(H.L. Dattu, C.J. and A.K. Sikri, J.)
Board of Control For Cricket in India ___________________ Appellant
v.
Commissioner of Service Tax, Mumbai-I _______________ Respondent
Civil Appeals Nos. 277-78 of 2015†, decided on January 7, 2015
The Order of the court was delivered by
ORDER OF THE SUPREME COURT
1. Delay condoned. These appeals are directed against the judgment and order passed by the Customs, Excise & Service Tax Appellate Tribunal, Mumbai in Order No. A/1395-1396/14/CSTB/C-1 in BCCI v. Commr. of Service Tax1 dated 26-8-2014.
2. On hearing Shri V. Lakshmikumaran, learned counsel for the appellant and after going through the materials on record, we see no infirmity in the order passed by the Tribunal and there is no reason to interfere in these matters.
3. Accordingly, the appeals stand dismissed.
IMPUGNED ORDER OF THE TRIBUNAL dated 26-8-2014
[BEFORE P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) AND RAMESH NAIR, MEMBER (JUDICIAL)]
The Order of the Tribunal was delivered by
P.R. Chandrasekharan, Member (Technical):— The appeals arise from Orders-in-Originals Nos. 26-27/STC-I/SKS/11-12 dated 2-11-2011 and 57-58/STC-I/SKS/11-12 dated 14-2-2012 both passed by the Commissioner of Service Tax, Mumbai I.
5. Vide the impugned order, the learned adjudicating authority has confirmed a total service tax demand of Rs. 20,70,22,328 along with interest thereon and imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994. Aggrieved of the same, the appellant is before us.
6. The facts relevant to the case are that the appellant, M/s. Board of Control for Cricket in India (BCCI), entered into agreements for provision of services with M/s. Taj TV Ltd., Dubai/Mauritius, M/s. TWI-U.K. Ltd., London and Nimbus Sport International Pte. Ltd., Singapore. BCCI also entered into agreements with M/s. Hawkeye Innovations Ltd., UK and IMG Media, London and IMG, South Africa for coverage of Indian Premier League matches. As per these agreements, the service providers mentioned above, who were non-residents, were required to produce audio-visual coverage of the cricket matches conducted by BCCI and the digitalised images of the coverage were uploaded for broadcasting for the viewers of the cricket match all over the world. The appellant paid consideration for the services received to these non-resident service providers. The Department was of the view that the services received by the appellant came within the purview of “programme producers service” and, therefore, the appellant was required to discharge service tax liability on reverse charge basis under Section 66-A of the Finance Act, 1994 or under Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, read with Section 66 of the said Finance Act. Accordingly, show-cause notices dated 15-10-2009 (for the period 2004-2005 to May 2009), 31-5-2010 (for the period 15-4-2008 to 17-4-2010), 23-10-2010 (for the period June 2009 to March 2010) and 18-6-2010 (for the period April 2009 to March 2010) were issued in respect of the said services received form various service providers mentioned therein. These notices were adjudicated vide the impugned orders and the sevice tax demands were confirmed for the period on or after 18-4-2006 (when Section 66-A was inserted in the statute) along with interest and also by imposing penalties.
7. The learned consultant for the appellant made the following submissions:
7.1. The services provided by the non-resident service providers related to recording of cricket images and such recordings were intended to be transmitted for viewing by the general public. The service providers did not produce any programme but were merely recording the cricket matches organised/held by BCCI and they had no control over the cricket matches. Therefore, it cannot be said that the non-resident service providers were producing any programme either for BCCI or on behalf of BCCI. Therefore, the services of audio-visual recording of the cricket matches do not fall under the category of “programme producers services” and the impugned demands are not sustainable in law.
7.2. The service providers undertook both audio as well as visual recording of the cricket matches. The taxable service under “programme producers services” covers either audio recording or visual recording and does not cover recording of both together. Therefore, the activity undertaken by the non-resident service providers do not come strictly within the definition of “programme” as defined in law and, therefore, the question of demand of service tax under “programme producers services” would not arise.
