The Customs, Excise, Service Tax Appellate Tribunal (CESTAT), while setting aside the order of the Commissioner held that no service tax is leviable on linking of the signals from the satellite is the transmission of signals covered under the definition of ‘broadcasting’.
The Appellant, Vedic Broadcasting Limited is a Public Limited Company, engaged in the business of broadcasting socio, spiritual and cultural television channels, for which it has a network of three 24×7 television channels, namely Aastha, Aastha Bhajan, and Vedic.
The issue raised in this case was whether the charges paid by the Appellant to M/s Intelsat Global Sales & Marketing Ltd., UK are for a service provided by Intelsat, which is situated outside India to the Appellant, that would be leviable to service tax under the head “broadcasting service” in the hands of the Appellant under the reverse charge mechanism.
According to the Appellant, the Master Service Agreement entered into between Intelsat and the Appellant is for securing a dedicated 8MHz bandwidth on the transponder of Intelsat satellite.
While according to the Department the downlinking of the signals from the satellite is the transmission of signals covered by the definition of “broadcasting” and, therefore, leviable to service tax.
The tribunal headed by the President, Justice Dilip Gupta while setting aside the order of the Commissioner held that no service tax is leviable on linking of the signals from the satellite is the transmission of signals covered under the definition of ‘broadcasting’.
“The lease of space segment capacity of the transponder is not taxable as it is subjected to State VAT, being akin to transfer of right to use goods. Even if the transmission of signals, as per the impugned order and as per the submissions of the learned Authorized Representative of the Department, is covered under “broadcasting service”, then to the rule of classification contained in section 65A of the Finance Act cannot be applied since it involves only one taxable service and one non- taxable service,” the tribunal observed.
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