Case Law Details
Coxswain Technologies Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that agreement entered that the appellant is providing uplinking service for ‘SS Music channel’ and ‘Sur Sangeeth Channel’ is only a sham document. Appellant has disguised the rendering of Broadcasting Service under cover of uplinking service. Hence, service tax demand invoking extended period of limitation sustained.
Facts- The appellant is engaged in operating television channel and also uplinking facility for third party and has obtained registration under the category of ‘Business Support Service’ (BSS).
During the course of audit of accounts it was noticed by the Internal Audit Group of Service Tax Commission rate that the appellant had accounted the income under the head ‘Fees for allotment of air time and uplink income’. It appeared to the department that the allotment of air time was relating to broadcasting service and that the appellant is primarily engaged in the business of television broadcasting. The appellant had not paid service tax under the category of Broadcasting Service which has come into effect on 16.07.2001.
Accordingly, the show cause notice was issued demanding service tax under the category of ‘Broadcasting Service’ along with interest and for imposing penalties. After due process of law, the original authority vide order impugned herein upheld the demand of Rs.78,38,768/- along with interest and imposed equal penalty u/s. 78 besides imposed penalty u/s. 77 of the Finance Act, 1944. Aggrieved by such order, the appellant is now before the Tribunal.
Conclusion- Held that the appellant has totally suppressed these facts and has tried to create confusion so as to escape the liability to pay tax. The agreement entered by M/s. Coxswain Technologies Ltd. with M/s. Fortune Media Ltd. and M/s. Mindscape Creations Pvt. Ltd. has to be considered as a sham document to cover up the ‘broadcasting service’ rendered by the appellant. Proceedings before quasi-judicial authority is not tied up in the heavy shackles of Procedures and Evidence Act. The same should not be taken advantage by parties to misrepresent facts and furnish fabricated and sham documents.
We are of the view that the demand invoking extended period and imposition of penalties are legal and proper.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellant is engaged in operating television channel and also uplinking facility for third party and has obtained registration under the category of ‘Business Support Service’ (BSS). During the course of audit of accounts it was noticed by the Internal Audit Group of Service Tax Commission rate that the appellant had accounted the income under the head ‘Fees for allotment of air time and uplink income’. It appeared to the department that the allotment of air time was relating to broadcasting service and that the appellant is primarily engaged in the business of television broadcasting. The appellant had not paid service tax under the category of Broadcasting Service which has come into effect on 16.07.2001. On seeking explanation, the appellant vide letter dt. 23.04.2010 informed the department that the appellant was not a broadcasting organization or agency and that they were engaged only in the up linking of TV programme produced by SS Music and Sur Sangeeth Channel which were owned by M/s. Fortune Media Pvt. Ltd. and M/s. Mindscape Creations Pvt. Ltd. respectively. They also cited Board’s circular dt. 09.07.2001 and contended that mere up linking cannot be classified under Broadcasting Service.
2. On scrutiny of records, it was found that the appellant was providing broadcasting service also and that two channels referred as above were initially owned by the appellant company and subsequently transferred under the name of other companies. The appellant had obtained permission from the Ministry of Information and Broadcasting vide letter dt. 03.06.2003 in which it was stated that appellant owned a television channel under the name & style “Coxwaine Channel”. On 08.10.2004, appellant obtained permission from the Ministry of Information & Broadcasting for changing the name of the channel into “SS Music”. It was also seen that the permission letter dt. 11.09.2003 given by the Ministry to appellant was for operating “Sur Sangeeth” channel in Hindi language. The license agreement dated 11.08.2005 entered into appellant with M/s. Videsh Sanchar Nigam Limited confirmed the fact that the appellant continued to own and operate ‘Sur Sangeeth Channel’. The accounting of income under the head “Fee for allotment of air time and up linking income” thus appeared to indicate that the appellant was indeed providing broadcasting service as well as up linking facilities to other channels. The appellant had been paying service tax under the category of ‘Business Support Service’ (BSS) on the income earned by them only from 2006-07. In spite of repeated request by the Audit Group, the appellant did not provide break up income for broadcasting and up linking for the year 2005-06. It was also noticed that as the up linking charges are taxable under BSS w.e.f. 01.05.2006, the appellant should have paid service tax on the entire income from such date under the category of ‘Business Support Service’. The appellant was not discharging service tax on entire income received under BSS. From the facts and circumstances, it appeared that the appellant had suppressed and misrepresented the facts of providing broadcasting service by deliberately declaring that they were undertaking only uplinking facility and also resorting to misclassification of the service as ‘BSS’ with an intention to evade payment of service tax. Therefore, the show cause notice dt. 22.10.2010 was issued for the period from 2005-06 to 2009-10 demanding service tax under the category of ‘Broadcasting Service’ along with interest and for imposing penalties. After due process of law, the original authority vide order impugned herein upheld the demand of Rs.78,38,768/- along with interest and imposed equal penalty under Section 78 besides imposed penalty under Section 77 of the Finance Act, 1944. Aggrieved by such order, the appellant is now before the Tribunal.
