, a statement of demand as per Section 73(1A) dated 07.04.20014 was issued for demanding and recovering service tax amounting to Rs 1,41,31,667/- along with interest under Section 75 and for imposition of penalty under Section 76 and 77 of the Finance Act, 1994.
2.7 Show Cause Notice dated 8.04.2013 and Statement of Demand dated 7.04.2014 were adjudicated by the Commissioner as per the impugned order referred in para 1, supra.
2.8 Aggrieved by the impugned order, Appellant have preferred these appeals.
3.1 We have heard Shri S.S. Gupta, Chartered Accountant for the Appellants and Shri Suresh Merugu, Joint Commissioner, Authorized Representative for the revenue.
3.2 Arguing for the appellant learned Chartered Accountant submitted that-
Service provided to them by AsiaSat are very specialized services which cannot be carried out by the appellant themselves;
The category of taxable service i.e. Business Support Service is only for the activities which are outsourced by the organization and are in the nature of routine transaction of business as per the clarifications given in a) Circular No 334/4/2006-TRU dated 28.02.20006, b) Circular No 159/10/2012-ST dated 16.06.2012 and c) Circular No 109/3/2009-ST dated 23.02.2009. In the present case they have obtained space in transponder from the third party as this activity could not have been carried out in house. Thus availing space on the transponder cannot be said to be outsourced service, 6 ST/85354,85355/2015 which could be levied to service tax under the category of business support services;
By application of principle of ejusdem generis, the phrase "infrastructure support service" in the definition, should be interpreted to include the services which are in nature of supporting sales, purchase, transaction processing and accounting;
As per explanation to 65(104c) and CBEC Circular No 334/1/2006-TRU dated 28.02.2006, office shall be provided along with various facilities in order to attract service tax under the category of infrastructure support service. This view is also as per the decisions in following cases o Air Liquid North India (P) Ltd [2017 (4) GSTL 230 (T-
Del)] o Dish TV India Ltd [2015 (38) STR 857 (T-Del)] o Mundra Port& Special Economic Zone Ltd [2012 (27) STR 171 (T-Ahm)] M/s AsiaSat has transferred the "right to use" of transponder, hence no service tax is payable. As per clause (d) to Article 366(29A) of the Constitution of India, such transaction of transfer of right to use is deemed to be sale and thus not leviable to service tax. In case of Imagic Creative Ltd [2008 (9) STR 337 (SC)] it has been held that if the transaction is considered as "sale", it cannot be considered as "service".
Hon'ble Karnataka High Court has in case of Antrix Corporation Ltd [2010-TIOL-15-HC-Kar-CT] held that leasing of transponder of INSAT Satellites amounts to transfer of right to use the goods. Hence, their agreement with AsiaSat is a transaction for sale and no service tax is payable.
There is duplication of demand as the demand of same service tax in respect of the payments made to AsiaSat was also made by Commissioner Central Excise NOIDA. The demand confirmed is under challenge before CESTAT 7 ST/85354,85355/2015 Allahabad. Parallel proceedings cannot be pursued for the same matter pertaining to the same period as per the following decisions o Paro Food Products [2005 (184) ELT 50 (T-Bang)] o Solitaire Machine Tools Ltd [2008 (222) ELT 404 (T- Ahmd)] Once CESTAT has confirmed the order and upheld the jurisdiction of the NOIDA Commissionerate in the matter then the same service cannot be also taxed by the Mumbai Commissionerate or else it will lead to parallel jurisdiction with different officers having different view. It is not mandatory for the Bench to follow the judgement given on the same matter by another Bench of the CESTAT if the new evidence has been brought to light which was missing in that case Since the amount of service tax sought to be demanded from them on principle of reverse charge shall be available to them as CENVAT Credit the demand is totally revenue neutral. Since it is revenue neutral the invocation of extended period of limitation for making the demand cannot be sustained as per the following decisions:
o Nirlon Ltd [2015 (320) ELT 22 (SC)] o Tenneco RC India Pvt Ltd [2015 (323) ELT 299 (Mad)] o Coca Cola India Pvt Ltd [2007 (213) ELT 490 (SC)]. Since the issue is in relation to interpretation of statue and appellant has reasonable cause for non payment of service tax imposition of penalties cannot be justified.
3.3 Arguing for the revenue learned Authorized representative submitted that-
All the pleadings advanced by the Appellant counsel in the matter were also advanced by them before the Allahabad bench of CESTAT in respect of similar proceedings undertaken in respect of the Noida branch. Rejecting the argument on merits tribunal has confirmed the demand for normal period.
8 ST/85354,85355/2015 The agreement under consideration has been entered between AsiaSat and Sahara India Commercial Corporation Limited (Appellant is a unit of SICCL) Goregaon, Mumbai for the period 2010 to 2015.
The payments as per the agreement were made from the appellants office at Mumbai.
No notice after the first Show Cause Notice except the one covering the period from 2007-2011 has been issued by NOIDA authorities.
Reliance is placed on the decisions as follows:
o Hospital Mazdoor Sabha & Others [(1960) 2 SCR 866] o Indus Towers Limited [2014 (35) STR 459 (Del)] o Indus Tower Limited [2017 (52) STR J81 9SC)] o Indus Tower Ltd [2012 (285) ELT 3 (Kar)] o Tower Vision India Pvt Ltd [2016 (42) STR 249 (T- LB)] o Essar Telecom Infrastructure Pvt Ltd [2015 (40) STR 591 (T-Mum)] o Sahara India TV Network [Final Order No 71339/2018 dated 5.07.2018 of CESTAT Allahabad Bench.] 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments on appeal.
4.2 The matter was earlier heard by the co-ordinate bench and written submissions dated-
10th October 2018 and 29th October 2018 were made by the appellant counsel;
18.12.2018 were made by the learned Authorized Representative;
These written submissions have also been taken on record while considering the matter.
4.3.1 Appellants have during the course of hearing submitted a chart showing the duplication of demand by way of Show Cause 9 ST/85354,85355/2015 Notice issued by NOIDA Commissionerate and that issued by the Mumbai Commissionerate. We reproduce the relevant extract of chart as produced by the appellant counsel below:
Payment SN of Annexure Amount (Inclusive of Service Tax Demand Rem Date to SCN TDS) ark Mumbai Noida Mumbai NOIDA Mumbai Noida 16.04.08 1 9 15104554 16894580 1866923 2088170 1
10.07.08 2 10 18001357 18001357 2224968 2224968 - 15.12.08 3 11 20580606 20580606 2543763 2543763 - 20.02.09 4 12 21093473 21093473 2607153 2607153 - 01.06.09 5 13&14 20042416 20042416 2064369 2477243 2 31.08.09 6 15 20654510 20654510 2127415 2127415 - 23.11.09 7 16 19696342 19696342 2028723 2028723 - 23.02.10 8 17 19567680 19456421 2015471 2004011 3 03.05.10 9 18 18955680 18844421 1952435 1940975 4 02.06.10 10 19 19848248 19731527 2044370 2032347 5 23.09.10 11 20 23561336 23561336 2426817 2426817 - 07.12.10 12 21 23121212 23121212 2381485 2381485 - 10.03.11 13 22 23226167 23226167 2392295 2392295 -
Total 263453581 264904368 28676187 29275365 1 Rs 1790026/- paid towards TDS inadvertently not disclosed to officers in Mumbai 2 Mumbai demanded Service Tax @ 10.30% while NOIDA @ 12.36% 3 Additional TDS of Rs 111259/- paid after providing the amounts to officers at NOIDA 4 Additional TDS of Rs 111259/- paid after providing the amounts to officers at NOIDA 5 Additional TDS of Rs 116721/- paid after providing the amounts to officers at NOIDA 4.3.2 Counsel for the appellants have submitted that the there has been duplication of demand, as indicated above and in the case CESTAT Allahabad, has by deciding the issue in respect of these demands conferred the jurisdiction in respect of this issue to the Noida Commissionerate. Hence the demands made by Mumbai Service Tax Commissionerate are not sustainable in respect of the same issue.