7.3. The non-resident service providers cannot be said to have produced a programme on behalf of BCCI. When a programme is produced on behalf of another person, there should be a third person available so as to complete the transaction which is missing in the present case. Reliance is placed on the decisions of this Tribunal in Taggas Industrial Development Ltd. v. CCE2, Bharuch Enviro Infrastructure Ltd. v. CCE3, Cibatul Ltd.4 and a few other decisions in support of this contention.
7.4. As regards the service rendered by Hawkeye Innovations Ltd., the same is for supply of software for recording of matches and, therefore, the same would not fall within the purview of “programme production”. Similarly, the service received from IMG S.A. pertains to booking of hotel accommodation and transport services for the cricket matches conducted in South Africa and, therefore, the same also would not fall within the purview of “programme producers services”.
7.5. The demand is time-barred. The show-cause notices have been issued invoking the extended period of time. The appellant bona fidely believed that the services received did not fall under any of the taxable service category. Therefore, there is no suppression or wilful misstatement of facts on the part of the appellant attracting extended period of time for confirmation of tax demand. Reliance is placed on the decisions in Cosmic Dye Chemical5, Chemfar Drugs and Liniments6 and Pushpam Pharmaceuticals Co.7 in support of this contention.
7.6. The learned consultant also submits that penalties have been imposed both under Sections 76 and 78 of the Finance Act, 1994. The issue whether penalties can be imposed under both these sections has been referred to a larger Bench of CESTAT in Industrial Security & Protection Services v. CCE8, in view of the conflicting decisions of the Hon’ble High Courts of Kerala and Delhi. Therefore, simultaneous imposition of penalties under both these sections cannot be sustained in law.
8. The learned Commissioner (AR) appearing for the Revenue, reiterates the findings of the adjudicating authority. He also relies on the terms of the contracts entered into by the appellant with the non-resident service providers, wherein the persons recording the cricket matches are described as producers, and production specifications have been given in the contract. Therefore, the services received by the appellant squarely falls within the definition of “programme producers services” and, therefore, the impugned demands are clearly sustainable in law.
9. We have carefully considered the submissions made by both the sides. We have also perused the contracts entered into with the service providers.
10. The agreement is titled as “Television production for international and domestic cricket”. As per the recital in the contract entered into with M/s. Nimbus Sport International Pte. Ltd., the appellant has accepted the bid tendered by Nimbus Sport International Pte. Ltd. who has been referred to as “the producer in the agreement and has agreed to appoint the producer to produce audio-visual coverage of the events on behalf of BCCI and the producer has undertaken to produce the audio-visual coverage of the events for broadcasting on the terms and conditions stipulated in the agreement.
11. As per Clause 2.1, BCCI has appointed the producer to exclusively produce the feed for and on behalf of BCCI and the feed means — the live and continuous clean audio and visual television signal of each match as described in detail in Clause 3.2 of the agreement. Clause 3.1 of the agreement deals with production services and reads as: “the producer must produce the feed for each match of the events as per the production/technical specification detailed in Schedule 3, using the personnel specified in Clause 5, using the equipment specified in Schedule 3 and otherwise in accordance with this agreement.” Clause 3.2 specifies that the feed for each match must be live, continuous and uninterrupted and should be in conformity with the specifications mentioned in sub-clauses (a) to (g) thereof. Clause 4 of the agreement deals with the other obligations of the producer and Clause 5 deals with personnel who should be engaged for production. Clause 6 deals with production and technical specifications relating to the equipment, use of the equipment, camera and key camera positions and so on. Clause 9 deals with assignment of the copyright by the producer to BCCI in respect of all the sound recordings, broadcasting and transmissions and so on for the services rendered, Clause 10 of the agreement specifies the consideration to be paid by BCCI to the producer for the production of the feed which includes all statutory taxes and charges, import duties and tariffs on imported materials and equipment, rise and fall, relevant award costs and allowances for the personnel.
