2004 (166) E.L.T. 34 (Tri. - Del.

)
IN THE CESTAT, NORTHERN BENCH, NEW DELHI
Justice K.K. Usha, President and Shri C.N.B. Nair, Member (T)
ZEE TELEFILMS LTD.
Versus
COMMISSIONER OF CENTRAL EXCISE, MUMBAI
Final Order Nos. ST/9-10/2004-NB(A), dated 11-3-2004 in Appeal Nos. ST/4-5/2003-NB(A)
Service Tax on broadcasting agency or organisation in relation to
broadcasting in India - Broadcasting - Meaning of - Appellants engaged in activity
of selling of time slots or obtaining sponsorships for broadcasting of any
programme and are collecting broadcasting charges on behalf of
ATL/EXPAND/STAR - When television programme and advertisements in form of
signals are encrypted and beamed from outside India and telecast outside India
but are received in India through decoders by Multi System Operators and Cable
TV Operators, it would come within meaning of definition of “broadcasting” under
Section 2(c) of Prasar Bharati Corporation Act, 1990 - Appellants thus rendering
taxable service under Section 65(72) of Finance Act, 1994 and entire amount paid
by advertiser/sponsorer to ATL/ EXPAND/STAR to be treated as value of taxable
service - Demand for duty and interest confirmed. - In the case of broadcasting
agency or organisation, having its head office situated in any place outside India, the
activity of selling of time slots or obtaining sponsorships for broadcasting of any programme
or collecting the broadcasting charges on behalf of the said agency or organisation, by its
branch office or subsidiary or representative in India or any agent appointed in India or by
any person who acts on its behalf in any manner are also brought under net of the term
“broadcasting”. The activities as carried on by the appellants herein are not in dispute. Such
activities would strictly come within the definition of the term “broadcasting” as amended.
They will also come within the definition of the term “broadcasting agency or organisation”
in view of the nature of activities carried on by them. It is not disputed that the appellants
are engaged in the activity of selling of time slots or obtaining sponsorships for
broadcasting of any programme and are collecting broadcasting charges on behalf of
ATL/EXPAND/STAR. Therefore, there is no merit in the contention of the appellants that
they are not providing taxable service. [paras 9, 10]
Words and Phrases - Broadcasting or dissemination of any form of
communication - Meaning of - Restricted meaning not be given to the word
“broadcasting” or “dissemination of any form of communication” even as they
stood prior to amendment by Finance Bill, 2002 - Section 65(13) of Finance Act,
1994. [para 9]
Penalty - Service tax on broadcasting agency - Legal position as to liability as
broadcasting agency not clear during relevant period - Dispute relating to a legal
issue regarding interpretation of provisions of different statutes and taking into
account conduct of appellants in taking out registration and submitting returns
under protest, imposition of penalty vacated - Section 76 of Finance Act, 1994.
[para 11]
Appeals disposed off

REPRESENTED BY : S/Shri V. Sridharan, Anil Misra and K. Srikanth, Advocates, for the Appellant.
Ms. K.A. Misra, SDR, for the Respondent.

[Order per : Justice K.K. Usha, President]. - The appellant-assessees who are held liable to pay
service tax challenge the orders passed by the Commissioner of Central Excise (Appeals), Mumbai dated
18-11-2002 rejecting their appeals against the orders of adjudication. Since both the appellants raised a
common contention that their activities cannot be termed as ‘taxable service’ as defined under Section
65(72), as it stood during the relevant period, the appeals are disposed of by a common order. According
to them they are not providing any service to a client as a broadcasting agency or organization in relation
to broadcasting in India. Therefore, the demand of service tax is not sustainable.
