Multi System Operator liable to pay Service Tax only on Gross amount received by them from LCO: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh held that Multi System Operator (MSO) liable to pay service tax only on gross amount received by them from Local Cable Operators (LCO).

The issue to be decided is whether the respondent – a Multi System Operator (MSO) was required to pay service tax on the gross amount collected from the subscribers/ultimate customer or only on the gross amount received by them from the Local Cable Operators (LCOs) who are providing the content, maintenance services to the subscriber/ultimate customer and collecting payments from them and remitting amount to respondent as per their invoice and retaining the balance amount collected by them? and also whether the Cenvat credit has rightly been denied to the respondent-assessee?

M/s. HathwaySukhamrit Cable and Datacom Private Ltd. (now known as M/s. Hathway Patiala Cable Pvt. Ltd.)- Respondent herein were providing cable operator services covered under section 65(105) (zs) of the Finance Act, 1994 upto 30.06.2012 and under section 65(44) of the Act.

Scrutiny and investigation were conducted including recording of the statements of Director as well as authorised signatory of respondent which, according to Revenue, revealed that the respondent had evaded service tax by suppressing the value of taxable service provided as they had not paid service tax on the gross amount of subscription collected from ultimate consumers and accordingly a show cause notice was issued to the respondent.

The Bench consisting of observed that “In view of Section 67 ibid as interpreted by the Supreme Court and as well as the agreements entered into between the LCOs and MSO and also the Board Circulars issued from time to time we have no hesitation in deciding this issue in favour of respondent and against the revenue-appellant by holding that the respondent is liable to pay service tax only on the gross amount received by them from LCOs.”

Support our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.