12. Thus, from the terms of the contracts entered into by BCCI, it is amply clear that the non-resident service providers were producing a programme for and on behalf of BCCI. The question is whether this activity would come within the definition of “programme producers services”. The taxable event is programme producer service as defined in the Finance Act, 1994. For ready reference, the relevant provisions of Sections 65(86-a) and 65(86-b) are reproduced below:
“65. (86-a) “programme” means any audio or visual matter, live or recorded, which is intended to be disseminated 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 stations;
(86-b) “programme producer” means any person who produces a programme on behalf of another person;”
13. From the reading of the contract, we find that the service provider has installed 30-32 cameras in the stadium to capture the images of the cricket match. The appellant has set up a broadcast control room (BCR) in the stadium where the match is played. The images taken by the cameras are transmitted to vision colour correction unit and the same are viewed by the experts and after processing, these images are transmitted to the Directors vision desk.
14. The nature of activities undertaken by the service provider is as under:
“(i) The broadcast control room (BCR) is set up by the company in the stadium. It has various units viz. vision colour correction unit, Directors vision desk, sound engineer desk, replay desk, graphic desk, hawk eye unit, ball speed machine, other machine routers, commentary unit, monitor wall.
(ii) Around 30-32 cameras are fixed around the ground to take image of not only play but also of crowds and other happenings in the stadium.
(iii) The images taken by camera are transmitted to vision colour correction unit. Each engineer views the images taken by 4 to 6 cameras.
(iv) After processing, these images are transmitted to Directors vision desk and also at action replay unit. Images of all the cameras with their numbers are displayed on monitor wall having various screens supervised by Director. The Director in-charge continuously instruct the desk in-charge the camera number whose image is to be telecasted. The desk in-charge presses the button of said camera to send signal through router to satellite uplink unit.
(v.) The BCR has sound engineer who records all types of sounds through the mic fitted around and on the ground. The Director in charge of sound desk decide the sound to be transmitted to Directors vision desk from where images are transmitted.
(vi) The BCR has action replay unit. The images in this unit are also transmitted to Directors vision desk. The images shown through these cameras are given colour code. The Director in charge of vision unit keeps on continuously instructing the vision desk in-charge the colour code. The images shown in the said colour code is finally telecasted.
(vii) The BCR has hawk eye unit which tracks each ball played.
(viii) The BCR has graphic unit, which produces graphic of average run rate, standing of various teams, score board, etc. and as per instruction of Director in charge of vision desk, it is telecasted.
(ix) The sound and images are sent for recording in to video tape recorder and are also simultaneously sent for converting into audio video signals and sent out for uplinking to satellite uplink unit.
(x) The finally vended programme is transmitted to OB van stationed in the stadium from where it is sent to satellite for further transmission to household.”
15. The taxable service has been defined under Section 65(105)(zzu) as “any service provided or to be provided to any person, by a programme producer, in relation to a programme”. The Hon’ble Supreme Court in Doypack Systems (P) Ltd.9 has held that: (SCC p. 329, para 50)
“50. The expression “in relation to” … is a very broad expression which presupposes another subject-matter. These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context.…”
16. The Hon’ble Bombay High Court in ONGC v. CCE, Sales Tax & Customs10, has held that “where the legislature or its delegate uses the expression “in or in relation to”, its object and purpose is to widen the scope and purview of its entitlement”. In other words, these are expressions of width and amplitude and cover within its scope any activity which is in connection with the main activity. In this view of the matter, the activities undertaken by the non-resident service providers squarely falls within the definition of “programme” as defined in Section 65(86-a) and the service providers are “programme producers” as defined in Section 65(86-b).
17. As regards the contention that in respect of Hawkeye Innovations Ltd., they were only supplying software programmes for recording, this contention does not seem to be flowing from the contract entered into with Hawkeye Innovations Ltd. A perusal of the agreement with Hawkeye Innovations Ltd. shows that Hawkeye Innovations was required to supply four units in connection with the production by IMG Media for BCCI of the world feed live coverage on the IPL in the seasons 2008, 2009 and 2010. Hawkeye Innovations was also required to supply three engineers for the recording of the events and the consideration was paid for supply of the equipment and the personnel for recording purposes. As already noted by us, any service in relation to “programme producers services” would also fall within the definition of “taxable service”. Therefore, the services provided by Hawkeye Innovations by way of supply of equipment and personnel for recording the live programme and actually participating in such programme would also fall within the definition of “programme producers services” and we hold accordingly.