2. M/s. Zee Telefilms Ltd., appellant in ST/4/2003, are representatives of M/s. Asia Today Ltd.
(ATL) and M/s. Expand Fast Holdings Ltd. (EXPAND), Mauritius in India for selling time slot for
advertisement and for obtaining sponsors for serials, programmes, events, etc. which would be played out
by ATL/EXPAND in the various channels like ZEE TV, ZEE CINEMA, MUSIC ASIA. Appellant in
ST/5/2003 are representative of M/s. Satellite Television Asian Region Limited (STAR) Hong Kong in
India for selling time slot for advertisement and for obtaining sponsors for serials, programmes, events,
etc. which would be telecast by STAR in the various channels like STAR PLUS, STAR NEWS, STAR
WORLD etc. It is the case of the appellants that their programmes are telecast from satellite situated
outside India. The signals are encrypted and beamed from outside India. These signals are received by
the Multi System Operators (MSO) and Cable TV operators through decoders. These decoders enable
MSOs and Cable TV operators to re-transmit the signals to the viewers subscribed to them. The signals
that are broadcast may be of advertisements, serials, programmes or live events. The advertisements
recorded in videotapes by the advertising agencies and programmes/serials recorded in the videotapes
by or on behalf of the sponsor are procured from advertisement agencies in India and sponsors and sent
to ATL/EXPAND, Mauritius in the case of the appellant in ST/4/2003 and to Star Ltd., Hong Kong in the
case of appellant in ST/5/2003.
3. M/s. Zee Telefilms submits that they are engaged in collecting money due to ATL/EXPAND
from its clients in India and the same is remitted to ATL/EXPAND after deducting its commission. So also
M/s. Star India Pvt. Ltd. collects amounts due to STAR from clients in India and remit the same to STAR
and get a commission paid for its activity. Both the appellants contend that they are not engaged in the
activity of broadcasting and that broadcasting done by ATL/EXPAND and STAR are from outside India
and therefore no service tax can be demanded from the appellants as agents of broadcasting agency or
organisation.
4. A show cause notice dated 7-12-2001 was issued to M/s. Zee Telefilms Ltd. proposing to levy
service tax for the reason -
(a) ATL/EXPAND is engaged in the business of broadcasting services in India since
ATL/EXPAND telecasts various channels like ZEE TV, ZEE CINEMA, MUSIC ASIA, etc.;
(b) Since Zee Telefilms Ltd. are appointed as a non-exclusive independent representatives in
India by ATL/EXPAND they are rendering service of broadcasting in the capacity of
broadcasting agency/organisation in identifying the clients wanting to broadcast
advertisements and for obtaining sponsors for serials/programmes, events, live events, etc.
for broadcasting on foreign TV channels in India; and
(c) Zee Telefilms are rendering services in relation to broadcasting in India and broadcasting
services rendered by them would come within the ambit of service tax levy in terms of Section
137 of the Finance Act, 1994.
A show cause notice dated 7-12-2001 was issued to M/s. Star India Pvt. Ltd. on the similar allegation
regarding the services rendered by them as non-exclusive representative of STAR. The adjudicating
authority as well as the Commissioner (Appeals) rejected the contentions taken by the appellants that the
services provided by them would not come within the term ‘broadcasting’ as defined under the relevant
provisions for the purpose of imposing service tax. Commissioner (Appeals) took the view that the activity
of broadcasting by the principals of the appellants is performed in India. He further held that the activities
carried out by the appellants are integrally connected to the activities of broadcasting and are performed
in relation to broadcasting.
5. Aggrieved by the above, the assessees have come up in appeal. According to the appellants
they are not engaged in dissemination of any form of communication by transmission of electro-magnetic
waves through space or through cables. They collect amounts due to their principals and remit the same
to them and get the commission paid for their activity. They are only providing service of selling time slot
for advertisement and for obtaining sponsors for serials etc. for their principal for which they are paid an
agreed commission. Therefore, it cannot be held that they are providing broadcasting service to their
clients. It is further contended that the activity of ATL/EXPAND and STAR is carried out outsie India and
hence is not taxable. The appellants submit that the amendment which was brought under the Finance
Act, 2002 with retrospective effect could at the most make the appellants liable to pay service tax on the
amount received by them from ATL/EXPAND/STAR as the case may be. The learned Counsel for the
appellants further submitted that Explanation 65(90)(zk) cannot have the effect of enlarging the scope of
the definition of the term “taxable service”.
