The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax shall be remitted by the Board of Control for Cricket in India ( BCCI ) on selling of media rights of the IPL Matches to a Singapore Company.
The BCCI entered into a license agreement with M/s MSM Satellite, Singapore licensing them the media rights for the 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 the agreement with them. The department held that service tax is payable by the Board on such income.
The CESTAT observed that the appellants have provided the program feed to the M/s MSM Singapore at the venue of the match which is in India and not outside. The programmed feed as provided by the appellant is encrypted and then uplinked by the said M/s MSM/ WSG to the designated transponder in the 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 the 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,” the Tribunal said.
It was also observed that 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, and therefore, it was held that the 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 broadcast 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,” the Tribunal said.
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