Sei sulla pagina 1di 6




C. No.


M/s B&W Cable Network, # 22, Haripur Road, Balongi, Mohali (here-in-after referred to as the
Noticee) are registered with the Service Tax Department vide Service Tax Registration No.
AAKFB0872HSD001 w.e.f. 12.11.2014 and are engaged in providing taxable services under the category of
Cable Operators as defined in Section 65B (44) of the Act in the specified territorial area for providing the
taxable services as mutually agreed upon by the Noticee and M/s Fastways Transmission Services (P) Ltd.,
Lajjya Tower, Near P.F. Building, Sham Nagar, Ludhiana (hereinafter referred to as Fastway).
Fastway are operating as Multi System Operator (MSO) who receive TV contents from TV Channels /
aggregators and supply those to linked cable operators (LCOs). M/s Fastway have entered into an agreement
with the Noticee for supply of TV contents against monetary consideration payable by the Noticee. As per the
agreement entered into by M/s Fastway, the Noticee is transmitting the signals received from M/s Fastway as it
is without any addition/modification. The name/logo of Fastway is continuously displayed during the
transmission and reception of TV programme by ultimate consumers and it appears that the Noticee undertook
the distribution of services provided by a person under a brand name or trade name, whether registered or not, of
another person.
Further, as per provisions of Section 65(105)(zs)(valid upto 30.06.2012) of the Act, and under Section
66B of the Act, (valid w.e.f. 01.07.2012), any service provided or to be provided to any person, by a cable
operator in relation to cable services is taxable service and subject to service tax. As per provisions of Section
67 of the Act, service tax chargeable on any taxable service with reference to its value, shall be the gross amount
charged by the service provider for such service provided or to be provided by him. However, notification No.
06/2005-ST dated 01.03.2005 (as amended) (valid upto 30.06.2012) and/or 33/2012ST dated 20.06.2012 (valid
w.e.f.01.07.2012) exempts taxable services of a specified aggregate value in any financial year from whole of
the service tax leviable thereon. However, it has been specifically provided in the notification that nothing
contained in this notification shall apply to, taxable services provided by a person under a brand name or trade
name, whether registered or not, of another person. The brand name has been defined in the above mentioned
notifications as:
(A) brand name or trade name means a brand name or a trade name, whether registered or not, that is
to say, a name or a mark, such as symbol, monogram, logo, label, signature, or invented word or writing which
is used in relation to such specified services for the purpose of indicating , or so as to indicate a connection in
the course of trade between such specified services and some person using such name or mark with or without
any indication of the identity of that person.
As the service being provided by the Noticee is under the trade name / trade mark/ logo of other person
(i.e. Fastway), as discussed supra, the benefit of value based exemption as provided under Notification
No.6/2005-ST dated 01.03.2005 (as amended) does not appear to be admissible and it appears that the Noticee
should have discharged the service tax liability on the gross amount received from the
customers/users/consumers to whom the Noticee is providing the service.
Accordingly, the Noticee vide C. No. ST-20/CER-II/Mohali/Enquiry/B&W Cable/5/15/725 dated
30.03.2016 was requested to provide the details of the amount charged from each subscriber and the details of
service tax payment, if any during the period October 2009 to March 2014. The Noticee did not respond to the
departmental communication.

