By TIOL News Service

MUMBAI, JAN 11, 2017: THE issue is whether the payment received for allotment of time-slots to music companies by the assessee as fillers in programmes broadcast from outside the country is liable to service tax in the hands of the appellant as provider of 'broadcasting agency service.'

The appellant was subjected to proceedings for alleged non-payment of service tax of Rs.2,54,22,950/- on income of Rs.34,45,17,232/- received from music companies for the period from 1 st July 2001 to 31 st September 2003.

The appellant has been discharging service tax only with effect from 1 st May 2006 under the category 'sale of space or time for advertising service'.

The CCE, Thane-II confirmed the demand on the ground that the appellant, as the deemed service provider of 'broadcasting agency service', is not covered by the later levy of tax on 'sale of space or time for advertising service'.

Reliance was also placed on Circular no. 334/4/200-TRU dated 28th February 2006 issued when the later levy was incorporated which intended to bring such providers who, not being providers of 'broadcasting agency service', sell space or time for advertisement, within the tax net. Holding that this exclusion implied the taxability of the service in the hands of appellant from 1 st July 2001, the adjudicating authority also cited the decisions in Vijay Television (P) Ltd. - 2009-TIOL-1638-CESTAT-MAD, Siticable Network P Ltd. - 2006-TIOL-1157-CESTAT-MUM and Zee Telefilms Ltd. - 2006-TIOL-945-CESTAT-MUM to reinforce the conclusion.

The appellant is before the CESTAT.

After considering the submissions, the Bench observed -

++ We have examined the invoices issued by the appellant to M/s Sony BMG Music Entertainment Pvt. Ltd which specifies the duration of the advertisement slot as anywhere from 30 seconds to 40 seconds and bears the date and time of the programme into which the material supplied by the music company is to be incorporated. We have also examined the sample copy of the invoice raised by the appellant on the overseas broadcasting agency which is that of the pre-recorded video tapes claimed to contain the programme that has to be broadcast. The invoice raised by the overseas broadcasting agency directly on advertisers indicates the appellant to be their agent for collecting the invoices amount ...

++ This aspect of broadcasting industry has not been examined by the adjudicating authority. The appellant is a production-house which produces programmes that are broadcast by the overseas broadcasting agency and for which slots are booked with the overseas broadcasting agency. At the same time, the appellant engaged commercially with the clients of the overseas broadcasting agency on which tax dues therein, as provider of broadcasting agency service are discharged.

++ Only a scrutiny of the contract terms relating to those programmes for which fillers are sold to music companies, and was the subject matter in the proceedings before the adjudicating authority, will attest to the veracity of the claim. If such ascertainment of the nature of commercial engagement between the appellant and the overseas broadcasting agency reveals that of a client, and not that of an agent, and the ascertainment of the nature of the relationship between the appellant and the music companies who supply advertisement fillers in the programme produced by the appellant reveals that of a client, and not that of a fee remission agency, the claim of the appellant to be an independent service provider delinked from the foreign broadcasting service provider would sustain.

Noting that there is a lack of precise conclusion on this submission in the impugned order, the matter was remanded to the adjudicating authority.

The appeal was disposed of.

(See 2017-TIOL-94-CESTAT-MUM)