6. The learned DR made elaborate submissions supporting the view taken by the Commissioner.
She contended that the word “dissemination” would take in both transmission of electro-magnetic waves
through space or through cables and reception of the same. She submitted that the dictionary meaning
relied by the appellants clearly supports the Revenue’s case. Following are the meanings given, in
different dictionaries for the word ‘disseminate’ :-
Concise Oxford Dictionary - spread widely.
Chambers English Dictionary - to sow or scatter abroad to propagate to diffuse.
Penguin English Dictionary - Spread about freely or widely.
The New Lexicon Webster’s Dictionary of the English Language - to spread abroad, scatter,
disperse, wisdom, belief etc.
Collins Cobuild English Dictionary for Advanced Learners meaning - to disseminate information or
knowledge means to distribute it so that it reaches many people or organisations.
The learned DR pointed out that the meaning given as above in different dictionaries would show that it is
not enough that the information or knowledge is transmitted but it has to reach the destination so as to
come within the meaning of “dissemination”. Therefore, she contends that even before the amendment
which was brought under the Finance Bill, 2002 the legal position was such that if the broadcast is
received in India even though the encryption of signals or beaming thereof through the satellite might
have taken place outside India, it would come within the definition of the term “broadcasting” in India and
such service shall be taxable service as defined under the Act. In support of her contention on the
meaning of the word “broadcasting” she brought to our notice the following from Encyclopaedia
Britanica :-
“broadcasting - electronic transmission of radio and television signals that are intended for general public
reception, as distinguished from private signals that are directed to specific receivers. In its most common form
broadcasting may be described as the systematic of entertainment, information, educational programming and other
features for simultaneous reception by a scattered audience with appropriate receiving apparatus. Broadcasts may
be audible only, as in radio, or visual or a combination of both, as in television.”
She further submitted that even though the transmission of signals by electro magnetic wave and
uplinking in the Satellite Transporter by ATL/EXPAND and STAR are outside India, their activity will still
come under the definition of “Broadcasting” and a Taxable Service rendered in India.
7. We will now refer to the relevant provisions as it stood on the date of show cause notices were
as follows :
“Section 65(13)
‘broadcasting’ has the meaning assigned to it in clause (c) of Section 2 of the Prasar Bharati (Broadcasting
Corporation of India) Act, 1990 (25 of 1990);
Section 65(72)
‘taxable service’ means any service provided :
(zk) to a client, by a broadcasting agency or organisation in relation to broadcasting, in any manner;”
8. Clause (c) of Section 2 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990
defines “Broadcasting” as under :
“’Broadcasting’ means the dissemination of any form of communication like signs, signals, writing, pictures,
images and sounds of all kinds 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 and all its
grammatical variation and cognate expressions shall be construed accordingly.”
9. Finance Act, 2002 made amendments to the provisions relating to broadcasting with
retrospective effect from 16th July, 2001. The amended provisions read as follows :
Section 65(1)(14)
‘broadcasting’ has the meaning assigned to it in clause (c) of section 2 of the Prasar Bharati (Broadcasting
Corporation of India) Act, 1990 and also includes programme selection, scheduling or presentation of sound or visual
 matter on a radio or a television channel that is intended for public listening or viewing, as the case may be; and in
the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes
the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the
broadcasting charges on behalf of the said agency or organisation, by its branch office or subsidiary or
representative in India or any agent appointed in India or by any person who acts on its behalf in any manner.
Section 65(1)(15)
‘broadcasting agency or organisation’ means any agency or organization engaged in providing service in
relation to broadcasting in any manner and, in the case of a broadcasting agency or organisation, having its head
office situated in any place outside India, includes its branch office or subsidiary or representative in India or any
agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time
slots for broadcasting of any programme or obtaining sponsorships for programme or collecting broadcasting
charges on behalf of the said agency or organisation.
Section 65(1)(90)
‘taxable service’ means any service provided :
(zk) to a client, by broadcasting agency or organisation in relation to broadcasting in any manner and, in
the case of broadcasting agency or organisation, having its head office situated in any place outside India, includes
service provided by its branch office or subsidiary or representative in India or any agent appointed in India or by any
person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any
programme or obtaining sponsorships for programme or collecting broadcasting charges on behalf of the said
agency or organisation.
‘Explanation’. - For the removal of doubts, it is hereby declared that so long as the radio or television
programme broadcast is received in India intended for listening or viewing, as the case may be, by the public such
service shall be a taxable service in relation to broadcasting, even if the encryption for the signals of beaming thereof
through the satellite might have taken place outside India.”
We are not able to accept the contention raised by the appellant and give a restricted meaning to the
word “broadcasting” or “dissemination of any form of communication” even as they stood prior to
amendment by Finance Bill, 2002. As pointed out by the learned DR meaning given to the word
“disseminate” in all the dictionaries referred by the appellants would clearly show that unless the
information or knowledge reaches the receiving end dissemination will not be complete. Meaning given to
the word “dissemination” in Indian Edition 2001 the New Oxford Dictionary is ‘spread or disperse
(something especially information) widely’. Therefore, when the television programme and advertisements
in the form of signals are encrypted and beamed from outside India and telecast outside India but are
received in India through decoders by Multi System Operators and Cable TV operators, it would come
within the meaning of definition of “broadcasting” under Section 2(c) of Prasar Bharati Corporation Act,
1990. Under the amended definition, the word “broadcasting” includes programme selection, scheduling
or presentation of sound or visual matter on a radio or a television channel that is intented for public
listening or viewing, as the case may. In the case of broadcasting agency or organisation, having its head
office situated in any place outside India, the activity of selling of time slots or obtaining sponsorships for
broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or
organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or
by any person who acts on its behalf in any manner are also brought under net of the term “broadcasting”.
The activities as carried on by the appellants herein are not in dispute. Such activities would strictly come
within the definition of the term “broadcasting” as amended. They will also come within the definition of
the term “broadcasting agency or organisation” in view of the nature of activities carried on by them. It is
not disputed that the appellants are engaged in the activity of selling of time slots or obtaining
sponsorships for broadcasting of any programme and are collecting broadcasting charges on behalf of
ATL/EXPAND/STAR. Therefore, there is no merit in the contention of the appellants that they are not
providing taxable service.
10. In the light of the above view which we are inclined to take on the status of ATL/Expand/Star
and the appellants with reference to the term ‘broadcasting’ and ‘broadcasting agency’, we find no merit in
the contention of the appellant that the value of their service has to be limited to the payment made to it
by ATL/Expand/Star. The entire amount paid by the advertiser/sponsorer to ATL/Expand/Star has to be
treated as value of Taxable Service.
11. It is contention on behalf of the appellants that in the facts of their case no penalty should
have been imposed on them. The legal position as to their liability as ‘broadcasting agency’ was not clear
during the relevant period. It was, therefore, felt that an amendment had to be brought in the statute with
retrospective effect. Under these circumstances no intention to evade duty could be read into their
conduct. They, therefore, pray for setting aside the imposition of penalty. We find merit in the above
contention. In the nature of dispute which related to a legal issue regarding interpretation of provisions of
different Statutes and also taking into account the conduct of the appellants in taking out registration and
submitting returns under protest, we are inclined to vacate imposition of penalty on the appellants under
Section 76. Therefore, while affirming the duty demand and interest against the appellants we set aside
the imposition of penalty under the impugned order.
12. Appeals are disposed of as above.
_______

_______