4.3.2 We have seen the order of CESTAT Allahabad, [Final Order No 71339/2018 dated 5.07.2018]. In the said order we do not find any such plea of jurisdiction being raised or being considered by the tribunal. Even if CESTAT Allahabad has passed the said order it cannot be said that they have conferred the jurisdiction in respect of the issue to Noida Commissionerate.
10 ST/85354,85355/2015 4.3.3 In case of multiple registrations of the same entity in different jurisdictions each jurisdiction in which the unit/ person is registered is having jurisdiction over the transactions entered into by the unit/ registrant in that jurisdiction. Commissioner has in para 28 &29 of his order recorded as follows:
"28. The noticee has also stated that similar service received by M/s Sahara India TV Network, Noida registered separately as Service Tax assessee at Noida has been classified under Business Support Service for the purposes of levy of Service Tax and accordingly the Commissioner of Central Excise an Service Tax, Noida confirmed the demand of Service Tax for the Service Tax registration pertaining to Noida vide Order in Original No 08/Commissioner Noida/2013-14 dated 17.06.2013 on the following grounds:-
The services provided by AsiaSat are of infrastructural support to the business of TV Channel Admittedly, Broadcasting cannot b done without uplinking to the satellite.
The transponder of AsiaSat is an infrastructural requirement which allows TV Channels to be viewed. The definition of Business Support Services clearly states that the support service provided in relation to Business or Commerce, in any manner is covered under this service.
29. The noticee have contended that service tax amounting to Rs 23,992,295/- was demanded both by Noida and Mumbai authorities. AsiaSat issued invoices to Sahara India Commercial Corporation Limited, Sahara India T V Network, Noida quoting the PAN Number as AADCA7848N. The PAN Number for the purpose of Service Tax registration at Mumbai is AADCS6118F.
Service Tax registration numbers of NOIDA and Mumbai are different. Therefore the contention that demand of Rs 23,92,295/- is common in the SCNs issued at Mumbai and Noida is without basis and is not sustainable"
4.3.4 We have perused the invoices issued by AsiaSat against which the demand of Service tax has been made in the present 11 ST/85354,85355/2015 case. The details as they appear on invoices are tabulated below:
SN Invoice Invoiced To Invoice
'USD
1 AS3S/460/07 15.10.2007 Sahara India Commercial 400,000
2 AS3S/048/08 21.02.2008 Corporation Ltd 400,000
3 AS3S/399/08 21.04.2008 Sahara One Tower, Kamala Mill 400,000
Compound, Lower Parel,
Mumbai
4 AS3S/324/08 21.10.2008 Sahara India Commercial 400,000
5 AS3S/043/09 21.01.2009 Corporation Ltd 400,000
6 AS3S/141/09 14.04.2009 Sahara India T V Network 400,000
7 AS3S/253/09 15.07.2009 Sahara India Point, CTS 40-44, 400,000
8 AS3S/365/09 20.10.2009 S V Road, 400,000
9 AS3S/163/10 10.05.2010 Goregaon (West) Mumbai. 487,500
10 AS3S/254/10 12.07.2010 487,500
11 AS3S/363/10 19.10.2010 487,500
12 AS3S/153/11 18.04.2011 487,500
13 AS3S/043/11 25.01.2011 487,500
14 AS3S/047/10 21.01.2010 400,000
15 AS3S/261/11 18.07.2011 Sahara India Commercial 487,500
16 AS3S/384/11 19.10.2011 Corporation Ltd 487,500
17 AS3S/044/12 16.10.2012 Sahara India T V Network, 487,500
Sahara India Complex, C-2/3/4
Sector 11, NOIDA
4.3.5 From the facts as they emerge from the Table in para 4.3.4, it is quite evident that in respect of the invoices mentioned at Sl No 1 to 14, the address indicated of the service recipient shown on invoices is that of Mumbai and not of Noida. When the appellant themselves recognize that these services are being received by them for providing the Broadcasting Services from their registered premises at Mumbai, the issue of jurisdiction needs to be decide accordingly.
4.3.6 We have also examined the ST-2 certificates of Appellant issued from Mumbai, as per the ST-2 certificate issued Address of the Business Premises is same as that indicated on the invoices. Interestingly, though Appellants had taken centralized 12 ST/85354,85355/2015 registration at Noida, they have not indicated said business premise in ST-2 certificate issued at Noida. The business premise in Mumbai from where they were providing the taxable services including the Broadcasting Services was indicated as "Sahara India TV Network, B-12, 1st Floor, Ghanshyam Chamber, Opp City Mall, New Link Road, Lokhandwala, Andheri (West), Mumbai. Address of the premises or office paying service tax under centralized billing or centralized accounting under sub-rule (2) and (3A) of rule 14 of the Service Tax Rules, 1994 on the ST-2 certificate issued from Noida is indicated as "Sahara India Complex, C-2, C-3, C-4, Sector 11, Noida." While the ST-2 Certificate at Mumbai was issued on 01.01.2002 and last amended on 19.09.20014, that issued at Noida was issued on 16.09.2006 and last amended on 29.01.2014. These facts clearly show the existence of the premises indicated on the invoices issued by M/s AsiaSat and mentioned at Sl No 1 to 14 as separate registrant for the purpose of providing taxable service and registered in the jurisdiction of Mumbai Commissionerate. In our view the jurisdiction in respect of these 14 invoices to demand service tax on reverse charge basis vests with the Mumbai Commissionerate only. In respect of the invoices mentioned at Sl No 15, 16 & 17 which are in the name of the appellants registered premises as per the registration certificate issued by the Noida Commissionerate the jurisdiction will vest with the Noida Commissionerate, accordingly demand in respect of these invoices made by the Mumbai Commissionerate needs to be deleted.
4.3.7 Counsel for the appellant have relied upon the decision of Hon'ble Apex Court in case of Sayed Ali [2011 (265) ELT 17 (SC)] to argue that for exercising power, the officer should have proper jurisdiction, if there is no jurisdiction then it cannot issue show cause notice. The relevant para of the said decision is reproduced below:
"14.From a conjoint reading of Sections 2(34) and 28 of the Act, it is manifest that only such a customs officer who has been assigned the specific functions of assessment and re-assessment 13 ST/85354,85355/2015 of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act is competent to issue notice under Section 28 of the Act. Any other reading of Section 28 would render the provisions of Section 2(34) of the Act otiose in as much as the test contemplated under Section 2(34) of the Act is that of specific conferment of such functions. Moreover, if the Revenue's contention that once territorial jurisdiction is conferred, the Collector of Customs (Preventive) becomes a "proper officer" in terms of Section 28 of the Act is accepted, it would lead to a situation of utter chaos and confusion, in as much as all officers of customs, in a particular area be it under the Collectorate of Customs (Imports) or the Preventive Collectorate, would be "proper officers". In our view therefore, it is only the officers of customs, who are assigned the functions of assessment, which of course, would include re-assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act."
In our view the said decision do not help the cause of the appellants because in respect of the premises, registered with the Mumbai Service Tax Commissionerate, the power to assess was vested with the Mumbai Commissioner only and hence the proceedings initiated against the appellant by Commissioner in Mumbai cannot be faulted with.
