The court upheld the validity of show cause notices issued under the Central Goods and Services Tax Act, affirming the authority of the officers and the necessity for the petitioner to respond to the notices.

1.Heard Sri V. Lakshmikumaran learned Counsel for the petitioner and Sri N. Venkataraman, learned Additional Solicitor General of India and Sri P.R. Sreejith learned Senior Standing Counsel for the Central Board of Indirect Taxes and Customs (CBIC) on behalf of the respondents.

2. These two writ petitions have been filed by the petitioner/Asianet Digital Network Private Ltd, a Company registered under the provisions of the Companies Act impugning two show cause notices in Ext.P1 in both the writ petitions issued under Section 73 of the Central Goods and Services Tax Act 2017 (for short, ‘CGST Act’) for the period February 2017 to June 2017 in W.P.(C) No.30147/2022 and from July 2017 to March 2020 in W.P.(C) No.3611/2024.

Facts in brief:

3. In October 2015, Asianet Broadband Private Ltd was formed as a wholly owned subsidiary of Asianet Satellite Communications Ltd (for short, ‘Parent Company’). ‘Asianet Broadband Private Ltd’ was renamed ‘Asianet Digital Cable TV Private Ltd’ in March 2017 and again renamed ‘Asianet Digital Network Private Ltd’ in January 2018.

3.1 During the initial period i.e., 1993-2000, the Parent Company used to provide cable television services directly to the subscribers. The Parent Company receives different channels broadcasted by various broadcasting entities and provides access to such channels to its subscribers on payment of subscription charges. This system of providing signals to its subscribers directly is known as Multi-System Operator (for short, ‘MSO’). In the areas where the Parent Company did not have network coverage, it started providing input services to Local Cable Operators (for short, ‘LCO’), who, in turn, re-transmit the signal of various channels to the subscribers of LCOs.

3.2 The cable operator service was brought under the Service Tax net in 2002. According to the petitioner, the Parent Company had been paying service tax at applicable rates on the amounts received by them as consideration for the services provided to the subscribers as well as the LCOs. It is said that during the period April 2015 to June 2017, the Parent Company was providing services to around 1200 LCOs in addition to their direct subscribers. Till 2015, cable television signals could be received by its subscribers through either analog or digital systems. However, from 01.02.2017 in pursuance of the implementation of Digital Addressable Systems by the Government, vide the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations 2012 (for short, ‘DAS Regulations’) as well as Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations 2017 (for short, ‘2017 Regulations’) the cable television signals were provided only through digital system i.e., through set-top boxes.

Allegations:

Show cause notice dated 19.07.2022 in W.P.(C) No.30147/2022:

4. The petitioner is registered as a Multi System Operator (MSO) with the Ministry of Information and Broadcasting. They are engaged in providing digital cable television services to subscribers under the brand name ‘Asianet’ throughout Kerala. They are registered for service tax and have been paying service tax on monthly subscription amounts collected from their subscribers in respect of digital cable television services provided to subscribers and also on other services rendered viz. broadcasting services, maintenance or repair services etc.

4.1 Intelligence enquiry done by the officers of Directorate General of Goods and Services Tax Intelligence (for short, ‘DGGI’), Thiruvananthapuram Regional Union indicated that various LCOs linked to Asianet were collecting payments from subscribers. And after retaining part of the amount collected from the subscribers the LCO would remit the remaining amount to the petitioner. The petitioner was not accounting for the amounts retained by its linked LCOs in their financial documents and was thus suppressing taxable value and servi