3. Ld. Counsel Sri N. Viswanathan appeared and argued for the appellant. It is submitted that the appellant is engaged in the business of uplinking programme for other channels only. Due to a misconception and misunderstanding, the department has issued the show cause notice alleging that the appellant is providing Broadcasting Service also. The appellant had initially taken registration under Broadcasting Agency Service also. Later realizing that they are not liable to pay service tax under ‘Broadcasting Service’ as their activity was only up linking of programmes, the appellants surrendered the service tax registration for broadcasting services with the department on 29.10.2004. After much exchange of communications between the appellant and the department and on the request of the Range superintendent, the appellant obtained legal opinion as to whether their services would fall under Broadcasting Agency Service. They obtained legal opinion that on the basis of the clarification issued by the Board vide its circular dt. 09.07.2001, their activity would not attract levy of service tax under Broadcasting Service and the up linking services would attract levy of service tax under Business Support Service w.e.f. 01.05.2006. Accordingly, the appellant registered for paying service tax under BSS and has been paying service tax w.e.f. 01.05.2006 under BSS on the up linking charges received by them. It is contended by the counsel that in the SCN, the department itself is not sure as to whether the activity would fall under Broadcasting Service and it is treated that the appellant ought to have paid at least under BSS. Ld. Counsel explained that appellant-company is engaged in the up linking business for television channels owned by others. During the material time M/s. Videsh Sanchar Nigam Ltd. (VSNL) was only a licensed company to uplink TV channel programs either by themselves or through persons who have been granted permission by the Ministry of Information and Broadcasting (MIB), New Delhi. Later, this position was modified and private operators were also given licenses to operate their ports. One of the various private companies who had obtained license to operate television programs is M/s. Fortune Media Pvt. Ltd. As the appellant proposed to undertake up linking activities appellant filed application for permission to uplink TV programs and thereafter obtained the permission. For obtaining the permission it was required to indicate the name of TV channel proposed to be uplinked and the appellant thus indicated the TV channel name as “Coxwain”, even though no such channel was owned or operated by appellant. The name was indicated in the letter requesting for permission only because it was necessary to indicate a TV channel name. Accordingly, the appellant obtained the license for up linking from the Ministry of Information and Broadcasting, New Delhi vide letter dt. 3.6.2003 and was directed to approach the WPC, a wing of the Department of Communications for obtaining licnese in this regard. There was another company by name M/s. Fortune Media Pvt. Ltd. which owned a TV channel by name ‘SS Music’ and owned brand / trade name ‘SS’ for up linking TV programs and accordingly the arrangement was made for up linking the programs by engaging the services of overseas uplinker by name Thailand. Due to some technical reasons for some time up to January 2005 appellant could not operate even though they had obtained necessary licnese from MIB. The channel name was changed from ‘Coxwain’ to ‘SS Music’ vide letter dt. 08.10.2004. Later, during the year 2003 another company by name M/s. Mindscape Creations Pvt. Ltd. which owned TV channel by name “Sur Sangeeth” approached the appellant for up linking their programs and accordingly obtained necessary permission from MIB vide letter dt. 11.09.2003 and started operating their programs. Later on, removing the different obstacles the appellant started up linking the program of SS Music also w.e.f January 2005.