4.4.1 On merits of the issue appellants have argued that services rendered by M/s AsiaSat do not qualify to be Business Support Services as defined by the 65(105)(zzzq) of the Finance Act, 1994. The definition as incorporated in the Finance Act, 1994 is reproduced below:
"Section 65(104c) of the Finance Act, 1994 14 ST/85354,85355/2015 "Support Services of Business or Commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.
Explanation -For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security;
Section 65 (105) (zzzq) of the Finance Act, 1994 "Taxable Service" means any service provided or to be provided to any person, by any other person, in relation to support services of business or commerce, in any manner;"
4.4.2 Revenue has sought to classify the said service under this category by holding that the service provided by the AsiaSat to the Appellant is "infrastructural support services". Commissioner has in his order in para 17 to 23 of impugned order Commissioner has observed as follows:
"17 The Show Cause Notice alleges that the activity undertaken is provision of infrastructural support under "Business Support Services." The noticee have contended that they have not received an infrastructural facilities like those mentioned in above Explanation and therefore, they are not liable to pay Service Tax under the category of infrastructural support services classifiable under Business Support Services.
18. In the instant case, the noticee have hired C-band transponder of Asiasat-3S satellite for uplinking of the programmes to be broadcasted, i.e., to support their business of Broadcasting Services provided by them. It is an admitted fact 15 ST/85354,85355/2015 that without uplinking of the programmes with the support of C- band capacity provided by AsiaSat satellite space, the Broadcasting services provided by the noticee cannot be done. Therefore I am inclined to examine whether the services received by the noticee get covered under the definition of Business Support Services as defined under Section 65(104c) and as classifiable under Section 65(105)(zzzq) of the Finance Act, 1994 in the nature of infrastructural support.
19. As can be seen, the expression "includes" in the above explanation clearly establishes that the definition of "infrastructural support services" itself is exhaustive and those infrastructural support services which are contentious are specified/ explained in the further inclusive part. Therefore, the expression "infrastructural support services" mentioned in the definition itself is adequate to cover the activities received by the noticee. The essential criteria to be satisfied for classification under the said service is that it should support the business or commerce of the recipient and the emphasis is on "in any manner".
20. CBEC circular issued under D O F No 334/4/2006-TRU dated 28.02.2006 explains the scope of the said service as under:
"3.13 BUSINESS SUPPORT SERVICES: Business entities outsource a number of services for use in business or commerce. These services include transaction processing, routine administration or accountancy, customer relationship management and tele-marketing. There are also business entities which provide infrastructural support such as providing instant offices along with secretarial assistance known as "Business Centre Services". It is proposed to tax all such outsourced services. If these services are provided on behalf of a person, they are already taxed under Business Auxiliary Service. Definition of support services of business or commerce gives indicative list of outsourced services."
16 ST/85354,85355/2015
21. The CBEC vide Circular No 109/3/2009-ST dated 23.02.2009 further clarified that Business Support Service is a generic service of providing support to the business or commerce of the service receiver. In other words, the principal activity is to be undertaken by the client while the service received is to support the business or commerce of the recipient.
Thus the infrastructural support services are those services which are often outsourced and used for the business activity undertaken by the client.
22. In the instant case, the noticee applied for and obtained Service Tax registration for providing Broadcasting service. The noticee entered into an agreement with M/s Asia Satellite for hiring C-band transponder on AsiaSat 3S satellite. The said transponder was meant for use for uplinking the programme to be broadcasted. In other words, the noticee outsourced the space in C-band transponder for provision of Broadcasting Service. The noticee is entitled to treat the said service as input service used for providing the output service namely Broadcasting service. The Noticee have not denied having received the services and their use for providing the output services. In fact, the output service could not have been provided without the support service.
23. From the foregoing, I am of the considered view that the Noticee has received services (as deemed service provider) for use in their business activity which get appropriately covered within the scope of the taxable services of "Business Support Services" as defined under Section 65(104c) and classifiable under Section 65 (105)(zzzq) of the Finance Act, 1994."
4.4.3 Appellants have argued that the services provided to them by M/s AsiaSat are specialized services without which the Broadcasting would be impossible. These services cannot be called as outsourced service or infrastructural support service, for classification of these service under the category of Business Support Services. They further stated that the phrase "infrastructure support service" used while defining the 17 ST/85354,85355/2015 "Business Support Service" should be interpreted along with the other terms used in definition by application of principle of "ejusdem genersis" or "noscitur a sociis" (Reliance placed on Hon'ble Apex Court decision in case of Siddheshwari Cotton Mills (P) Ltd [1989 (39) ELT 498 (SC)]). It is thus their argument that such specialized service provided by M/s AsiaSat, cannot be covered by phrase "infrastructure support service", as used in the definition clause.
4.4.4 We have considered the argument of the appellant. However we do not find ourselves to be in agreement with what is stated by them. The principle of "ejusdem genersis" and "noscitur a sociis" are essentially principle of construction of the statue, provide that the words used in a statue should be interpreted along with the words in company which they occur i.e. the word occurring together derive the colour from each other. This essentially mean that the word which are more general in nature get restricted by the other words used therein. However the said principles are not applicable when the words used in the statute are simple plain and clear. Hon'ble Supreme Court has in case of Hospital Mazdoor Sabha & Others [(1960) 2 SCR 865] in para 9 held as follows:
"It is, however, contended that, in construing the definition, we must adopt the rule of construction noscuntur a sociis. This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. The same rule is thus interpreted in " Words and Phrases " (Vol. XIV, P. 207): "Associated words take their meaning from one another under the doctrine of noscuntur a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim Ejusdem Generis." In fact the latter maxim "is only an illustration or specific application of the broader maxim noscuntur a sociis ".
18 ST/85354,85355/2015 The argument is that certain essential features or attributes are invariably associated with the words "business and trade" as understood in the popular and conventional sense, and it is the colour of these attributes which is taken by the other words used in the definition though their normal import may be much wider. We are not impressed by this argument. It must be borne in mind that noscuntur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. 1 is only where the intention of the Legislature is associating wider words with words of narrow significance is doubtful, or otherwise not clear that the present rule of construction can be useful applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service. As has been observed by Earl of Halsbury, L. C., in The Corporation of Glasgow v. Glasgow Tramway an Omnibus Co. Ltd. (1), in dealing with the wider word used in s. 6 of Valuation of Lands (Scotland) Act, 1854 " the words 'free from all expenses whatever in connection with the said tramways' appear to me to be so wide in their application that I should have thought it impossible to qualify or cut them down by their being associated with other words on the principle of their being ejusdem generis with the previous words enumerated". If the object and scope -of the statute are considered there would be no difficulty in holding that the relevant words of wide import have been deliberately used by the Legislature in defining "industry" in section 2(j). The object of the Act was to make provision for the investigation and settlement of industrial disputes, and the extent and scope of its provisions would be realised if we bear in mind the definition of "industrial dispute " given by Section 2(k), of "wages" by Section 2(rr), "workman" by Section 2(s), and of "employer" by Section 2(g). Besides, the definition of public utility service prescribed by s. 2(m) is very significant. One has merely to glance at the six 19 ST/85354,85355/2015 categories of public utility service mentioned by Section 2(m) to realise that the rule of construction on which the appellant relies is inapplicable in interpreting the definition prescribed by Section 2(j)."
In the Siddheshwari Cotton Mills (P) Ltd [1989 (39) ELT 498 (SC)], Hon'ble Supreme Court has applied the principle of "Ejusdem Generesis" for interpreting the phrase like "or any other process" as is evident from the para 8 of the decision reproduced below:
"8. The preceding words in the statutory provision which, under this particular rule of construction, control and limit the meaning of the subsequent words must represent a genus or a family which admits of a number of species or members. If there is only one species it cannot supply the idea of a genus.