However, Hqrs. Preventive, Central Excise & Service Tax Commissionerate, Chandigarh II, provided
the details of LCOs based in the jurisdiction of Central Excise & Service Tax Range V, S.A.S. Nagar, Mohali
as received from Fastway indicating the name, address and contact number of the person concerned and the
figures for the period 2009-10 to 2013-14.
Further to seek some clarifications, the statement of Shri Rajesh Mehru S/o Shri Dharam Chand Mehru,
resident of H. No,273, Model Gram, Ludhiana, authorized signatory of Fastway, was recorded on 09.10.2014
under Section 14 of the Central Excise Act as made applicable to the Service Tax as per the provisions enshrined
in Section 83 of the Finance Act, 1994. Shri Rajesh Mehru, the authorized Chartered Accountant of Fastway in
his statement, interalia, stated that he was working since 2009 with Fastway and was entrusted the work of
supervising, maintenance and finalization of Financial Accounts of the above said company; that he also
supervise the filing of statutory returns with various Government Departments including service tax department;
that Fastway is engaged in providing the Television Signals both Digital and Analogue and working as MSO;
that they provide signals to LCO who in turn provide the signals to the last mile subscriber; that from the year
2009-10 (April ,2009) to 2011-12 (Upto March, 2012) only Analogue System was in operation; that in the
analogue system lump-sum bill was raised to the LCO as per the data regarding number of connections
(subscribers) provided by the LCO as there was no Digital Access System; that the billing was @ Rs.100/- per
connection during the said period; that the share of LCO and MSO was usually on 50% share basis (Rs.100/each); that from April, 2012 after onset of Digitalization, the company used to raise the bill on the basis of STB
installed in the territory of each LCO @ Rs.100/- per STB out of which Rs.65/- being the subscription amount
and Rs.35/- as digital rent of STB; that Rs.100/- was the gross amount of billing which was inclusive of service
tax as well;
Sh. Gurdeep Singh S/o S. Jaswant Singh, Resident of House No. 57-B, Rajguru Nagar, Ludhiana,
Managing Director of M/s Fastway Transmissions Pvt. Ltd., Lajjya Tower, Near E.P.F. Building, Sham Nagar,
Ludhiana in his statement recorded on 28.02.2015 inter alia stated that:

M/s Fastway Transmissions Pvt. Ltd., Ludhiana had five directors namely S/Sh. Gurdeep Singh
(himself), Arshdeep Singh (his son), Vishal Chaudhary, Jagjit Singh Kohli and Yogesh Shah and that the
company was incorporated on 11.10.2007;


the company was working as an MSO (Multi System Operator) and were registered with the Service
Tax department vide Registration No. AABCF1854BST001;


MSO was an intermediary between broadcasting companies and LCOs, and received the TV contents
from broadcasters and re-transmitted the same to LCOs; for such re-transmission purpose they had
installed head-end and transponders at their premises at Lajjya Tower, Ludhiana; and that from there
they distributed the signals to LCOs through optic fibre cable network laid throughout Punjab,
Chandigarh and some parts of Haryana and Himachal Pradesh;


the LCOs distributed the signals received from the MSOs to each and every subscriber of their network
through their own cable network;

before the digitalization (of cable services), i.e. prior to 31.03.2012, analogue system was in operation
under which analogue signals were provided to LCOs, and MSO used to raise the bills on LCOs at lump
sum basis on the declaration of LCOs regarding the number of connection/subscribers;


the share of MSO (M/s Fastway Transmissions Pvt. Ltd., Ludhiana) and its LCOs in the subscription
(amount received from ultimate consumers of cable service) during analogue period was about 50:50
and they (M/s Fastway) paid service tax on the amount so received by them (M/s Fastway) from LCOs
during the period of analogue era;


with effect from 01.04.2012, with the introduction of amendment to the provisions of Cable Television
Regulation Act in 2011 the Digital Addressable System (DAS) was adopted by their company in a

phased manner; that in DAS system each subscriber needed to install a device called Set Top Box to
decode the signals;

under DAS system the MSOs were having full control over the STBs; the STB could start functioning
only after its activation by MSO and, for this purpose, they had installed Subscriber Management
System (SMS) at their premises at Lajjya Tower, Ludhiana and that SMS system was a computerized
system which had LCO-wise details of STB boxes installed at the premises of each subscriber;


they had imported these STB boxes from China and were charging rent from subscribers for using STBs
but the ownership of the STBs remained with their company;

in DAS regime, they used to raise bills on LCOs on the basis of number of subscribers i.e. number of
STB installed under a particular LCO multiplied by Rs.100/- (inclusive of service tax); and this Rs.100/was further bifurcated into two parts i.e. Rs. 65/- in respect of subscription fee and Rs.35/- for STB rent;


they were paying Service Tax on Rs.100/- (inclusive of service tax); the LCO used to charge from
subscribers on an average Rs.250/- per STB; thus the share of LCO under digital system was Rs.150/per STB;


they had yet not covered the entire territory of operation under DAS system; some of their LCOs
located in far flung areas and rural areas were still under analogue system; that the company was
progressively covering the entire area under DAS; that the LCOs working under analogue system even
after 01.04.2012 had started keeping Rs.150/- per subscriber as their share (out of the amount collected
from the subscriber) with effect from 01.04.2012 (thus their share had declined from 50% to 40%);


on being questioned about decreased percentage of their own share after introduction of DAS system, he
stated that it was because after introduction of DAS system their subscriber base had increased


