Agreement for perpetual copyright assignment with production obligations as directed constitutes taxable programme producer service; per-episode payments are for production activity, justifying service tax and extended limitation for non-disclosure.

Per Mr. AJAYAN T.V.

Sathya Jyothi Films, the appellant herein has preferred this appeal aggrieved by the Order in Appeal No.211/2015 (STA - II) dated 25.08.2020 (the impugned order) whereby the Appellate Authority has upheld the Order in Original No.STC/14/2012 –ADC (LTU) dated 28.03.2012.

2. Briefly stated, the facts of the case are that the appellant is registered with the Service Tax Department under the category of Television or Radio Programme Producer’s Service, Video take Production services and ‘sale of space or time for advertisement’ service. During the course of audit of Sun TV network by CERA, it was noticed that Gemini TV had received recorded commercial programme for which payments have been made to the Appellant. On perusal of the documents submitted by the Appellant, it is stated to have been found that the amounts have been received as consideration from Gemini TV on account of assignment of exclusive Telugu dubbing rights of the Tamil serial “Anandam”, after duly dubbing into Telugu language. It is stated that on perusal of the assignment agreement it was found that the appellant had agreed to assign exclusive copy rights and all the ownership rights of all the episodes of the serial for a perpetual period to Gemini TV. It is stated that clause 7 of the agreement stipulated that the appellant shall undertake production work as directed by Gemini TV. It is also stated that the assignee was required to pay to the assignor a sum of Rs.10,000/- per episode and the said amount shall be paid for every five episodes after the telecast of the same and in the succeeding week. The Department was of the view that the said activity of production on behalf of others and assigning the copyright of the programme produced by the appellant to the broadcaster for a perpetual period, amounts to sale of programmes which was a taxable service covered under “Programme Producer’s Services” as per Section 65 (105) (zzu) of the Finance Act, 1994 (Act).

3. The Department therefore issued a Show Cause Notice No.743/2010 dated 22.10.2010 (SCN) invoking the extended period of limitation alleging willful suppression and mis-declaration of facts as well as contravening of various provisions of the Act since the appellant had not disclosed the actual fact of providing taxable services and payments received thereon. The SCN demanded service tax of Rs.7,85,621/- for the period from 2005-06, 2007-08 under proviso to Section 73 (1) of the Act along with appropriate interest and proposed to impose penalties under Section 76, 77 and 78 of the Act. After due process of law, the Adjudicating Authority vide the Order in Original mentioned above confirmed the demand along with interest and imposed an equivalent penalty under Section 78 of the Act. Aggrieved, the appellant preferred an appeal which came to be rejected vide the impugned order. Hence this appeal.

4. Ms. Radhika Chandrasekhar, Ld. Advocate appearing for the appellant contended that the appellant is the copy right owner of the Television serial ‘Anandam’ and had assigned the exclusive rights including all ownership rights of the dubbed Telugu version to Gemini TV for a perpetual period through a Copyright Assignment Agreement. The appellant has assigned copyrights to the broadcaster to exploit the right to the exclusion of other persons, whic