In the present case the expressions bleaching, mercerising, dyeing, printing, water-proofing, rubberising, shrink-proofing, organdie processing' which precede the expression 'or any other process' contemplate processes which impart a change of a lasting character to the fabric by either the addition of some chemical into the fabric or otherwise. 'Any other process' in the section must, share one or the other of these incidents. The expression "any other process" is used in the context of what constitutes manufacture in its extended meaning and the expression "unprocessed" in the exempting notification draws its meaning from that context. The principle of construction considered appropriate by the Tribunal in this case appears to us to be unsupportable in the context in which the expression "or any other process" has to be understood."
It is not the case herein wherein separate identifiable words have been used in the definition clause. Hence following the decision of Hospital Mazdoor Sabha, supra we hold that the said principles of "Noscitur a Sociis" and "Ejusdem Genersis" to be not applicable in the present case.
4.4.5 Relying on the explanation to Section 65(104c) and the decision of the tribunal in the case of Air Liquide North India (P) 20 ST/85354,85355/2015 Ltd [2017 (4) GSTL 230 (T-Del)] and Dish TV India Ltd [2015 (38) STR 857 (T-Del)] appellants have argued that for the service to be considered as "infrastructural support service", office should have been provided along with various other facilities. In the decision of Air Liquide North India, CESTAT has held as follows:
"10. The appellants strongly pleaded that the scope of infrastructure support as mentioned under tax entry 'business support service' will not cover the present case. Reliance was placed on the explanation to state that the nature of activities which are to be generally considered as infrastructural support service can be ascertained from such inclusive definition. These are mainly administrative and office related support. The type of activities like putting up and managing gas storage facility in industrial unit are not fitting into overall scope of the infrastructural support service as contemplated by the inclusive definition given in the explanation. We note that though the activities of the appellant, can be brought under very generic understanding of infrastructure support, when examined with statutory scope as per explanation indicating nature of services which are to be brought under tax net than it would appear that the present activity will not get covered under the said tax entry. We also take note that in legal interpretation, there are situation where the word 'includes' in certain context be a word of limitation (South Gujarat Roofing Tiles Manufactures- 1997 (1) SCR 878). In certain situations the nature of included items would not only partake of the character of the whole, but may be construed as clarificatory of the whole. In the present case even considering the explanation for infrastructural support service is only defined in an inclusive way, still it will not be incorrect to hold such inclusive definition will throw light upon what are all the nature of services which are sought to be taxed."
In our view the said decision do not lay down that office should be provided as must for the service to be classified under the category of "infrastructure support service". Nor do the explanation to Section 65(104c) state so. In the case of South 21 ST/85354,85355/2015 Gujarat Roofing Tiles Manufactures, relied upon by the bench while passing the said decision, Hon'ble Supreme Court was interpreting the entry 22 of Minimum Wages Act, 1948 and held that the items included in it were plainly comprised in the expression 'potteries industry' which showed that the word 'includes' was not to extend the normal meaning of this expression. The conclusion was that the word includes was used in the explanation in the sense of 'means' and the definition provided by the explanation was exhaustive. From the explanation, it is evident that "infrastructure support service"
has been defined using the phrase "includes" and not the word, "means". Hon'ble Supreme Court has in case of Rajasthan Texchem Ltd [2007-TIOL-08-SC-CT] held as follows:
"....The word includes gives a wider meaning to the words or phrases in the Statute. The word includes is usually used in the interpretation clause in order to enlarge the meaning of the words in the statute. When the word include is used in the words or phrases, it must be construed as comprehending not only such things as they signify according to their nature and impact but also those things which the interpretation clause declares they shall include....."
4.4.6 Appellants have argued that in this case they were granted the right to use the C-Band Transponder and hence in view of Article 366(29A)(d) such transfer of right to use amounts to transaction of sale and cannot be taxed as service. We have perused the agreement between the Appellant and M/s AsiaSat. In the said agreement following has been provided:
"2. TRANSPONDER CAPACITY 2.1 AsiaSat hereby agrees to make available the Transponder Capacity for the Permitted Facilities to the Customer during the Term and the Customer hereby agrees to comply with the terms of this Agreement.
2.2 The Customer is hereby granted the right to be availed of the Transponder Capacity for the Permitted Facilities only. The Customer shall not change the Permitted Facilities without first 22 ST/85354,85355/2015 submitting a written report to AsiaSat on the proposed changes and without the prior written consent of AsiaSat, which consent AsiaSat shall not unreasonably withhold. The Customer shall conform to the parameters as set out in Annex 5 when being availed of the Transponder Capacity.
2.3 (a) The Customer will follow practices and procedures established by the ITU for frequency coordination and will not do anything to the Transponder Capacity in any manner that would harm the Transponder Capacity or cause interference to any other transponder capacities on the Satellite, or any other satellites. The Customer shall configure, equip and operate its transmit earth facilities to confirm to the technical parameters of the Satellite, and to follow AsiaSat's procedures for transmission to the Satellite as set out in Annex 1 (as may be revised from time to time to conform with ITU regulations and recommendations). The Customer shall be responsible for the acts and omissions of any third parties that it retains for such transmission.
(b) The Customer shall prior to being availed of Transponder Capacity provide AsiaSat with the Customer's written transmission plans in sufficient detail to enable AsiaSat to ensure that the availability of the Transponder Capacity to the Customer does not or will not cause interference with other customers on the satellite or other satellites nor adversely affect AsiaSat's ability to co-ordinate the satellite with other satellite operators. Following receipt of such details, AsiaSat shall promptly notify the Customer in writing whether the transmission plans are acceptable to AsiaSat and, if not, shall notify the Customer in sufficient detail to enable the Customer to amend the transmission plans and submit such amendments until final acceptance by AsiaSat. Thereafter, the Customer shall not amend, modify or alter its transmission plans (which shall include a change of plans due to migration to Substitute 23 ST/85354,85355/2015 Transponder Capacity or transponder capacity on any Replacement Satellite) without AsiaSat's prior approval and AsiaSat shall respond with reasonable promptness to requests from the Customer to approve amended transmission plans.
2.4 The Transponder Capacity shall be provided to the Customer on a non-pre-emptible basis, meaning that the Transponder Capacity will not be subject to deliberate interruption or cessation of availability by AsiaSat and will only be provided with the protection as set out in clause 7.2. Notwithstanding the foregoing, the Customer acknowledges that AsiaSat may pre-empt or interrupt the Customer's being availed of the Transponder Capacity if such action is required to protect the overall health and performance of the Satellite or if there is an anomaly or other emergency situations affecting the Transponder Capacity, the Transponder or the Satellite or during the Maintenance Window Period. AsiaSat shall give the Customer as much advance notice as is possible in the circumstances an, other than in emergency situations. AsiaSat shall advise the Customer the action it proposes to take under this Clause over a reasonable period prior to exercising its rights under this Clause.
2.5 (a) AsiaSat shall, in its sole discretion, allocate the Transponder number to the Customer and inform the Customer of that number at least ten (10) Business Days before the Commencement Date. AsiaSat shall have the right at any time either prior to or during the Term, to move the Customer (i) to the Substitute Transponder; or
(ii) onto the Substitute Transponder Capacity; PROVIDED that the performance specifications of such Substitute Transponder or Substitute Transponder Capacity are not materially and adversely different to the performance specifications of the Transponder as specified in Appendix 1 or the Transponder Capacity, as the case may be. Upon any such change in Transponder or Transponder Capacity, all rights and obligations of the Parties hereunder shall apply in all respects to such Substitute Transponder or 24 ST/85354,85355/2015 Substitute Transponder Capacity and shall be otherwise unaffected by such change in the Transponder or Transponder Capacity, as the case may be, and from the date the Customer has migrated to the Substitute Transponder or Substitute Transponder Capacity, as the case may be, all references in the Agreement to "Transponder", "Transponder Capacity" and "Annexes" shall be deemed to be references to the Substitute Transponder, Substitute Transponder Capacity and the annexes in respect of such Substitute Transponder or Substitute Transponder Capacity, respectively.