4. The appellant entered into back-to-back agreements with the above broadcasting companies for undertaking up linking services and these broadcasting companies were also registered with the service tax authorities under the category of Broadcasting Service. These broadcasting companies (M/s. Fortune Media Pvt. Ltd. and M/s. Mindscape Creations Pvt. Ltd.) were accordingly discharging service tax on the entire receipts. The appellant company had provided the program uplinked by third party and telecasting for public view by these companies only and they did not deal with the clients for booking various commercial or allotment of time slot. Therefore, only these companies can be considered as broadcasters. The appellant had only provided up linking services as per the permission granted to them by MIB. This is evident from the license granted to them as it is only for up linking services and not for broadcasting services. It is submitted that the department has issued SCN under Broadcasting Service due to the misconception that the appellant is rendering broadcasting services also.
5. Ld. Counsel submitted that there are factually incorrect allegations in the SCN. It is alleged in the SCN that the appellant originally owned two channels namely ‘SS Music’ and ‘Sur Sangeeth’ which is incorrect. The appellant had never owned these channels and these channels belong to the respective companies mentioned above. To substantiate this, the appellant had produced trade mark registration request made by Fortune Media Pvt Ltd. The said request letter would show that the above broadcasting company had requested for registration of trade mark as ‘SS’. Original authority did not consider the said document observing that the request made for trade mark has been withdrawn. It is submitted by the ld. Counsel that even though the request for the trade mark has been withdrawn, the document would evidence that the name of the company who has requested for registration of trade mark (‘SS’) is M/s. Fortune Media Pvt. Ltd. and not the appellant. This document would be sufficient proof that the appellant does not own broadcasting company and that M/s. Fortune Media Pvt. Ltd. is engaged in activity classifiable under ‘Broadcasting Service’ within the meaning of the Finance Act, 1994. The appellant has discharged service tax under BSS from 01.05.2006. The demand made now alleging that the appellant is liable to pay service tax under ‘Broadcasting Service’ for the period 2006-07 to 2009-10 cannot be sustained.
6. Counsel adverted to the Board’s circular dt. 09.07.2001 to argue that the said circular clearly stated that no tax is payable on unlinking services.
7. The decision in the case of ESPN Software India Pvt. Ltd. was relied by the Counsel to argue the ingredients for attracting the levy of tax under the definition of “Broadcasting Service”.
8. Ld. Counsel argued on the ground of limitation also. It is submitted by the counsel that they had earlier obtained registration for Broadcasting Service and thereafter on obtaining legal advice that their activity being only up linking services would not attract levy under the said category had surrendered the registration on 29.10.2004. The legal opinion was given to them on the basis of clarification issued by the Board vide circular dt. 09.07.2001. The consideration received for up linking services has been subjected to service tax under BSS and the present demand under BSS cannot be sustained. Further, the demand has been raised on the basis of the figures accounted by the appellant in their books of accounts and there is no positive act of suppression established by the department to invoke the extended period. It is submitted that there were repeated communications between the appellant and the department as to whether their activity would fall under ‘broadcasting service’ and after which they had surrendered their registration for ‘broadcasting service’ and later had obtained registration under Business Support Service. For this reason, there was no willful suppression of facts with intent to evade payment of service tax on the part of the appellant and the show cause notice issued invoking the extended period therefore cannot sustain. The Ld. Counsel prayed that the appeal may be allowed.
9. Ld. A.R Ms. Anandalakshmi Ganeshram appeared and argued for the Department. It is submitted that the original authority had carefully considered the documents and the submissions made by the appellant before confirming the demand. Ld. A.R adverted to para 11 of the findings in the impugned order and submitted that the show cause notice was issued proposing to demand the service tax of Rs.1,03,34,893/- for the period from 2005-06 to 2009-10. However, the appellant had put forward the contention that the said amount received by them includes tax and the demand has to be quantified taking the value as cum tax which would work out to be Rs.78,38,768/- only. The adjudicating authority accepted the said contention of the appellant and confirmed the demand only to the extent of Rs.78,38,768/-.