18. As regards the contract entered into with IMG S.A., the said agreement was for booking of hotel accommodation and transport of personnel in connection with the recording of cricket matches to be recorded by IMG UK. These services per se will not qualify as “programme producers services” and they are in the nature of supporting services. The contract was a separate one and the service provided and received consisted of booking of hotel accommodation and arrangements for transportation. Therefore, though these services were in connection with the production agreement with IMG Media, UK for recording of matches, they cannot be considered as production of any programme. The said service availed by BCCI by sub-contracting the work to a different service provider would not come within the purview of “programme producers services” and therefore, the demand of service tax on the consideration paid for the services under the category of programme producers services service cannot be sustained in law. Therefore, demand to this extent has to be set aside.
19. The appellant has contended that since the definition of “programme” refers to audio or visual matter, if recording is done of both i.e. audio as well as visual, the same would fall outside the definition of “programme”. This contention is quite absurd. If audio recording can be a programme and a visual recording also can be a programme, a combination of both would also be a programme. As per the Principles of Statutory Interpretation by Justice G.P. Singh (12th Edn. 2010, p. 477):
“The word “or” is normally disjunctive and “and” is normally conjunctive, but at times they are read as vice versa to give effect to the manifest intention of the legislature as disclosed from the context (Ishwar Singh Bindra v. State of U.P.11).”
20. In p. 478 of the said Book, it is stated that:
“In Section 2(1)(d)(i) of the Bombay Lotteries and Prize Competition Control and Tax Act, 1948, the Supreme Court read “or” as “and” to give effect to ‘the clear intention of the legislature as expressed in the Act read as a whole’ (State of Bombay v. R.M.D. Chamarbaugwala12)”
21. Applying these principles to the facts of the present case, to give effect to the manifest intention of the legislature, the expression “audio or visual matter” can be read as “audio and visual matter”. Therefore, we do not find any merit in the contention raised in this regard by the appellant.
22. As regards the contention that since the programme is produced on behalf of BCCI, there should be a third person, which is lacking in the present case, this contention is also not tenable. The statutory definitions of “programme” and “programme producer services” do not envisage the presence of a third party. Whether the programme is produced for BCCI or on behalf of BCCI, the transaction is complete. In any case, the programme is produced for dissemination by way of broadcasting to the general public and it is for the BCCI who has the rights over the programme, to decide and entrust the task of broadcasting to a third party. Thus the third party involved would be the broadcaster who will actually undertake dissemination of the programme produced by the non-resident service providers. This is evident from Clause 2.1 of the agreement with Nimbus wherein it is stated that “BCCI appoints the producer to exclusively produce the feed for and on behalf of BCCI. For the purpose of such appointment, BCCI hereby authorises the Producer to produce the feed for delivery in accordance with this agreement”. Clause 2.3 specifically provides that the rights of the producer under Clause 2.1 do not include the right to transmit the feed or both save to the extent necessary to perform its obligations hereunder including but not limited to the delivery of the feed to the on-site gateway and to the producers production facility. As per Clause 3.3 the producer must deliver the feed for each match to the on-site gateway. By definition, on-site gateway is the satellite uplink point at each venue. From the gateway the broadcaster licensed by BCCI or its media rights partner exhibits the feed or part thereof within their specific licensed territory. Thus the third party involved is the Broadcaster authorised by BCCI. From the specific clauses mentioned in the agreement as discussed above, the programme has to be delivered to the Broadcaster authorised by BCCI. In view of the factual position as discussed above, we do not find any merit whatsoever in the contention that there is no third party involved and therefore, the production of the programme is not on behalf of BCCI. Consequently the reliance placed by the appellant on various decisions completely fails and in fact, they are not at all relevant.