(b) AsiaSat shall give the Customer as much notice as possible in the circumstances of its intention to take action under paragraph (a) of this Clause 2.5 and use its reasonable endeavours to minimise the inconvenience to the Customer"
From the above agreement, it is quite evident that M/s AsiaSat has just granted right to use passive infrastructure of Transponder Capacity available on its Satellite. Hon'ble Karnataka High Court has in case Indus Tower Ltd [2012 (285) ELT 3 (Kar)] specifically held that such transaction is not within the ambit of Article 366 (29A)(d) of the Constitution of India. Hon'ble High Court has held as follows:
"63.The right conferred by the assessee on the mobile operator is in the nature of a personal right granted to him to do something upon the passive infrastructure belonging to the assessee. It does not amount to creation of an interest in the passive infrastructure itself. It is purely a permissive light and is personal to the grantee. The licence has no other effect than to confer a liberty upon the licensee to go upon the land which would otherwise be unlawful. A dominant legally creating leave and licence in favour of the licensee cannot create encumbrance on the immoveable property for the simple reason that whenever the licence is created in favour of the licensee, the licensee is always treated to be in permissive possession. He is given only an authority to enter into the premises. The possession is always
25 ST/85354,85355/2015 with the licensor. Only entry in the premises is made legal. It does not create any title in favour of the licensee. A licence is a mere grant of a personal privilege to do something upon, without conferring an estate in the land. If a document gives only a right to use a property in a particular way under certain terms while it remains in the possession and control of the owner thereof, it will be a licence. The legal possession thereof continues to be in the owner of the property but the licencee is permitted to make use of the premises for the particular period. But for the permission his occupation would be unlawful, and does not create in his favour any estate or interest in the property.
64.It is well settled that, whether the transaction amounts to transfer of right or not cannot be determined with reference to a particular word or clause in the agreement. The agreement has to be read as a whole to determine the nature of the transfer. From a close reading of all the clauses in the agreement it appears to us that under the terms of the contract there is no transfer of right to use the passive infrastructure conferred on the sharing operator/mobile operator. What is permitted under the contract is, a permission in the nature of a licence to have access to the passive infrastructure and permission to keep the equipments of the mobile operator in the pre-fabricated shelter with permission to have ingress and egress only to the authorised representatives of the mobile operator. It is because an owner of a property has a bundle of rights, namely right to possess, right to use and enjoy, right to usufruct, right to consume, to destroy, to alienate or transfer, etc.. Therefore, to constitute a deemed sale under Article 366(29A)(d) having regard to the object with the 46th Constitutional Amendment was inserted, it is clear the right that is transferred under a contract should be a bundle of rights minus right to title. It is because of the earlier Constitution Bench judgment of the Apex Court where the right to use the property was transferred by the person who retained the title as only a nominal owner with the benefit of the goods has been passed on to the transferee, without paying taxes to the exchequer, that the Constitution was 26 ST/85354,85355/2015 amended to bring within its fold such transactions which are styled as deemed sales. Therefore, in deciding whether a transaction falls within Article 366(29A)(d) so as to constitute a deemed sale, the purpose of the 46th Amendment, the mischief sought to be remedied and the object sought to be achieved by the said provision cannot be lost sight of. In that background, in the facts of this case, if we look into the various terms of the agreement it is clear under the contract, the assessee has not transferred any right in the passive infrastructure to the mobile operators. The right that is conferred on the mobile operator is a permission to have access to the passive infrastructure, a permission to keep the active infrastructure in the site belonging to the assessee, a permission to mount the antennae on the tower erected by the assessee and to have the benefit of a particular temperature so as to operate the equipments belonging to the mobile operator. No sale of goods or transfer is involved in the transaction in question. Therefore, it does not fall within the mischief of Article 366(29A)(d) of the Constitution as held by the learned Judge as well as the assessing authority. Therefore, the impugned order passed by the learned single Judge as well as the assessing authority cannot be sustained."
4.4.7 In case of Indus Tower, Limited [2014 (35) STR 459 (Del)], Hon'ble Delhi High Court has held as follows:
"16. The main point urged on behalf of the petitioner was that there was no transfer of the right to use any goods by Indus in favour of the sharing telecom operators since the provision of "Passive Infrastructure" was essentially a service which was taxed as a service provided "in relation to support services of business or categories, in any manner" under section 65 (105) (zzzq) of the Finance Act, 1994. It was contended that the same transaction which was treated as a taxable service cannot also be treated as a sale or deemed sale under the DVAT Act. It was contended that at any rate there was no transfer by Indus of the right to use any goods in favour of the sharing telecom operators.
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17. We were taken through the agreement dated 25.02.2009 (which is referred to as the "master service agreement" or MSA) and it was contended on the basis of the terms thereof that the Passive Infrastructure provided by the petitioner does not involve any transfer of right to use any goods in favour of the sharing telecom operators. Strong reliance, inter alia, was placed on the judgment dated 07.09.2011 of the Karnataka High Court reported as Indus Towers Ltd. vs. Deputy Commissioner of Commercial Taxes Enforcement, 2012 (285) ELT 3 (Kar), a judgment which disposed of several writ appeals filed by different petitioners of which the present petitioner was one. It was pointed out that the terms and conditions of the MSA were examined by the Karnataka High Court which came to the conclusion that no transfer of any right to use the goods was involved. It was submitted that the Karnataka High Court (supra) has concluded, for reasons stated in the judgment, that the petitioner provided services in relation to site access, power conversion, air- conditioning and safe keeping for which it received a consolidated service revenue from the sharing telecom operators and that there was neither a sale of goods nor a deemed sale so as to attract levy of tax under the Karnataka Value Added Tax, 2003.
18. .............
19. We are in respectful agreement with the view taken by the Karnataka High Court in the judgment sited (supra). The right to use the goods - in this case, the right to use the passive infrastructure - can be said to have been transferred by Indus to the sharing telecom operators only if the possession of the said infrastructure had been transferred to them. They would have the right to use the passive infrastructure if they were in lawful possession of it. There has to be, in that case, an act demonstrating the intention to part with the possession of the passive infrastructure. There is none in the present case. The passive infrastructure is an indispensible requirement for the proper functioning of the active infrastructure which is owned and operated by the sharing telecom operators. The passive 28 ST/85354,85355/2015 infrastructure is shared by several telecom operators and that is why they are referred to as sharing telecom operators in the MSA. The MSA merely permits access to the sharing telecom operators to the passive infrastructure to the extent it is necessary for the proper functioning of the active infrastructure. The MSA also defines "site access availability" as meaning the availability of access to the sharing operator to the passive infrastructure at the site. Clause 2 of the MSA which has been quoted above provides for "site access" and Clause 1.7 limits the site access availability to the sharing operator on use - only basis so far as it is necessary for installation, operation and maintenance etc. of the active infrastructure; the clause further states that the sharing operator does not have, nor shall it ever have, any right, title or interest over the site or the passive infrastructure. The Clause also takes care to declare that the sharing operator shall not be deemed to be the tenant of Indus and no tenancy rights shall be deemed to exist over the site/passive infrastructure. Clause 2.1.8, presumably by way of abundant caution, states that it is expressly agreed by the sharing operator that nothing contained in the MSA or otherwise shall create any title, right, tenancy, or any similar right in favour of the sharing operator.
20. ....................