10. The main ground put forwarded by the appellant is that they are rendering only up-linking services and is not engaged in broadcasting services. It is submitted by the Ld. AR that in their accounts, the appellant has mentioned amounts received under the head ‘Air time allotment charges / up linking charges’. The mention of ‘air time allotment charges’ would definitely indicate that the appellant is rendering broadcasting services also. There cannot be any amount in the nature of airtime allotment for up linking services. Further, the adjudicating authority has examined the permission letter dt. 03.06.2003 issued by MIB and also the permission letter dt. 08.10.2004. In the previous letter the permission is granted to the appellant viz. M/s. Coxwain Technologies Ltd. who owns channel ‘Coxwain’ for providing up linking services. In the second letter, the change of channel name from ‘Coxswain’ to ‘SS Music’ has been noted. In the letter dt. 11.09.2003, the channel name ‘Sur Sangeeth’ ‘owned by the appellant’ has been noted. Again, in the license agreement entered with VSNL, the channel name ‘Sur Sangeeth’ has been mentioned to be owned by the appellant. Though the appellant contends that they do not own any channel and have been doing only up-linking services, the documents speak otherwise. The adjudicating authority has rightly considered all these documents and held that the appellant owns these channels and therefore appellant is not only engaged in up-linking services but also is engaged in the business of broadcasting service. Further in the agreement entered with M/s. VSNL, it is stated that the channel of the appellant is allowed to bring into the said play-out station its furniture and articles and materials as necessary and required for maintaining a fully equipped play out set up. The permission letter from MIB along with agreement entered with M/s. VSNL will establish that the appellant is owning and operating these channels. In the Profit & Loss Account for the year ended 31.03.2008 and 31.03.2009 it is shown as ‘Fees for allotment of airtime and uplink income’. It is clear from the above account head that appellant has been collecting fees for allotment of airtime. Further “Notes on Accounts” for the year ending 31st March 2006 under “Segment Reporting” it is mentioned that “The Company is engaged in the business of Broadcasting”. This document is considered as the only reportable business segment as per accounting Standard-17. The appellant has not been able to establish that they were providing only uplinking services. The demand quantified has not included the value that has been subjected to service tax under BSS.
11. Ld. A.R submitted that one of the arguments put forward by appellant is that other broadcasting companies use uplinking services of the appellant and that appellant has incurred expenses for uplinking services only. On perusal of the Notes on Accounts for the year ending 31.03.2006 under the head Expenses in Foreign Currency it is seen mentioned as expense of Rs.62,10,000/- towards renting of satellite. Such expenses towards renting of satellite can only be incurred for the purpose of broadcasting.
12. The circular dt.09.07.2001 adverted to by the Ld. Counsel was countered by the Ld.AR, by submitting that the said circular was issued prior to the amendment brought forth in the definition of “Broadcasting Service”. After the amendment to the definition of “Broadcasting Service” another circular dt. 27.07.2005 was issued by the department. After the amendment, the services rendered by Multi System Operators (MSO) who were permitted to receive signals from the broadcasting agencies on prescribed amount were also subjected to service tax. The decision in the case of CC VS World space India P. 2008-TIOL-42262-CESTAT BANG was relied by the Ld. A.R to argue that after the amendment brought forth with regard to definition of ‘broadcasting agency’ the earlier circular dt.09.07.2001 has lost its relevancy. Ld. A.R prayed that the appeal may be dismissed.
13. Heard both sides.
14. The issue to be decided is whether the demand, interest and penalties imposed alleging that the appellant is rendering ‘Broadcasting Services” is sustainable or not.
15. The Ld. Counsel for appellant has vehemently argued that they are providing only up linking services and that they do not own and operate any channel and therefore are not doing any broadcasting service. To support the contention that up linking services are different from broadcasting services, appellant has relied on the Board’s circular dt.09.07.2001. Relevant para of the said circular reads as under :
“3. Broadcasting is done either terrestrially or through satellite links. Most of the private TV channels are using satellite links for broadcasting their programmes. The up linking of the programme to the satellite is done through VSNL or other earth stations located in India or through other agencies located abroad. The up-linking agencies are not broadcasting agencies and are not liable to service tax in respect of such service…..”
16. It is the plea of the appellant that they had obtained legal opinion and on the basis of circular, they were advised that they are not rendering any broadcasting service. Ld. A.R has adverted to the change brought forth in the definition of ‘Broadcasting Agency’ and ‘Broadcasting Service’ in the year 2005. To appreciate these rival submissions, it would be beneficial to look into the relevant definitions of “Broadcasting Service” and “Broadcasting Agency” as defined under Section 65 (14) and 65 (15) prior to 2005 as well as after 16.06.2005.
