Service Tax - Statute Update

Broadcasting services – Chargeability of payments by MSO – effective date

CBEC has issued Letter F. NO. 149/5/2006-CX 4 dated 9-6-2006 clarifying that in case of Broadcasting service, the scope was expanded from 16-6-2005 (i.e., by the Finance Act, 2005) to include the service provided by the broadcasters to the subscribers for receiving broadcasting signals. In other words, the Multi System Operators (MSO) subscribing to the broadcasters are covered from 16-6-2005. Further, the individuals subscribing Direct to Home (DTH) are also covered from that date.

It is clarified that prior to 2005 Budget, the activity of selling of time slots for broadcasting of any programme or obtaining sponsorship for programme or collection the broadcasting charges only was covered. The charges for permitting right to receive any form of communication was not covered till 15-6-2005.

The above clarification was issued with reference to the letters issued by Chief Commissioner bearing No. C.No. IV(16) HQ/Tech/321/ST/05 dated 21-11-2005 and CCU (DZ)/ST/135/2005 dated 8-5-2006 stating that the subscription charges collected by the broadcasters from MSO or cable operators were subject to service tax even prior to the amendment made by the Finance Act, 2005 and the Budget 2005 only clarified the scope of the levy.

Timely intervention in form of recent clarification, the CBEC has put the matter beyond doubt and made life easier for the broadcasters.

Electronic payment of Service Tax by major assessee now mandatory

The DGST has issued instructions wide Letter D.O.F. No.:V/DGST/30-Misc-27/excise-payment/2006, dated 6-7-2006 that from 1st October 2006 onwards electronic payment of service tax is mandatory for those assessee whose payments exceeds Rs.50 Lakhs in the preceding financial year or has made payment of more than Rs. 50 lakhs during the current financial year.

The letter further states that at present twenty three banks are nominated to provide the facility of electronic payment.