Service Tax – Broadcasting service – Board clarifies
Board was clarifying a question from a Chief Commissioner. Board states that
++ prior to 2005 Budget, in respect of the foreign broadcasting channels the ‘activity of selling of time slots…. Or collecting broadcasting charges’ were within the tax net.
++ In 2005 Budget the scope was expended to include permitting the right to receive any form of communication…..
++ In other words, whereas prior to 2005 Budget the charges were limited to those collected by Broadcasters from clients who purchase time slots to show a telecast (say a TV serial, a cricket watch or an advertisement), after 2005 Budget, the tax of also extended to such customers (of the broadcaster) who subscribe/pay the channels for receiving the Broadcasted signals.
++ Further, on going through the definition of the term ‘Broadcasting’ in the Prasar Bharti (Broadcasting Corporation of India) Act, 1990, it is seen that under the said Act the term “Broadcasting” has been defined to mean the dissemination of any form of communication like sign, signal writing, pictures, images and sound of all kind 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 station and all its grammatical variation and cognate expressions shall be construed accordingly.
Therefore the Board has clarified that:-
++ it is clear that while broadcasting ‘intends’ to be received by general public, such receipt of signal is not an essential criteria.
++ For example if all the receivers of a place stop receiving the signal due electrical fault in that place, it can not be said that there has been no ‘broadcasting’ during that period.
++ Thus, while receipt of the broadcasted signal may be intended but is never an essential condition.
++ This leads to conclusion that only after the insertion of provision regarding charging for right for receiving signal was added in Budget 2005 (i.e. w.e.f. 16.6.05) that the charges collected by Broadcasters from M.S.O. etc. fell within the purview of tax net.
++ This issue has also been clearly brought in circular No.B1/6/2005 – TRU dated 27.7.05 (para No.17.1).
In the Circular referred to above, Board had clarified that
In the case of radio or TV broadcasting services, the services are subject to tax where the services are effectively used and enjoyed. Multi System Operators (MSOs) are permitted to receive signals from the broadcasting agencies on payment of prescribed amount. Cable operators transmit programmes to customers through cable network after receiving signals from the multisystem operators (MSOs). Prior to 16/6/2005, service tax was leviable on services provided by cable operators to their customers and multisystem operators to cable operators. In this year’s budget, the charges recovered by the broadcasting agencies from the multisystem operator for providing the signals have been specifically made liable to service tax. This completes the service tax chain from the customer to the broadcaster.
It really is beyond logic as to why the Board does not publicly circulate such important decisions.
CCBEC’s F.No. dated 9th June, 2006.