W.e.f. 01.07.2014 as per Telecom Regulatory Authority of India (TRAI) regulations, in the cities which
were mandatorily to be covered under DAS in phase II of digitalization, MSOs were required to collect
the cable charges directly from their subscribers under their (MSO) invoices; thus w.e.f. 01.07.2014 the
company had started raising bills directly on subscribers in three cities i.e. Ludhiana, Amritsar and
Chandigarh and this system was called Direct Accessible System (DAS); now LCOs of the said three
cities were raising the bills on their (MSO) company in respect of their (LCO) share;


W.e.f. 01.07.2014, they were paying service tax on full amount of subscription charged from subscribers
located at Ludhiana, Amritsar and Chandigarh;


They had entered into written agreement with each and every LCO;


their LCOs were located in Punjab, Chandigarh and parts of Himachal Pradesh and Haryana; that they
were keeping data as per branch network maintained by them such as Ludhiana, Amritsar, Jalandhar,
Chandigarh, Bathinda, Patiala, Shimla and Ambala;


branch-wise soft copy of list of LCOs along with the amount collected from these LCOs (area wise) had
been supplied to Ludhiana Commissionerate and hard copy of the same would be signed by authorized
representative of the company, i.e. Sh. Rajesh Mehru in token of its correctness.


On further being asked about the logo/brand name of the company and whether the logo/brand name
remained displayed on TV screens of subscribers during transmission of contents supplied by their
company to LCO, he stated that the logo/brand name of their company was FW which remained
continuously displayed on TV screens of subscribers during the transmission of contents supplied by
them to LCO and further to subscribers;

A Show Cause Notice was issued to the noticee for the period for the period October, 2009 to March,
2014 vide C. No. V/ADC/ADJ/Moh/C-II/145/2015/2465 dated 22.04.2015 for recovery of Service Tax of Rs.
12,68,126/- on the basis of best judgment assessment as provided under Section 72 of the Act by the Additional
Commissioner, Central Excise & Service Tax Commissionerate, Chandigarh - II, Plot No. 19, Sector-17-C,
For the subsequent period 2014-15, the Jurisdictional Range Office vide letter dated the Jurisdictional
Range Office vide letter dated 30.03.2016 requested the Noticee to provide the amount received / receivable on
account of providing cable services and Service Tax paid, if any, for the period from April 2014 to September
2015 but the Noticee failed to respond to the departmental communications.
In the meanwhile the Jurisdictional Range office vide letter C. No. ST-20/Enquiry/Cable O
perator/02/R-III-M/01/2014/682 dated 04.03.2016 followed by reminder of even C. No 711 dated 21.03.2016
also requested the Fastway to provide the details of the amount for which bill raised by Fastway to the LCO and
the amount retained by the LCO during the period April 2014 to September 2015. The Fastway vide their e-mail
dated 07.04.2016 & 08.04.2016 provided the copies of Noticees ledger account for the said period. On scrutiny
of ledger accounts revealed that the noticee was debited for Rs. 2,67,80,534/- for the period from April 2014 to
September 2015 by M/s Fastways Transmissions (P) Ltd., Chandigarh for different charges.
On Scrutiny of the data received from Fastway it appears that the MSO have raised their bills /
invoices / debit notes etc. to the LCO on account of different charges and LCO is raising bill/ invoice to the
ultimate consumer and collecting the entire/gross subscription charges on which the LCO has not discharged
their complete service tax liability for the period April 2014 to September 2015.
Further, the Noticee have not replied to the departmental communication seeking complete details of the
gross amount collected during the relevant period from the cable subscribers, However, on scrutiny of ST-3
Return (April 2014 to September 2015) filed by the Noticee, it appears that the noticee in their ST-3 returns
declared the value of taxable services as Rs. 1,38,16,277/- and paid Service Tax amounting to Rs. 17,64,694/(Rs. 15,61,888/- PLA + Rs. 2,02,806 Cenvat). Since, the Noticee have not assessed their Service Tax liability
correctly, service tax liability is to be worked out, in terms of the provisions of Section 72 of the Act on the basis
of details provided by Fastway (as disclosed by Shri Gurdeep Singh, in his statement dated 28.02.2015) as was
done in the previous SCN issued to the Noticee by taking the amount paid by the Noticee to the Fastway as 40%
of the amount received by the Noticee for provision of the taxable services. Accordingly, service tax liability of
the Noticee is Rs. 67,54,503/- which is worked out as per Annexture - A attached.
Thus, by application of best judgment assessment under Section 72 of the Act, the value of taxable
Service provided by the Noticee comes to Rs. 6,69,51,335/- as arrived on the basis of statement of Sh. Gurdeep
Singh S/o Sh. Jaswant Singh resident of House No.57-B, Rajguru Nagar, Ludhiana Managing Director of M/s
Fastway Transmissions Pvt. Ltd., Lajjya Tower, Near E.P.F. Building, Sham Nagar, Ludhiana recorded on
28.02.2015 by applying the 40/60 ratio. Therefore, differential Service Tax amounting to Rs. 67,54,503/- (after
adjusting the amount of Service Tax paid by the Notice i.e. Rs.17,64,694/- ) appears to be recoverable from the
Noticee under Section 73 of the Act on the said value of taxable services. Further, interest on the said amount of
Service Tax also appears to be recoverable from the noticee under Section-75 of the Act.
From the foregoing, it appears that non-furnishing of information by the Noticee and resulted in nonpayment of service tax and this action on the part of the Noticee tantamount to deliberate non-compliance
with the provisions of the Act and Rules to evade payment of service tax in as much as the Noticee had not
paid the service tax, as per the provisions of Section 68 of the Act read with Rule 6 of the Rules and thereby
rendered themselves liable for penal action under Section 77 & Section 78 of the Act as discussed supra.
From the above, it appears that the Noticee have failed to pay service tax amounting to Rs. 67,54,503/for providing the said taxable services under a brand name, whether registered or not, of another person to
various users in contravention of the provisions of Sections 68 of the Act read with Rule 6 of the Rules which
appears to be recoverable from them under Section 73 of the Act along-with interest under Section 75 of the

