BCCI Vs Commissioner of Service Tax (CESTAT Mumbai)
it is undisputedly admitted that appellants have provided the program feed to the M/s MSM Singapore at the venue of match which is in India and not outside. The programme feed as provided by the appellant, is encrypted and then uplinked by the said M/s MSM/ WSG to the designated transponder in designated satellite. The satellite beams back the uplinked signal, for transmission through cable or network of TV Channels to the individual viewers. In the entire process at no stage the feed, provided by the appellant is routed through any place outside India. Thus service provided by the appellants are provided in India and used in India. The service provided by the appellant is in form of the feed for the live broadcast of match, and not for transfer of media right. The recipient of service carries the said feed to the individual viewers. Transfer of media right is only to exclusively authorize the M/s MSM Singapore or M/s WSG to broadcast the said feed as Official Broadcaster for the IPL. Thus we are not convinced by the argument advanced by the appellant that in para C.8 that location of the person to whom the media rights have been transferred will determine the place where the service has been provided, and since in the present case the person to whom the media rights have been transferred is located in Singapore, the service should be treated as export of service.
Appellants have heavily relied upon the decision of Tribunal in case of Balaji Telefilms Ltd. [2016 (43) STR 98 (T Mum)]. However in the said case the programmes were exported to Hongkong and uplinked from there for beaming back to viewers in India. Thus the said case is distinguishable on facts.
Since prior to amendments made in Rule 3, with effect from 27.02.2010, the requirement of “providing the services from India for use outside India was mandatory and is not satisfied in the present case, we hold that benefit of Export of Services Rules, 2005 will not be available to the appellants.
In the present case the grant of media rights is not the service but the delivery of the feed to the person to whom the media rights have been granted for telecast is the service provided. Since this service feed has been provided by the appellant to the person holding media rights in India the service has been provided in India and all the activities in relation to the consumption of the said feed for broad cast of the match have been performed in India, the claim for the appellants in respect of the said feed as export of Service cannot be agreed to.
With effect from 27.02.2010, when the condition relating to receipt place of provision and use have been omitted, the situation changes. Since the service provided falls within category (iii) service the location of the service recipient, determines whether the service can be treated as export of service, subject to the requirement that the consideration for the said services are received in convertible foreign exchange. In the show cause notice for the period post 27.02.2010, the benefit of export of service has been allowed to the extent of payment received in convertible foreign exchange from M/s MSM Singapore. It is uncontroverted fact that entire consideration in respect of media rights agreement was not received in convertible foreign exchange. Quiet substantial amount in terms of the said agreement was paid by M/s Sony Picture Entertainment Limited a subsidiary of M/s MSM Singapore from its advertisement revenues to appellant as a consideration for the service provided by the appellant.
Out of the total payments received payments mentioned on 30.06.11 and 07.03.11 has been received M/s Sony Pictures Entertainment on behalf of MSM Singapore. The net amount after TDS deduction has been credited in the Appellant Bank Account with HDFC Bank. Further income of Rs 34,64,40,768/- has been received from sub licensees M/s WSG. It is admitted fact that appellant has themselves claimed benefit of export of service in respect of certain part of the income from media rights agreement. However they have not claimed the said benefit in respect of entire amount. This would be for the reason that entire income from media rights is not received in convertible foreign exchange. (Para C.12 of the submissions).
From the para 7 of show cause notice dated 13.03.2013 it is quite evident in respect of the payments received from M/s MSM Singapore demand has been made in respect of those amounts which are not in convertible foreign exchange and cannot be treated as export of service.
Thus in view of the discussions as above and the decisions referred we are of the view that benefit under Export of Service Rules, 2005 could not have been extended to the appellant, for the period prior to 27.02.2010. For the period after 27.02.2010, the said benefit has been extended to the appellant, to the extent they have shown that the payment against the said services was received in convertible foreign exchange.
FULL TEXT OF CESTAT JUDGMENT
These appeals (Four Appeals have been filed by BCCI (appellant) and one appeal has been filed by the revenue) are directed against the order in original No 30 to 33/ PR. COMMR/ ST-II/PK/2015-16 dated 19/08/2015 of the Commissioner of Service Tax: II: Mumbai. By the said order Commissioner has adjudicated four show cause notices as detailed in para 2, holding as follows:
“Order
i. I confirm total demand of Rs 131,19,45,874/-(Rs One Hundred and Thirty One Crores, Nineteen Lakhs Forty Five Thousand Eight Hundred and Seventy Four only) in respect of the service tax liability which is to be paid by the noticees in terms of proviso to sub-section 1) if Sec 73 of Finance Act, 1994.
ii. I order recovery of interest at the appropriate rate against the above confirmed demand, under Sec 75 of the Finance Act, 1994.
iii. I impose a penalty of Rs 25,96,08,402/- (Rs. Twenty Five Crores Ninety Six Lakhs Eight Thousand Four Hundred and Two Only) under Section 78 of the Act.
iv. I impose a penalty of Rs 87,82,39,421/- (Rupees Eighty Seven Crores Eighty Two Lakhs Thirty Nine Thousand Four Hundred Twenty Nine Only) under Section 76 of the Act.
v. I impose penalty of Rs 5,000/- (Rupees Five Thousand Only) each for SCNs art Sr Nos 1,2,3 above and Rs 10,000/- (Rupees Ten Thousand Only) for SCN at Sr No 4 above (Total Rs 25,000/- 9Rupees Twenty Five Thousand Only) under Section 77 of the Act.
vi. This order is issue without prejudice to any other action that may be initiated against The Board of Control for Cricket in India under the provision of Finance Act, 1994 or the Rules made thereunder or under the provision of any law for time being in force.”
2.1 Appellant is a society registered under the Tamil Nadu Societies Registration Act, 1975, having a separate sub-committee known as Indian Premier League (IPL) set up to oversee the operations of domestic T-20 Cricket competitions in India and abroad.
2.2 Appellants entered in media rights license agreement as licensor with M/s MSM Satellite, Singapore (MSM or Licensee) & M/s World Sports Group (India) Pvt Limited (WSG or Licensee) vide agreement dated 21.01.2008 (Revised by agreements dated 25.03.2009 and 25.06.2010) licensing them the media rights for telecast of IPL matches. They also entered in Memorandum of Understanding dated 16.04.2008 with M/s Live Current Media Inc (LCM), Canada to design, build, operate, maintain & promote the IPL website as the sole IPL website sanctioned by appellant. They also received certain amounts from M/s Pioneer Digadsys under the head of “Media Right Incomes” but had not produced the copy of agreement with them.
2.3 On scrutiny of the said agreement revenue was of the view that the services provided by the appellants to the licensee were covered by the definition of Franchise Services as defined by Section 65 (47) read with Section 65(48) and Section 65 (105) (zze) of the Finance Act, 1994. Since Appellants had not paid the service tax by classifying the services provided by them and had not filed ST-3 returns, four show cause notices were issued to the Appellants as detailed in table I below:
