Custom, Excise & Service Tax Tribunal
Ananda Vikatan Productions Pvt Ltd vs Cst Ch - Ii on 21 January, 2026
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Service Tax Appeal No. 42449 of 2015
(Arising out of Order in Appeal No. 227/2015 (STA - II) dated 26.8.2015 passed by
the Commissioner of Service Tax (Appeals - II), Chennai)
Ananda Vikatan Productions Pvt. Ltd. Appellant
No. 5, Seventh Road
Gopalapuram, Chennai - 600 086.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai North Commissionerate 26/1, Mahatma Gandhi Road Nungambakkam, Chennai - 600 034.
APPEARANCE:
Shri N.K. Bharath Kumar, Chartered Accountant for the Appellant Shri M. Selvakumar, Authorized Representative for the Respondent CORAM Hon'ble Shri M. Ajit Kumar, Member (Technical) Hon'ble Shri Ajayan T.V., Member (Judicial) FINAL ORDER NO. 40123/2026 Date of Hearing : 25.07.2025 Date of Decision: 21.01.2026 Per M. Ajit Kumar, This appeal is filed by the appellant against Order in Appeal No. 227/2015 (STA - II) dated 26.8.2015 passed by the Commissioner of Service Tax (Appeals - II), Chennai (impugned order).
2. Brief facts of the case are that the appellants are providing services under the categories of Television or Radio Programme Producers service and Sale of Advertisement Space or Time Service. During the verification of the records of M/s. Sun TV Network, it was noticed that the appellant had received payments from M/s. Sun TV Network i.e. M/s. Gemini TV and M/s. Surya TV (also referred to as 2 'Broadcasters'), for recorded commercial productions of the Tamil serial 'Kolangal', of which the appellant is the copyright owner, after duly dubbing into Telugu/ Malayalam languages. It appeared that the said activity of production on behalf of others and assigning of copyright of programmes produced by the appellant to the broadcasters amounted to 'Sale of Programmes' which is a taxable service covered under 'TV or Radio Programme Producer Service'. After due process of law, the Ld. Original Authority confirmed the entire demand of service tax for the period 2005-06 to 2009-10 along with interest and also imposed penalty equal to service tax under sec. 78 of the Finance Act, 1994. Against the said order, the appellant preferred an appeal before the Ld. Commissioner (Appeals) who vide the impugned order, upheld the adjudication order. Hence the present appeal.
3. Shri N.K. Bharath Kumar, Ld. Chartered Accountant appeared for the appellant and Shri M. Selvakumar, Ld. Authorized Representative appeared for the respondent.
3.1 The Ld. C.A. Shri N.K. Bharath Kumar appearing for the appellant submitted that in light of the Copyright Act, 1957, copyright qualifies as "goods" as it constitutes intangible property that fulfils the requisite attributes for classification as goods under the Tamil Nadu Value Added Tax Act 2005. Further as per Section 2(33) of Tamil Nadu Value Added Tax Act 2005, "sale" with all its grammatical variations and cognate expressions means every transfer of the property in goods (other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration. It has to be ascertained whether VAT is 3 applicable on permanent or temporary transfer of copyrights. Once, the mode of transfer of right in the cinematographic film is on permanent basis, there shall not be any implications under the service tax law on such transactions since such transactions are in the nature of 'Deemed Sales' which are specifically excluded from the definition of 'Service' as enumerated in Section 65 B (44) of Finance Act, 1994. Once the said transaction is excluded from the definition of 'Service', there shall be no compliance required under service tax law. In the present case, the sale of copyright (goods) on perpetual basis constitutes a permanent transfer and is subject to VAT which the appellant has paid. The Ld. Counsel relied upon the case of Radaan Media Works (I) Ltd Vs Commissioner Of Service Tax, dated:
06.02.2018, wherein the Tribunal held that Section 65 (866) indicates that 'Programme Producer' is a person who produces a programme on behalf of another person. In the present case, the department has no case that appellants are producing programme for any other person.
