OFFICE OF THE PRINCIPAL COMMISSIONER

CENTRAL EXCISE & SERVICE TAX COMMISSIONERATE,

F-BLOCK, RISHI NAGAR,
LUDHIANA
C. No.-V(ST)ADC/Ldh/17/2016

Dated:

SHOW CAUSE NOTICE

M/s Arora Cable TV, # Rama Complex, 2 nd Floor, Old Sabji Mandi Market, Moga (here-inafter referred to as the Noticee) are registered with the Service Tax Department vide Service Tax
Registration No. AANFA6393FSDOO1 dated 14.05.2010 under Section 69 of the Finance Act, 1994
(hereinafter referred to as the Act) and have filed ST-3 returns for the half year ending Sep-2014 on
21.10.2014 and were 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).
2.
M/s. 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.
3.
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.6/2005-ST dated 01.03.2005 (as amended) (valid upto
30.06.2012) and /or 33/2012 ST 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.
4.
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
1 of 7

from the customers/users/consumers to whom the Noticee is providing the service. However, it has been
observed that the Noticee has neither obtained the service tax registration from the department during
the said period nor have discharged the service tax liability on the gross amount so received from the
customers.
5.
Accordingly, the Noticee vide letter C.No. ST-20/Misc/LCO/Moga/01/2015/364 dated
23.03.2015 and 372 dated 01.04.2015 was requested to provide the details of the amount charged from
each subscriber and the details of service tax payment, if any during the financial years 2009-10, 201011, 2011-12, 2012-13 and 2013-14. The Noticee did not respond to the departmental communication.
6
However, Hqrs. Preventive, Central Excise Commissionerate, Ludhiana provided the details of
LCOs based in the jurisdiction of Range Office, Moga as received from Fastway indicating the name,
address and contact number of the person concerned and the copies of ledger account of LCOs
associated with them and sample copies of the agreements executed with the LCOs for the period 200910 to 2013-14.
7.
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 lumpsum 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;
8.
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:
i.
ii.
iii.

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;
2 of 7

iv.
v.

vi.

vii.

viii.

ix.
x.

xi.
xii.

xiii.
xiv.

xv.
xvi.

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 substantially;
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;

3 of 7

xvii.
xviii.

xix

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;

9
A Show Cause Notice was issued to the noticee for the period Apr-2010 to Mar-2014 vide C.No.
V(ST)JC/Ldh/133/2015/7315 dated 17.06.2015 for recovery of Service Tax of Rs. 40,62,343/- on the
basis of best judgment assessment as provided under Section 72 of the Act by the Joint Commissioner,
Central Excise Commissionerate, F Block, Rishi Nagar, Ludhiana.
10.
For the subsequent period 2014-15, the Jurisdictional Range Office vide letter dated 14.10.2015
requested the Noticee to provide the amount charged by them from the customers on account of services
provided by them and Service Tax paid, if any, for the period 2014-15 and the Noticee vide their letter
dated 30.10.2015 intimated that they have collected an amount of Rs. 77,43,399/- and paid Service Tax
of Rs. 9,57,085/- for the financial year 2014-15. From the ST-3 return filed by the party for the period
April to September 2014 it has been ascertained that the Noticee has paid Rs. 3,70,045/- (PLA +Cenvat)
on taxable Services of Rs. 29,93,888.
11
In the meanwhile the Jurisdictional Range office vide letter C.No. ST-20/Misc/LCO/
Moga/01/2015/448 dated 08.12.2015 and 496 dated 01.01.2016 also requested the Fastway to provide
the details of the amount raised by Fastway to the LCO and the amount retained by the LCO during the
period 2014-15. The Fastway vide their e-mail dated 06.01.2016 provided the copies of Noticees ledger
account for the period 2014-15. Further, Range Office vide letter of even No. 552 dated 13.01.2016
requested Fastway to clarify as to whether the amount mentioned is the amount paid to Fastway or the
amount retained by the LCO. Fastway vide their letter dated 11.02.2016 clarified that the soft data
regarding LCO mailed to Range Office on 06.01.2016 shows the amount of billing raised by Fastway to
LCOs during the period under consideration and has the following figures.
(a)
Value means value of services provided to LCO.
(b)
Service Tax means Service Tax on Service provided.
(c)
Gross Total means total of both (a+b) i.e. value of service provided plus service tax.
LCO collect the gross amount of bill raised by Fastway from end consumer.
LCO retained his share and the balance paid to Fastway.
From the above, it appears that MSO i.e. Fastway is only billing the amount pertaining to service
provided to LCO only, however the LCO collects the gross amount from the end consumer and after
retaining his share, pays the balance amount to Fastway as billed by them.
12.
Scrutiny of the data received from Fastway reveals that the amount for which bills have been
raised on the Noticee for the period April to September 2014 is as under:4 of 7