21. When Indus has not transferred the possession of the passive infrastructure to the sharing telecom operators in the manner understood in law, the limited access provided to them can only be regarded as a permissive use or a limited licence to use the same. The possession of the passive infrastructure always remained with Indus. The sharing telecom operators did not therefore, have any right to use the passive infrastructure,
22. A careful perusal of the judgment of the Karnataka (supra) shows that the following propositions were laid down: -
a) No operation of the infrastructure is transferred to the sharing telecom operator. The latter is only provided access to use the 29 ST/85354,85355/2015 passive infrastructure, but Indus has retained the right to lease, licence etc. the passive infrastructure to any advertising agency;
b) The entire infrastructure is in the physical control and possession of Indus at all times and there is no parting of the same nor any transfer of the right to use the equipment or apparatus;
c) The permission granted to the telecom operator to have access to the passive infrastructure for limited purposes is loosely termed by the taxing authorities as "a right to use the passive infrastructure";
d) There is no intention on the part of the Indus to transfer the right to use; it is only a licence or an authority granted to telecom operator as defined in Section 52 of the Easements Act, 1952. A licence cannot in law confer any right; it can only prevent an act from being unlawful which, but for the licence, would be unlawful. A licence can never convey by itself any interest in the property;
e) The entire MSA has to be read as a whole without laying any undue emphasis upon a particular word or clause therein. What is permitted under the MSA is a licence to the telecom operators to have access to passive infrastructure and a permission to keep equipments of the sharing telecom operator in a pre- fabricated shelter with provision to have ingress and aggress only to the authorised representatives of the mobile operator."
4.4.8 Hon'ble Madhya Pradesh High Court has in case of Bharti Infratel Ltd [2018 (17) GSTL 225 (MP)](Affirmed by Hon'ble Supreme Court as reported in {2018 (17) GSTL J51 (SC)] held as follows:
"35. We are in respectful agreement with the view taken by the Karnataka High Court in the judgment sited (supra). The right to use the goods - in this case, the right to use the passive infrastructure - can be said to have been transferred by the petitioner to the sharing telecom operators only if the possession of the said infrastructure had been transferred to them. They would have the right to use the passive infrastructure if they 30 ST/85354,85355/2015 were in lawful possession of it. There has to be, in that case, an act demonstrating the intention to part with the possession of the passive infrastructure. There is none in the present case. The passive infrastructure is an indispensable requirement for the proper functioning of the active infrastructure which is owned and operated by the sharing telecom operators. The passive infrastructure is shared by several telecom operators and that is why they are referred to as sharing telecom operators in the MSA. The MSA merely permits access to the sharing telecom operators to the passive infrastructure to the extent it is necessary for the proper functioning of the active infrastructure. The MSA also defines "site access availability" as meaning the availability of access to the sharing operator to the passive infrastructure at the site. Clause 2 of the MSA which has been quoted above provides for "site access" and Clause 1.7 limits the site access availability to the sharing operator on use - only basis so far as it is necessary for installation, operation and maintenance etc. of the active infrastructure; the clause further states that the sharing operator does not have, nor shall it ever have, any right, title or interest over the site or the passive infrastructure. The Clause also takes care to declare that the sharing operator shall not be deemed to be the tenant of petitioner and no tenancy rights shall be deemed to exist over the site/passive infrastructure. Clause 2.1.8, presumably by way of abundant caution, states that it is expressly agreed by the sharing operator that nothing contained in the MSA or otherwise shall create any title, right, tenancy, or any similar right in favour of the sharing operator."
4.4.9 In view of the above decisions of High Court we are unable to agree with the submissions made by the Appellant that the agreement between them and M/s AsiaSat, was one transferring right to use and shall be covered by the 366(29A)(d) to be deemed sale of goods and hence cannot be contract for service. Since we refer to the later decisions of High Court of Karnataka than the decision in case of Antrix Corporation Ltd [2010-TIOL- 515-HC-Kar-CT] we have not taken up this decision for analysis.
31 ST/85354,85355/2015 Furthermore the appeal filed in the matter has been admitted by the Hon'ble Apex Court as reported at [2018 (361) ELT A63 (SC)].
4.4.10 We also note that CESTAT Allahabad has in the Appellants own case for their Noida Registration has upheld the demand of Service Tax on merits. In our considered opinion the services rendered by M/s AsiaSat to appellant are nothing but "infrastructure support services" for supporting the business of broadcasting services undertaken by the appellants. Thus these services are appropriately classifiable as "Business Support Services" by the Section 65(104c) of the Finance Act, 1994 and taxable as per Section 65 (105)(zzzq) ibid.
4.4.11 Since the service provider i.e. M/s AsiaSat do not have any fixed business establishment in India, appellants as recipient of service are required to discharge the service tax liability as per Section 66A of the Finance Act, 1994 read with Rule 3(iii) of the Taxation of Services (Provided from outside India and received in India) Rules, 2006.
4.5.1 Appellants have argued that certain portion demand made vide show cause notice issued from F No. ST- II/Audit/Gr.6/98/SITV/11-12/Pt.I dated 08.04.2013 is barred by limitation. The only argument advanced by the appellant against the invocation of extended period of limitation for making the demand is that the issue is completely revenue neutral as any service tax paid by them on the basis of reverse charge as recipient of service would be available to them in the form of CENVAT Credit. Thus they do not gain anything by having not paid the service tax and there cannot be any intention to evade payment of tax attributed.
4.5.2 We are not in position to agree with the said submissions made by the appellants. Unlike the erstwhile proviso to section 11A(1) Central Excise Act, 1944 where the intention to evade payment of duty was material factor in cases where suppression etc; was invoked, the construction of Section 73(1) 32 ST/85354,85355/2015 of Finance Act, 1994 is different. Commissioner has in his order in para 37 to 41 held as follows:
"37. The next question that arises is whether the Department is justified in invoking the proviso clause to Section 73 (1) to demand Service Tax as confirmed above, not paid by the Noticee for the aforesaid period. The proviso clause to Section 73(1) of the Finance Act, 1994, provides that Service Tax which has not been paid, can be demanded, under proviso clause to Section 73(1) within five years (from the relevant date) wherever such short payment was " by reason of:-
a)Fraud; or
b)Collusion; or
c)Wiflful mis-statement; or
d)Suppression of facts; or
e)Contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of Service Tax."
Thus it is very clear from the seriatim listing of the situations mentioned against (a) to (e) under the proviso clause to Section 73(1) that these are independent of each other and existence of any/each of the situations specified against (a) to (e) above, is individually good enough to attract demand for extended period under the proviso clause to Section 73(1). In other words, "suppression of facts" alone is a reason sufficient enough to invoke this clause; there is no need to prove that there was "willful mis-statement" too.
38. There is no material to establish that non-payment of Service Tax is on account of bonafide reasons. In fact, the noticee argues that no service tax is payable. On the other hand, there are adequate evidences to establish the fact of suppression of material facts and contravention of provisions of law with intent to evade payment of Service Tax leading to non- payment of Service Tax.
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39. It has been alleged that the Noticee have not obtained Service Tax registration in respect of 'Business Support Service' for payment of Service Tax; they failed to disclose the fact that they had been receiving the said services; they failed to declare the correct value of the taxable services received by them from their foreign service provider; they have not assessed the Service Tax correctly and not paid the same within the time limit prescribed; they have not furnished to the Department ST-
3returns-with the full and correct details of services rendered by them and thereby willfully contravened the provisions of law with intent to evade payment of due Service Tax.