23. The next issue pertains to the time bar aspect raised by the appellant. This would arise only in the case of the show-cause notice dated 15-10-2009 as the demands in the other notices appear to be within the normal period of limitation. It is not the case of the appellant that the appellant took registration and gave details of the various contracts entered into to the Department. The details of the services received from the non-resident service providers and the consideration paid therefor was never declared to the Department in the statutory returns filed by BCCI. In terms of the provisions of Section 66-A read with Section 68 of the Finance Act, 1994, the appellant BCCI was the person responsible for paying service tax and it was their duty to comply with the statutory requirements which they failed to do. Both in the show-cause notices as well as in the impugned orders, the fact of suppression/withholding of information has been examined and discussed at length. Only after the commencement of the investigation by the Department, the true nature of the various transactions undertaken by the appellant came to light. Information relating to the transactions were given to the Department in August 2009 and thereafter. After completion of investigation, the show-cause notices were issued without any undue delay. In these circumstances, invocation of extended period of time cannot be faulted at all. There has been no undue delay on the part of the Department either in completing the investigation or in issue of the show-cause notices. Further, we observe that though the appellant has claimed bona fide belief, no material has been placed before us, either by way of expert opinion or otherwise, as to the basis for entertaining such belief. A belief can be said to be bona fide only when it is formed after all reasonable considerations are taken into account as held by this Tribunal in Interscape v. CCE13. In Winner Systems14, it was held that blind belief cannot be a substitute for bona fide belief. Therefore, we do not accept the plea of bona fide belief claimed by the appellant. Consequently the demand of service tax confirmed in the impugned order is clearly sustainable in law and we hold accordingly. In the absence of taking a registration and in the absence of filing any returns statutorily prescribed, it is the date of knowledge of the Department that is relevant for determination of time-limit. In CCE v. Mehta & Co.15, the Hon’ble Apex Court has held as follows: (SCC p. 440, para 23)
“23. The cause of action i.e. date of knowledge could be attributed to the appellant in the year 1997 when in compliance with the memo issued by the appellant and also the summons issued, the hotel furnished its reply setting out the details of the work done by the appellant amounting to Rs. 991.66 lakhs and at that stage only the Department came to know that the work order was to carry out the job for furniture also. A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show-cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years.”
24. If we apply the ratio of the above decision to the facts of the present case, it is seen that the show-cause notices have been issued well within the period of five years from the date of knowledge and, therefore, the contention that the notices are hit by time bar is clearly unsustainable in law and we hold accordingly. The reliance placed by the appellants on the various decisions are of no avail as in the present case there is deliberate withholding of information.
25. The appellant has also raised a contention as to whether penalties can be imposed both under Sections 76 and 78 of the Finance Act, 1994, simultaneously. Reliance has been placed on the decision of Industrial Security & Protection Services8 wherein a single member Bench has referred the matter to a larger Bench in view of the conflicting decisions by the Hon’ble Kerala and Karnataka High Courts. The Hon’ble High Court of Kerala in CCE v. Krishna Poduval16 held as follows: (SCC OnLine Ker para 11)
“11. The penalty imposable under Section 76 is for failure to pay service tax by the person liable to pay the same in accordance with the provisions of Section 68 and the Rules made thereunder, whereas Section 78 relates to penalty for suppression of the value of taxable service. Of course, these two offences may arise in the course of the same transaction, or from the same act of the person concerned. But we are of opinion that the incidents of imposition of penalty are distinct and separate and even if the offences are committed in the course of same transaction or arises out of the same act, the penalty is imposable for ingredients of both the offences.”