Act. The Noticee also appears to be liable for penal under Section 77 & 78 for the aforementioned
Now, therefore, M/s B&W Cable Network, # 22, Haripur Road, Balongi, Mohali are hereby called
upon to show cause to the Commissioner, Central Excise & Service Tax Commissionerate, Chandigarh - II, Plot
No. 19, Sector-17-C, Chandigarh, within 30 days of receipt of this notice, as to why :

The provisions of Section 72 of the Act should not be invoked to assess the taxable value and
service tax payable by the noticee;


Service tax amounting to Rs Rs. 67,54,503/- (Rupees Sixty Seven Lacs Fifty Four Thousand
Five Hundred and Three Only) should not be recovered from them under Section 73 of the


Interest on the above Service Tax should not be recovered from them under Section 75 of the


Penalty should not be imposed upon them under Section 77(1)(a) and 77(2) of the Act for
contravention of the provisions of Act as explained supra;

Penalty should not be imposed upon them under section 78 of the Act for contravention of
various provisions of Act/Rules as explained supra.

The Noticee are further required to produce at the time of showing cause all the evidence documentary
or otherwise upon which they intend to rely in support of their defence. They should also mention in their
written explanation whether they wish to be heard in person or through their authorized representative/counsel
before the adjudication of the case. If no mention is made about this in their written explanation, it shall be
presumed that they do not desire a personal hearing in this case.
The Notice should also note that if no cause is shown against the action proposed to be taken against
them within the stipulated period of 30 days or if the Noticee or their authorized representative/counsel do not
appear before the adjudicating authority on the date and time fixed for personal hearing without sufficient cause
being shown, the case would be decided ex-parte on the basis of evidence already on record without any further
reference to them.
This show cause notice is issued without prejudice to any further action that may be taken against the
Noticee either in the case or any other case under the provisions of Finance Act, 1994 and the Service Tax Rules
made there under, or any other Act or Law for the time being in force in India.

Through Division Office:
M/s B&W Cable Network,
# 22, Haripur Road,
Balongi, Mohali.
Copy to:1.

The Assistant Commissioner, Central Excise & Service Tax Division, Mohali alongwith copy meant for
noticee under proper receipt. Receipt, so obtained, may please be sent to this office for record.


The Superintendent, Central Excise & Service Tax Range - V, Mohali.

Superintendent (Adj.),
Commissioner Competency.

Interessi correlati