40. Requirement under law to file proper ST-3 returns with full disclosure is not a mere procedural formality but a statutory requirement. In the instant case, the Noticee has not paid Service Tax on the value (amounts) paid by them as consideration for taxable service, classifiable under 'Business Support Service' services received from their foreign service provider, viz., AsiaSat. The department had no knowledge of such non-payment of Service Tax, as the activities were never declared to the department. Had it not been for the EA-2000 audit conducted on the records of the noticee, the above mentioned facts would not have come to the notice of the department. The noticee, being a registered Service Tax assessee, being well aware of the statutory provisions, have refrained from obtaining Service Tax registration in respect of the 'Business Support Services' received by them, have suppressed the facts and have willfully evaded payment of Service Tax Thus, there are valid, adequate and justifiable grounds to conclude suppression of material facts by the Noticee resulting in non-payment of Service Tax, thereby warranting invocation of the extended period of limitation to demand the Service Tax.
41. Therefore, I hold that the proviso clause to Section 73(1), as it existed at the material time, to demand Service Tax for an 34 ST/85354,85355/2015 extended period of five years, is rightly invokable in respect of the Service Tax not paid during the period April 2008 to March 2012. Therefore, the demand of Service Tax amounting to Rs.3,94,10,566/- made in the Show Cause Notice under proviso to Section 73(1) of the Finance Act, 1994 is justified."
4.5.3 We are in complete agreement with the findings recorded by the Commissioner. If the argument of revenue neutrality was to be considered a valid argument under the scheme of Finance Act, 1994, then entire provisions relating to payment of service tax on reverse charge will become otiose and every service recipient will claim that what so ever service tax he pays on reverse charge basis will be available to him as CENVAT Credit. Argument of revenue neutrality thus would not be available in case where the service tax is demanded by the recipient of service on the reverse charge basis. Hon'ble Supreme Court has in case of Star Industries [2015 (324) ELT 656 (SC)] dismissing the argument of revenue neutrality held as follows:
"35. It was submitted by the learned counsel for the assessee that the entire exercise is Revenue neutral because of the reason that the assessee would, in any case, get Cenvat credit of the duty paid. If that is so, this argument in the instant case rather goes against the assessee. Since the assessee is in appeal and if the exercise is Revenue neutral, then there was no need even to file the appeal. Be that as it may, if that is so, it is always open to the assessee to claim such a credit."
4.5.4 In case of Dharampal Satyapal [2005 (183) ELT 241 (SC)] Supreme Court has dismissed the argument of revenue neutrality on the basis of availability of MODVAT Credit stating as follows:
25.Modvat is basically a duty collecting procedure which provides relief to the manufacturer on the duty element borne by him in respect of the inputs used by him. The relief is given under the modvat scheme on the actual payment of duty on the input. On such payment, the assessee gets a right to claim 35 ST/85354,85355/2015 adjustment/set-off against the duty on the final product. The question of duty adjustment/set-off against duty on the final product was not in issue. In any event, no record on credit entitlement was produced. A right to claim proforma/modvat credit against duty on final product was different from the defence of bonafides in a case where circumstances mentioned in the proviso to section 11A(1) stands proved by the department for invoking larger period of limitation. The burden to prove the defence of bonafides was on the assessee and the assessee in this case has failed to prove its bonafides. Under modvat, excisable finished products made out of duty-paid inputs are given relief of excise duty to the extent of duty paid on inputs. In the circumstances, we are satisfied that the department was justified in invoking the extended period of limitation under the proviso to Section 11A(1).
4.5.6 Thus we uphold the demand made in this Show Cause Notice by invoking the extended period of limitation as per proviso to Section 73(1) of Finance Act, 1994.
4.5.7 The demand made as per Statement of Demand/SCN under Section 73(1A) of The Finance Act, 1994 issued under F.No. ST-II/Dn-IV/Gr.II/Sahara/04/EA2000/SCN12-13/2013-14 dated 07.04.2014 is also upheld. Once we hold that the services provided by the M/s AsiaSat to appellants is a service, it is covered by the definition of Service as per Section 65(44B) of Finance Act, 1994 and is not one in the negative list or in the list of the exempted services. Since the services received by the appellants are taxable service, they were required to discharge the service tax liability in respect of these services as the service provider M/s AsiaSat is not having any fixed business establishment in India.
4.6. Appellants have argued against demand of interest made from them in terms of Section 75 of Finance Act, 1994. However we do not find any merits in those submissions in view of the decision following decisions:
36 ST/85354,85355/2015 P V Vikhe Patil SSK [2007 (215) ELT 23 (Bom)] affirmed by the Hon'ble Supreme Court [2016 (335) ELT 196 (SC)];
Kanhai Ram Thakedar [2005 (185) ELT 3 (SC)] TCP Limited [2006 (1) STR 134 (T-Ahd)] Pepsi Cola Marketing Co [2007 (8) STR 246 (T-Ahd)] Ballarpur Industries Limited [2007 (5) STR 197 (T-Mum)].
4.7 While discussing the issue in respect of interest under Section 11AB and penalty under Section 11AC of the Central Excise Act, 1944 which are pari-materia to Section 75 and 78 of the Finance Act, 1994, Hon'ble Bombay High Court has in its decision referred in para 4.6 held as follows:
"7. Considering the scheme together, it is evident that interest chargeable u/s. 11AB is a sort of civil liability of the assessee, who has failed to pay the duty or who has short paid the duty. This is irrespective of the fact whether such non-payment/short payment is innocent or mala fide. So far as penalty u/s. 11AC is concerned, it is certainly a provision, penal in nature. This is because, it comes into play only when non-payment/short payment is result of fraud, collusion or any wilful mis- statement/suppression of facts or contravention of any of the provisions of the Act/Rules on the part of the assessee, with intent to evade payment of duty. There is a sense of deliberate evasion and scheming for the purpose on the part of the assessee and that is why in that case, there is no discretion to impose penalty lesser than 100% or 25% in case duty determined is paid within 30 days from the date of determination. The distinction of civil liability and criminal liability stands further demonstrated by Explanation (1) to sub- section (2B) of Section 11A, which reads thus :
"Explanation (1): Nothing contained in this sub-section shall apply in a case where the duty was not levied or was not paid or was short levied or was short paid or was erroneously refunded by reason of fraud, collusion or any wilful mis-statement or 37 ST/85354,85355/2015 suppression of facts or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty."
8. The ratio laid down in the matter of Rashtriya Ispat Nigam Ltd. v. Commissioner of Central Excise, Visakhapatnam - 2003 (161) E.L.T. 285 (Tri.-Bang.), relied upon by learned Counsel for assessee, which view was confirmed by the Hon'ble the Apex Court while dismissing the appeal of the department, that in case the duty is paid before issuance of show cause notice, no penalty u/s. 11AC is imposable, was a decision of the Tribunal at Bangalore dated 13-11-2002. Taking into consideration the hierarchy of authorities under the Central Excise Act, 1944 i.e. Assessment Officer conducting enquiry and determining the duty evaded or short paid, Commissioner (Appeals) and thereafter CESTAT, it can safely be said that this was a decision regarding the non-payment of duty of the period prior to insertions by Amendment Act No. 14/2001 with effect from 11-5-2001 by which sub-sections (2A), (2B) and (2C) are inserted in the main Act. Naturally, the Explanation (1) to sub-section (2B), reproduced hereinabove, was neither on the statute book nor was under consideration before the Tribunal or before the Hon'ble the Supreme Court. If the effect of Explanation is taken into consideration, the liberty to pay evaded excise duty as may be ascertained by Central Excise Officer u/s. 11A(2) or on the basis of duty ascertained by himself, was not available to the assessee prior to 11-5-2001. We must say that by insertion of sub-sections (2A) to (2C) and more particularly Explanation (1) to sub-section (2B), the position stands drastically changed. Since there is no liberty to the assessee, who has evaded the duty intentionally, by exercising fraud, collusion etc. for the purpose, the liberty to pay the evaded duty under sub-section (2B) is not available and the terminal portion of sub-section (2B) "......and inform the Central Excise Officer of such payment in writing, who on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid;"
38 ST/85354,85355/2015 cannot render any assistance to such an assessee. In other words, the proceedings of ascertainment of evaded duty, imposition of interest and penalty cannot be dropped by virtue of above terminal clause of sub-section (2B) in the cases of assessees, who had intentionally evaded payment of duty by use of fraud, collusion etc. as contemplated by Section 11AC.