26. The Hon’ble High Court of Delhi in Bajaj Travels Ltd.17 also concurred with the view taken by the Hon’ble Kerala High Court and held that Sections 76 and 78 operated in two different fields and penalty was imposable under both separately, even if offences were committed in course of the same transaction or arose out of the same act. However, since the law has been amended prospectively w.e.f. 10-5-2008 so as to bar the imposition of penalties simultaneously, only one of the penalties would survive and not both after the amendment. As regards the reference made by a single member to the larger Bench of the Tribunal in this regard, we note that the decision on penalties has been rendered by a High Court and this Tribunal does not have jurisdiction to sit on judgment over a decision rendered by a High Court. Therefore, the reference made by a single member to a larger Bench of the Tribunal is of no consequence for imposition of penalties unless and until the decision of the Hon’ble High Court is overruled by the Hon’ble Supreme Court. Further we note that in the decision rendered by the Hon’ble Karnataka High Court, no reasons have been given as to why penalty is not imposable under both Sections 76 and 78 for the period prior to 10-5-2008. The Hon’ble High Court of Karnataka has merely observed that “it is now well settled that the liability cannot be imposed both under Sections 76 and 78”. This is only an obiter dictum and does not lay down any ratio. In these circumstances, we do not find any infirmity in the imposition of penalties both under Sections 76 and 78 of the Finance Act on the appellant for the period prior to 10-5-2008.
27. In view of the factual and legal analysis as above, we conclude as follows:
27.1. The services received by the appellant, BCCI from the non-resident service providers, namely, M/s. Taj TV Ltd., Dubai/Mauritius, M/s. TWI-U.K. Ltd. London, Nimbus Sport International Pte. Ltd., Singapore, M/s. Hawkeye Innovations Ltd., UK and IMG Media, London merit classification under “programme producers services” as defined in Sections 65(86-a), 65(86-b) read with Section 65(105)(zzu) of the Finance Act, 1994 and the appellant is liable to pay service tax along with interest thereon on the consideration paid for the services received under the provisions of Section 66-A of the said Finance Act. However, the services of hotel booking and transportation received from IMG, South Africa do not fall within the scope of the said service and hence demand of service tax on this service under the category of programme producers service is not sustainable in law.
27.2. The appellant has suppressed material facts from the Department and hence, extended period of time has rightly been invoked for confirmation of service tax demand.
27.3. The appellant is liable to penalty under Sections 76, 77 and 78 of the Finance Act, 1994.
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† Arising out of CA Diary No. 39331 of 2014
1 BCCI v. Commr. of Service Tax, 2014 SCC OnLine CESTAT 2115
2 Taggas Industrial Development Ltd. v. CCE, (1989) 39 ELT 151 (Tri)
3 Bharuch Enviro Infrastructure Ltd. v. CCE, (2008) 12 STR 622 (Tri)
4 Union of India v. Cibatul Ltd., (1985) 4 SCC 535 : 1986 SCC (Tax) 66 : 1985 (22) ELT 302
5 Cosmic Dye Chemical v. CCE, (1995) 6 SCC 117 : (1995) 75 ELT 721
6 CCE v. Chemphar Drugs and Liniments, (1989) 2 SCC 127 : 1989 SCC (Tax) 245 : (1989) 40 ELT 276
7 Pushpam Pharmaceuticals Co. v. CCE, (1995) Supp (3) SCC 462 : (1995) 78 ELT 401
8 Industrial Security & Protection Services v. CCE, 2014-TIOL-710-CESTAT (Bom)
9 Doypack Systems (P) Ltd. v. Union of India, (1988) 2 SCC 299 : (1988) 36 ELT 201
10 ONGC v. CCE, Sales Tax & Customs, (2013) 32 STR 31 (Bom)
11 Ishwar Singh Bindra v. State of U.P., AIR 1968 SC 1450 : 1969 Cri LJ 19
12 State of Bombay v. R.M.D. Chamarbaugwala, AIR 1957 SC 699
13 Interscape v. CCE, (2006) 198 ELT 275 (Tri)
14 Winner Systems v. CCE & Customs, (2005) 191 ELT 1051 (Tri)
15 CCE v. Mehta & Co., (2011) 4 SCC 435
16 CCE v. Krishna Poduval, 2005 SCC OnLine Ker 484 : (2006) 1 STR 185
17 Bajaj Travels Ltd. v. Commr. of Service Tax, 2011 SCC OnLine Del 3212 : (2012) 25 STR 417