17. In the decision of ESPN Software India (P) Ltd. – 2014 (35) STR 927 (Tri.-Del) the Tribunal had occasion to analyse the ingredients of definition of ‘Broadcasting Service’ prior to 16.06.2005 and after. The relevant para reads as under :
“26. We have heard both sides. Major issue to be decided in these appeals is whether Appellant No. 1 and No. 2 are liable to pay Service Tax as recipients of broadcasting Service under reverse charge mechanism. Broadcasting and Broadcasting agency or organisation has been defined under Section 65(14) and Section 65(15) as under (prior to 2005).
“65(14) Broadcasting has the meaning assigned to it in clause (c) of Section 2 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 (25 of 1990) and also includes programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intended for public listening or viewing, as the case may be; and in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner,”
65(15) “broadcasting agency or organisation” means any agency or organisation engaged in providing service in relation to broadcasting in any manner and, in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting broadcasting charges on behalf of the said agency or organisation.
Broadcasting and broadcasting agency or organisation have been defined as under with effect from 16-6-2005.
“65(15) Broadcasting has the meaning assigned to it in clause (c) of Section 2 of the Prasar Bharti (Broadcasting Corporation of India) Act, 1990 (25 of 1990) and also includes programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intended for public listening or viewing, as the case may be; and in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electromagnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner.”
“65(16) “broadcasting agency or organisation” means any agency or organisation engaged in providing service in relation to broadcasting in any manner and, in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organisation.” Taxable service is defined under [Section] 65(105)(zk) of the Finance Act as under :-
“Any service provided or to be provided to a client, by a “broadcasting agency or organization” means any agency or organization in relation to broadcasting in any manner and, in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes service provided by its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organisation”.
Explanation
“For the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India and intended for listening or viewing as the case may be, by the public, such service shall be a taxable service in relation to broadcasting, even if the encryption of the signals or beaming thereof through “the satellite might have taken place outside India.”
Section 2(c) of Prasar Bharati (Broadcasting Corporation of India) Act, 1990 reads as under :-
‘2(c) “broadcasting” means the dissemination of any form of communication like signs, signals, writing, pictures, images and sounds of all kinds by transmission of electro-magnetic waves through space or through cables intended to be received by the general public either directly or indirectly through the medium of relay stations and all its grammatical variations and cognate expression shall be construed accordingly.”
18. From the above, it can be seen that after 16.06.2005, the taxable service under Section 65 (105) (zk) has become wide so as to include transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operators (MSO) or any other person on behalf of the said agency or organisation. Thus the clarification issued by the Board vide its circular dt.09.07.2001 that MSO is not a broadcasting agency as they merely transmit signals looses its relevancy after the amendment brought forth in the definition. The argument of the appellant taking shelter of the circular dt. 09.07.2001 therefore fails.
19. The Ld. Counsel has vehemently argued that they do not own any TV channel and are only engaged in up-linking services for which they have permission from MIB.
20. The letter dt. 11.09.2003 reads as under :
“Subject : Permission to uplink TV Channel from India through VSNL – M/s. Coxswain Technologies Limited.
Sir,
The undersigned is directed to refer to your letters dated 10.07.2003 and 31.07.2003, seeking permission for up linking “SUR SANGEETH” channel (in digital mode) from India through VSNL, Chennai.
2. The undersigned is directed to convey permission to M/s. Coxswain Technologies Ltd. to uplink their “SUR SANGEETH” channel in Hindi language (in digital mode) from India through VSNL, Chennai using INSAT satellite 2E, for a period of ten years, subject to the following:”
21. The permission letter dt. 08.10.2004 reads as under :
“Subject : Permission to change the name of the channel from “COXSWAIN” to “SS Music” – M/s. Coxswain Technologies Ltd.
Sir,
This is with reference to your letters dated 9.8.2004, 13.9.2004 and 16.9.2004 requesting for the change of your channel name from “COXSWAIN” to “SS MUSIC”
2. In continuation of this Ministry’s letter of even number dated 3rd June, 2003 whereby permission was conveyed to M/s. Coxswain Technologies Ltd. to uplink your TV channel namely “COXSWAIN” from India through VSNL, Mumbai, the undersigned is directed to convey no objection of this Ministry to change he name of your channel from “COXSWAIN” to “SS MUSIC”. All other terms & conditions, as contained in the permission letter dated 3.6.2003 would continue to apply.”