In the cases where the finding of fact regarding existence of fraud, collusion, wilful mis-statement/suppression of facts or contravention of any provisions of the Act or Rules with intent to evade the payment of duty is confirmed, it may not be open to the assessee to claim that no penalty is imposable upon him u/s. 11AC, because of payment of evaded duty before issuance of show cause notice, after amendment as inserted by Act No. 14/2001 with effect from 11-5-2001.
As already discussed hereinabove, there is no discretion with the authorities to impose any lesser penalty than 100% and 25% in case duty after being determined u/s. 11A(2), the assessee pays it within 30 days. This answers both the substantial questions of law on which appeal is admitted, so far as penalty imposable u/s. 11AC is concerned."
9. .........
10. So far as interest u/s. 11AB is concerned, on reference to text of Section 11AB, it is evident that there is no discretion regarding the rate of interest. Language of Section 11AB(1) is clear. The interest has to be at the rate not below 10% and not exceeding 36% p.a. The actual rate of interest applicable from time to time by fluctuations between 10% to 36% is as determined by the Central Government by notification in the Official Gazette from time to time. There would be discretion, if at all the same is incorporated in such notification in the gazette by which rates of interest chargeable u/s. 11AB are declared.
The second aspect would be whether there is any discretion not to charge the interest u/s. 11AB at all and we are afraid, language of Section 11AB is unambiguous. The person, who is liable to pay duty short levied/short paid/non-levied/unpaid etc., 39 ST/85354,85355/2015 is liable to pay interest at the rate as may be determined by the Central Government from time to time. This is evident from the opening part of sub-section (1) of Section 11, which runs thus :
"Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as determined under sub- section (2) or has paid the duty under sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate ........"
The terminal part in the quotation above, which is couched with the words "shall" and "be liable" clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier. Upon reading Section 11AB together with Sections 11A and 11AA, we are of firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional."
4.8 Since we uphold the invocation of extended period of limitation in respect of the show cause notice dated 08.04.2013, the penalties imposed under Section 78 cannot be faulted with in view of the above referred decision of the Hon'ble Bombay High Court and the decision of Hon'ble Supreme Court in case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)].
4.9 Penalty has been imposed by the Commissioner under Section 77 for various infractions noticed in complying with provision of law. For imposing penalty under Section 77 Commissioner has recorded as follows:
"45. The Show Cause Notices also proposed penalty action under Section 77 of the Finance Act, 1994. It is observed from the records that the Noticee has failed to obtain Service Tax registration in respect of the Business Support services received by them from the service provider, located outside India; failed to file proper statutory returns in form ST-3 and also failed to 40 ST/85354,85355/2015 pay Service Tax within the prescribed time limit. Thus, they have contravened the provisions of Section 66, 67, 68, 69 and 70 of the Finance Act, 1994 read with Rule 4, 5, 6 and 7 of the Service Tax Rules, 1994. Therefore, they are liable to penalty under Section 77 of the Finance Act, 1994. For the reason of not filing Service Tax Returns, they are also liable to pay appropriate late fee as specified under Rule 7e of Service Tax Rules, 1994 subject to ceiling of Rs. 20,000/- each Return, provided under Section 70 of the Finance Act, 1994."
Penalty under Section 77 are civil in nature and are imposed for infractions noticed. Hon'ble Supreme Court has in case of Gujarat Travancore Agency vs. Commissioner of Income Tax [1989 (42) ELT 350 (SC)], Hon'ble Supreme Court held as under:
4. ..........In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mensrea must be proved before penalty can be levied under that provision. We are supported by the statement in Corpus Juris Secundum Volume 85, page 580, Paragraph 1023 :
"A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the 41 ST/85354,85355/2015 penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws."
Since there is no dispute about such infractions as recorded by the Commissioner in his impugned order, penalties as imposed under Section 77(2) are justified.
4.10 Commissioner has in para 47 of his order recorded as follows for imposing penalties under Section 76 of the Finance Act, 1994.
"47. As regards penalty proposed under Section 76 of the Finance Act, 1994 in the Show Cause Notice dated 07.04.2014, any person liable to Service Tax fails to pay the same is required to pay the same is required to pay penalty under Section 76 at the rate specified therein from time to time, in addition to Service Tax and the interest thereon."
Hon'ble Kerala High Court has in case of Krishna Poduval [2006 (1) STR 185 (Ker)] held as follows:
"11. The penalty imposable under S. 76 is for failure to pay service tax by the person liable to pay the same in accordance with the provisions of S. 68 and the Rules made thereunder, whereas S. 78 relates to penalty for suppression of the value of taxable service. Of course these two offences may arise in the course of the same transaction, or from the same act of the person concerned. But we are of opinion that the incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act, the penalty is imposable for ingredients of both the offences. There can be a situation where even without suppressing value of taxable service, the person liable to pay service tax fails to pay. Therefore, penalty can certainly be imposed on erring persons under both the above Sections, especially since the ingredients of the two offences are distinct and separate. Perhaps invoking powers under S. 80 of the Finance Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of 42 ST/85354,85355/2015 one or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs."
Thus in our view penalty imposed under Section 76 is justified.
4.11 Since on the issue in question appellants have not placed on record anything to show that their non payment of tax was a bonafide act, we do not find any reason for allowing the benefit of section 80 of the Finance Act, 1994.
4.12 In view of discussions as above we summarize our findings as follow:
i. Mumbai Service Tax having jurisdiction over the appellant registered in Mumbai, have jurisdiction do demand and recover service due in respect of invoices mentioned at Sl No 1 to 14 in the table in para 4.3.4 supra. In respect of three invoices mentioned at Sl No 15, 16 & 17 the jurisdiction is with Noida Commissionerate. ii. Service Received by the Appellant from M/s AsiaSat are "infrastructure support services" and are appropriately classifiable as "Business Support Services" as defined by Section 65(105)(zzzq) read with Section 65(104c) of the Finance Act, 1994.
iii. The demand of service tax made from the Appellant to extent of 14 invoices as stated at "i" above in Show Cause Notice dated 8.04.2013 is upheld. In respect of the three invoices which pertain to Noida Jurisdiction demand made by Mumbai Commissionerate is dropped.
43 ST/85354,85355/2015 iv. The demand of service tax made from the Appellant as per Statement of Demand dated 7.04.2014 is upheld.
v. Demand of interest under Section 75 of Finance Act, 1994 is upheld.
vi. Penalty imposed under Section 78 of Finance Act, 1994 is upheld but reduced by the amount of Service Tax demanded on the three invoices mentioned at Sl No 15, 16 & 17 in table in para 4.3.4.
vii. Penalty imposed under Section 76 and Section 77 of Finance Act, 1994 is upheld.
5.1 In view of discussions as above-
i. Appeal No ST/85354/2015 is dismissed;
ii. Appeal No ST/85355/2015 is partially allowed to extent of reducing the demand by amount of service tax on the three invoices mentioned at Sl No 15, 16 & 17 in the table in para 4.3.4 supra. Penalty under Section 78 is also reduced to that extent. With the above modification impugned order is upheld.
(Order pronounced in the open court on 26.02.2020) (S.K. Mohanty) Member (Judicial) (Sanjiv Srivastava) Member (Technical) tvu