Special Effects&3D Conversion Services not Video Tape Production Service u/s 65(120) of Finance Act,1994: Supreme Court [Read Judgement]

In a recent case, the Supreme Court has held that the 3D conversion services provided by the assessee, including services such as ‘imparting special effects’, ‘post-production service’, ‘digital asset management and content service’ and ‘digital restoration service’, will not fall under the ambit of ‘videotape production’ under Section 65(120) of the Finance Act, 1994.

Mr. Balbir Singh, ASG submitted that the analysis on  definition of ‘Video Production Agency’ in Section 65(119) and the definition of ‘Video-Tape Production’ in Section 65(120) of the Finance Act, 1994 made by the Tribunal is incorrect.

Prime Focus Ltd, the respondent Assessee pointed out that what is of significance in the definition of ‘Video-Tape Production’ is ‘the process of any recording of any Programme, event or function on any device and services relating thereto’.

In the appeal, the CESTAT held that the classification of the service adopted by the Adjudicating Authority, concurring with the proposal in the show cause notice, was not in consonance with the intent of Section 66 of the Finance Act, 1994, which deals with charge of service tax.

It was found that the services such as editing, cutting, coloring etc. is only after recording is done of any programme, event or function on a magnetic tape or any other media or device. This is clear from the use of the words “services relating thereto” and such a Video-Tape Production when done by any professional videographer or any commercial concern engaged in the business of rendering such services is a ‘Video Production Agency’.

The Tribunal concluded that the activity would not fall under the ambit of ‘video-tape production’ under Section 65(120) of the Finance Act.

Justice B V Nagarthana and Justice Ujjal Bhuyan held that “Having regard to the expressed words “services relating thereto” and the circular dated 09.07.2001, we find that the Tribunal has rightly interpreted the said sections.”

To Read the full text of the Order CLICK HERE

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