22. In these letters, it is stated that ‘Coxswain’ channel belongs to the appellant. It is also noted that the name of the channel has been changed from ‘Coxswain’ to ‘SS Music’. It is stated that permission is granted to the appellant to uplink their ‘Sur Sangeeth’ channel in Hindi language. Though the appellant contends that they do not own or operate any channel and therefore is not rendering any broadcasting service, they have not been able to give plausible explanation as to why in these permission letters it is stated that these channels are owned and operated by them. Further, in the licence agreement dt.11.08.2005 entered by the appellant with M/s. VSNL it is stated as under :
“M/s. COXSWAIN TECHNOLOGIES LIMITED, operating a Private Satellite Channel under the name and style, “SUR SANGEETH TV“ incorporated under the Companies Act, 1956, having its Corporate Office at No.90, Jawaharlal Nehru Street (100 feet Road), Vadapalini, Chennai-600 026, duly represented by its Director, Shri Shriram (hereinafter referred to as the ’CHANNEL” which expression shall unless repugnant to the context or meaning thereof be deemed to mean and include its successors and permitted assigns of the OTHER PART.
WHEREAS VSNL provides inter-alia, the up linking facilities to the private satellite channels from its sources for the purpose of telecasting and broadcasting various programs in India.
AND WHEREAS THE Channel is one such private satellite channel, which is presently availing such up linking facilities from VSNL, situated at 226, Redhills Road, Ambattur, Chennai-600 053, by virtue of the MCPC Agreement dated 22nd September 2003.
AND WHEREAS, the Channel has approached VSNL with a request for grant of license to use the room space for play-out set up admeasuring 200 Sq. Ft to organize play-out setup inside the compound of VSNL at the above stated situation.”
23. In all the above documents, it is stated that the channels ‘SS Music’ as well as ‘Sur Sangeeth’ are owned and operated by the Again, the accounts maintained by appellant show collection of charges towards airtime allotment. This fact of collecting charges for airtime allotments would lead to a strong inference that the appellant has indeed been rendering ‘Broadcasting Service’. The appellant has relied upon an application made for trade mark. On the basis of this document, it is argued that the said application for trademark (‘SS’) has been filed by M/s. Fortune Media (P) Limited and would indicate that the channel ‘SS’ is owned by M/s. Fortune Media (P) Ltd. and not the appellant. The application was given on 29.11.2001. The present status of the application shows ‘abandoned’. Merely because an application was given by M/s. Fortune Media (P) Ltd. it cannot be said that the said channel belonged to them and is discussed in this order. The permission letters submitted before the competent authority for issuing licence shows that these channels ‘SS Music’ and ‘Sur Sangeeth’ are owned by appellant. On merits, we do not find any grounds to accept the contention of appellant that they are not rendering any broadcasting services.
24. Ld. Counsel has argued on the ground of limitation also. It is the case of the appellant that they have been registered with the service tax and have been filing returns from 2002 onwards. It is argued by the Ld. Counsel for appellant that after obtaining legal opinion they had surrendered the registration for Broadcasting agency and got registration under BSS for payment of service tax on the uplinking charges received by them. However, it has to be seen that there were charges received by the appellant for airtime allotment also. Expenses incurred is the nature of satellite rent etc. Appellant has taken the shelter of Board circular dt. 09.07.2001 for non-payment of service tax under ‘Broadcasting Service’. Even after amendment w.e.f 16.06.2005, appellant has not paid service tax for broadcasting services. We therefore do not find any ground to hold that invocation of extended period is not sustainable. The appellant has in fact disguised rendering of Broadcasting services behind up linking services and misguided the department repeatedly by furnishing letters that they were providing only up linking services.
25. The original authority in para 11.3 has discussed in detail how the appellant has disguised the rendering of Broadcasting service under the cover of up linking services. The discussions of the original authority is noteworthy and reproduced as under :
“͙. From the discussions above, it is clear that the notice has disguised their services of ‘Broadcasting Services’ behind up linking services and misguided the department by submitting letters that they were providing only up linking services. Surrendering the registration certificate citing the same grounds was also incorrect. The notice had submitted the documents showing they were providing up linking services only and it is on the basis of up linking that the departmental officers have accepted the classification under “Business Support Services”. The notice has taken advantage of the Board Circular that up linking services are not covered under “Broadcasting Services” and deliberately misled the department about their activities and misclassified the same under “Business Support Services” with intention to evade payment of Service Tax. “Business Support Services” became taxable with effect from 1.5.2006 only whereas the “Broadcasting Services” have been brought under the tax net much earlier. The notice has tried to use this gap between the two services being made taxable and mislead the department by misclassifying the “broadcasting services” as up linking services under the category “Business Support Services”. The discussions in the paras referred above clearly show as to how the assessee in the guise of up linking tried to avoid payment of service tax. Only after detailed investigation and on unearthing various permissions and letters the department could finalise the extent of service tax liability. Therefore it is proved beyond doubt that the notice has deliberately misled the department with the intention of evading the payment of the tax under “Broadcasting Services”.
