Case Law Details
Sporty Solutionz Pvt. Limited Vs Commissioner, Central Goods and Service Tax (CESTAT Allahabad)
Brief facts of the case are that the appellants had acquired ‘Media / Broadcasting rights’ of various sporting events from M/s Taj TV Ltd., Mauritius, for broadcasting cricket matches between Bangladesh and Zimbabwe (to be played outside India), in Bangladesh territory on payment of rights fee/license fee, and further sold/sub-licensed to other parties for broadcasting in Bangladesh only, against consideration in the name of rights/license fee. The department had alleged that the appellant was liable to pay service tax under ‘Reverse Charge Mechanism’ (RCM) for acquiring such rights from persons located outside India as recipient of services under the category of ‘Commercial Exploitation of Rights of Sports Events’ upto June 2012 falls under the definition of Services, not included in the negative list w.e.f 01.07.2012. Accordingly, a show cause notice(s) was issued to the appellant proposing a demand of service tax amounting to Rs. 66,58,181/- which had not been paid under RCM during the period of April 2012 to March 2016, and demand for the period April 2016 to June 2017 for an amount of Rs. 51,46,500/-along with interest and penalty. The adjudicating authority had observed that the services (telecasting rights) acquired by the appellant from overseas providers would qualify as import of services, which is liable to service tax under RCM and, accordingly, the demand was confirmed along with interest and penalty.
Appellant had procured media rights from parties located outside India; that the media rights had been procured for broadcasting the sports event which had been held outside India; and the media rights had been procured for broadcasting in countries outside India. Therefore, neither the party from whom the media rights were procured was in India nor the event was held in India and also that the matches covered were broadcasted outside India. A copy of the License Agreement entered into by the appellant with M/s Taj TV Ltd. had also been submitted, and contended that as per the said agreement the term ‘Territory’ meant ‘current political borders of Bangladesh’. Exclusive television broadcasting rights were granted to Licensee of the event / program for the Territory only. Therefore, it has been contended that in view of the terms of the agreement, the broadcasting rights had been for broadcasting within the territory of Bangladesh only, and none of the services had ever been consumed within the taxable territory of India. Since no services had been effectively consumed within India, imposition of service tax on the value involved is outside the scope of the Finance Act, 1994 and will merely result in hardship and miscarriage of the intention of law.
Having considered the rival contentions and from a conjoint reading of the aforementioned provisions provides for charge of service tax at the specified rate on the value of any service, other than services specified in the negative list, provided or agreed to be provided in the taxable territory (India), by any person to another. Admittedly, no services have been provided in the taxable territory.
Further Rule 6 of the Place of Provision of Service Rules, 2012, provides and clarifies that in case of any cultural or sporting event and/or services related to such event, shall be the ‘place’ where the event is actually held. We find that admittedly the event was held outside India (Zimbabwe), and this service has not been received in India, rather it was meant for Bangladesh, for which territory, the telecasting rights were purchased and resold by the appellants. Only for the reason that the appellant provider or trader of telecasting right is located in India, it cannot be assumed or presumed by any stretch of imagination, that the service under dispute has been received in India.
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