In fact, the demand has been raised alleging appellant has assigned their own programme and received consideration. There is no evidence provided to show that the appellant has produced the programme on behalf of another person. The appellant produces the programme on its own and after the completion it may or may not be accepted by the channel / broadcasting agency. After production, they have transferred the copy right in the programme temporarily to the broadcasting agency. Such transfer of copy right does not attract levy of service tax under "TV or Radio Programme Production Service". A similar issue came up for analysis before the CESTAT Bench at Delhi and by Final Order No.58649/2017 dt. 14.12.2017 in the case of BBC World 4 Services India Private Ltd. Vs CCE & ST Delhi the Tribunal observed that only when the programme is produced on behalf of another person, the said levy of service tax would be attracted. The Ld. Counsel stated that the demand under programme production services is unsustainable and prayed that the same may be set aside. 3.2 Shri M. Selvakumar, Ld. A.R. appeared for the respondent. He reiterated the finding given in the impugned order.
4. We have carefully gone through the appeals and have heard the rival parties.
5. The issue is whether the assigning of copyright of programmes produced by the appellant to the broadcasters amounted to 'Sale of Programmes' leviable to VAT or are a service liable to Service Tax.
6. Firstly we find that the appellant produces the programme himself. There is nothing to show that the Tamil serial 'Kolangal' was scripted by or in any way produced on behalf of the Broadcasters, to which the copyright was later assigned. In such a situation as stated by the Hon'ble Gauhati High Court in Magus Construction Pvt. Ltd. v. Union of India -- 2008 (11) S.T.R. 225 (Gau.), "Since the very concept of rendering of "service" implies two entities, one, who renders the "service", and the other, who is recipient thereof, it becomes transparent that an activity carried on by a person for himself or for his own benefit, cannot be termed as "service" rendered." Hence such an activity would not attract Service Tax.
6. The second issue is the assigning of the Copyrights to the Broadcasters by the appellant. Copyrights are intangible property without a physical existence. Some intangible property might have a paper embodiment or be carried on any other hard medium, they 5 however have an intrinsic value, not confined to the value of the media. Hence an intangible activity need not necessarily mean it is a service. The issue of levy of sales tax on computer software was examined by the Apex Court in Tata Consultancy Services Vs. State of Andhra Pradesh (2004-TIOL-87-SC-CT-LB). It was held:-
"74. It is not in dispute that when a programme is created it is necessary to encode it uphold the same and thereafter unloaded. Indian law, as noticed by my learned Brother, Variava, J., does not make any distinction between tangible property and intangible property. A 'goods' may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customized satisfies these attributes, the same would be goods. Unlike the American Courts, Supreme Court of India have also not gone into the question of severability.
75. Recently, in Commnr. of Central Excise, Pondicherry Vs M/s. ACER India Ltd. (2004 (8) SCALE 169) this Court has held that operational software loaded in the hard disk does not lose its character as tangible goods.
76. If a canned software otherwise is 'goods', the Court cannot say it is not because it is an intellectual property which would tantamount to rewriting the judgment. In Madan Lal Fakirchand Dudhediya Vs Shree Changdeo Sugar Mills Ltd. (1962) Suppl. 3 SCR 973), this Court held that the Court cannot rewrite the provisions of law which clearly is the function of the Legislature which interprets them."
The judgment relying on Associated Cement Companies Ltd. Vs Commissioner of Customs [(2001) 4 SCC 593 / 2001 (128) E.L.T. 21 (S.C.)], held that a software program may consist of various commands which enable the computer to perform a designated task. The copyright in that program may remain with the originator of the program. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would become "goods". The 6 same would be applicable in the case of transfer of copyright of a T.V. serial in this case also, as it satisfies the criteria of goods as stated in Tata Consultancy Services (supra).
7. We find that payment of service tax and VAT are mutually exclusive. In a contract for supply of services there is no sale of goods If sale of goods are involved and VAT has been paid correctly; the activity would be outside the preview of Service Tax. There is no specific reference in the impugned order to the payment of VAT by the appellant. However, the appellant has submitted sample copies of two VAT returns for the period July & August 2009, to evince that, VAT has been paid to the government on sale of such copyright. Moreover, we find from para 7.5 of the OIO No STC/13/2012-ADC(LTU), dated:
28/03/2012, that the appellant had assigned the exclusive right of the dubbed serials to the Broadcasters for a perpetual period and has no right on them. The Ld. A.A. concludes that this amounts to a sale.
Having come to such a finding he should have verified the VAT payment details and should not then have held the activity to be a service. The impugned order has also has failed to take a proper legal perspective on the issue and hence merits to be set aside. This being so, the demand, interest, penalty etc. would not survive.
8. We also find that in the case of Radaan Media Works (I) Ltd Vs Commissioner Of Service Tax [FINAL ORDER No. 40341 / 2018, dated: 06.02.2018], passed by a Coordinate Bench of this Tribunal, one of the issues examined was, whether the amount received for transfer of copyright of programmes to various TV channels amounts to service under the category of "TV or Radio Programme Production service, which is similar to the issue raised in this appeal. The dispute 7 as in this appeal was decided in the appellant's favour. The Tribunal held:
"5. The first issue is with regard to demand raised under the category of "TV or Radio Programme Production Service". For better appreciation, the definition of "TV or Radio Programme Production Service" as defined under Section 65 (105) (zzu) is as under:
"any service provided or to be provided to any person, by a programme producer, in relation to a programme".
"Programme Producer" as defined under Sec.65 (86b) means "any person who produces a programme on behalf of another person" and "programme" is defined under Sec.65 (86a) as "any audio or visual matter, live or recorded, which is intended to be disseminated by transmission of electromagnetic waves through space or through cables intended to be received by the general public either directly or indirectly through the medium of relay stations."
Section 65 (86b) as shown above indicates that 'Programme Producer' is a person who produces a programme on behalf of another person. In the present case, the department has no case that appellants are producing programme for any other person. In fact, the demand has been raised alleging appellant has assigned their own programme and received consideration. There is no evidence placed before us to show that the appellant has produced the programme on behalf of another person. The appellant produces the programme on its own and after the completion it may or may not be accepted by the channel / broadcasting agency. After production, they have transferred the copy right in the programme temporarily to the broadcasting agency. Such transfer of copy right does not attract levy of service tax under "TV or Radio Programme Production Service". A similar issue came up for analysis before the CESTAT Bench at Delhi and by Final Order No.58649/2017 dt. 14.12.2017 in the case of BBC World Services India Private Ltd. Vs CCE & ST Delhi the Tribunal observed that only when the programme is produced on behalf of another person, the said levy of service tax would be attracted. The relevant portion of the above Tribunal's order is reproduced below :
".....(g) On the second issue, the learned Counsel for the appellant submitted that they have produced various programmes without any reference to another person and thereafter whenever requirement arises gave such programmes to other domestic radio stations for broadcast. They received certain considerations for such transfer of programmes on temporary basis. These are specific radio programmes. They have not produced these programmes on behalf of another person, hence, they cannot be considered as programme producer in terms of Section 65 (86b) of the Act. Even otherwise these are copy right materials and if at all to be subjected to service tax, the same will apply only w.e.f. 01/07/2010. The learned counsel also contested the proceedings on limitation and on imposition of penalties considering the interpretation involved with reference to actual 8 exports undertaken by the appellant only with reference to the nature of receipt of consideration from UK.
..... .... .....
12. On the second issue, a plain reading of the statutory definition for programme producer service makes it clear that such programme producer should produce programmes on behalf of another person. In the present case, the appellants did not produce programmes for another person. There is no second person at the time of appellant producing the programme which is apparently for self. Thereafter, such programmes were given to other broadcasters on a consideration. In our opinion, such transactions are not covered by programme producer service as the appellant did not producer programme for a third party."
From the above discussion and analysis, and following the decision of the Tribunal Delhi Bench, we are able to safely conclude that the demand under programme production services is unsustainable and requires to be set aside, which we hereby do."
9. Having regard to the discussions above, we set aside the impugned order and allow the appeal. The appellant is eligible for consequential relief as per law. The appeal is disposed of accordingly.
(Order pronounced in open court on 21.01.2026)
Sd/- Sd/-
(AJAYAN T.V.) (M. AJIT KUMAR)
Member (Judicial) Member (Technical)
Rex