26. The above view of the original authority that the appellant has played clever hide and seek game with the department is brought out on perusal of the various documents like the permission letters, agreement etc. The appellant has taken up the contention that they were providing only up linking services and that the channels in the name of ‘SS Music’ and ‘Sur Sangeeth’ belong to M/s. Fortune Media Pvt. Ltd. and M/s. Mindscape Creations Pvt. Ltd. respectively. As already discussed, in the letters submitted before the MIB for obtaining license they have stated that they own ‘Coxswain’ channel; the name changed to ‘SS Music’. It is also stated that they own ‘Sur Sangeeth’. The appellant has been denying the ownership of these channels all along. The documents/records placed before us show that M/s. Fortune Media Pvt. Ltd. is owned and operated by the appellant itself and the agreement entered by the appellant contending that they provide up linking services for ‘SS Music’ channel is only a sham document. The agreement which is said to have been entered into by the appellant (M/s. Coxswain Technologies Limited) with M/s. Fortune Media Pvt. Ltd. dt. 17.06.2004 is seen signed by Sri K. Shriram as the Director of Coxswain Technologies Ltd. and Sri B.D. Ramesh Babu as the President of M/s. Fortune Media Pvt. Ltd. The copy of the relevant part of the agreement is as under :
27. From the above, it is made to understand that Sri K. Shriram is the person representing M/s.Coxswain Technologies Ltd. (appellant herein). The very same impression is seen in the application dt. 10.07.2006 submitted for registration of Business Support Service filed by the appellant before the Department. The said application is signed by the Director, Sri K. Sriram for the appellant. The relevant part of the application is reproduced as under:
28. The appellant contends that the channel ‘Sur Sangeeth’ is owned by M/s. Mindscape Creations Pvt. Ltd. The Agreement dt. 27.09.2003 is entered by the appellant with M/s. Mindscape Creations Pvt. Ltd. It is executed by Shri K. Shriram Director of appellant Company and by Shri Usman Fayaz, Director of M/s .Mindscape Creations Pvt. Ltd. It can be seen from the document that the address of M/s. Mindscape Creation Pvt. Ltd. is the same as that of M/s. Fortune Media Pvt. Ltd. The address is “126, Triplicane High Road, Triplicane, Chennai 600 005”. This appeal (filed by M/s. Coxswain Technologies Ltd.) is filed by the President, Sri B.D. Ramesh Babu (who is the President of M/s. Fortune Media Pvt. Ltd.). The verification for filing the appeal in the appeal paper records is as under :
29. Thus, it can be seen that Sri B.D. Ramesh Babu is the President of M/s. Fortune Media Pvt. Ltd as well as M/s. Coxswain Technologies Ltd. The appellant has not explained the relationship between these two related entities. It is also not understood why Sri B.D. Ramesh of M/s. Fortune Media has filed this appeal. Even if separate legal entities, the appellant should have disclosed the relationship. In fact, appellant has totally suppressed these facts and has tried to create confusion so as to escape the liability to pay tax. The agreement entered by M/s. Coxswain Technologies Ltd. with M/s. Fortune Media Ltd. and M/s. Mindscape Creations Pvt. Ltd. has to be considered as a sham document to cover up the ‘broadcasting service’ rendered by the appellant. Proceedings before quasi-judicial authority is not tied up in the heavy shackles of Procedures and Evidence Act. The same should not be taken advantage by parties to misrepresent facts and furnish fabricated and sham documents.
30. Taking note of these aspects into consideration, we are of the view that the demand invoking extended period and imposition of penalties are legal and proper.
31. In the result, the impugned order is upheld. Appeal is dismissed.
(pronounced in court on 04.08.2023)
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