Sr.
No.
1

Period

Amount for which the payment made by the Noticee to Fastway

2014-15
(Upto
Sep-2014)

28,41,600/-

13.
On scrutiny of ST-3 Return (April-Sept 2014) filed by the Noticee, it appears that the noticee in
their ST-3 return declared the value of taxable services as Rs. 29,93,888/- and paid Service Tax of Rs.
18,823/- in cash and Rs. 3,51,222/- from Cenvat credit (Total Service Tax shown as paid in ST-3 Return
- Rs. 3,70,045/-). The Noticee was not entitled for Cenvat Credit of Service Tax paid to Fastway as the
amount i.e Rs. 29,93,888 on which Service Tax has been calculated by the noticee appears to be the
amount retained by them and the amount charged by Fastway i.e. Rs. 28,41,600/- was not included for
calculating their Service Tax laibility. The noticee were entitled for Cenvat credit only, had the Service
Tax payable by them been calculated on the amount collected from the ultimate subsciber i.e. the
amount charged by Fastway from the Noticee plus the amount retained by the Noticee. However, they
have availed CENVAT credit of Rs. 3,51,222/- i.e the Service Tax charged by Fastway on the amount
charged from them. 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 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, the details of
service tax liability in respect of the Noticee are as under:-

S.
No.

Amount
for which
bill raised
by Fastway
for
subscriptio
n
(40%)
2841600

Service
Amount
Tax
Total amount
which
is
Rate of
already
Net Service
collected from
Service Tax
retained by
Servic
paid as Tax
ultimate
payable
the Noticee
e Tax
shown
recoverable
subscriber
(60%)
in ST-3
return
42,62,400

71,04,000/-

12.36% 8,78,055/-

370045

5,08,010/-

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. 71,04,000/- as arrived on the basis of statement of
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 recorded on 28.02.2015 by applying the 40/60 ratio. Service Tax of Rs. 5,08,010/appears to be recoverable from the Noticee under Section 73 of the Act.
14.
Further, the Noticee were requested vide range office letter 29.03.2016 to provide copies of
invoices on the basis of which Cenvat Credit was availed by the noticee in financial year 2014-15. The
counsel of the noticee submitted copies of Invoices for the month of Apr-2014 and May 2014 only but
failed to furnish the invoices for the remaining 10 months of the financial year 2014-15. As per invoices
for the month of April and May, 2014, Cenvat Credit of Rs. 1,17,074/- was admissible to the noticee as
per Rule 9(i)(f) of the Cenvat Credit Rules 2004, as the notice was entiltled for the Cenvat Credit only
on the basis of an invoice, a bill or challan issued by a provider of Input Service i.e M/s Fastway. The
Balance amount of Cenvat Credit of Rs. 2,34,148/- availed and utilized by the noticee appears to be not
admissible to them as no supporting documents have been provided to the Range Office and appears to
be recoverable from the Noticee under Rule 14 of the Cenvat Credit Rules, 2004. Hence, it appears that
5 of 7

Cenvat Credit of Rs. 2,34,148/- has been availed and utilized by the noticee by reason of fraud,
collusion, willful mis-statement or suppression facts with an intent to evade payment of Service Tax.
15
From the above, it appears that the Noticee have failed to pay service tax amounting to Rs.
5,08,010/- 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 Service Tax Rules, 1994 which appears to be recoverable from them under Section 73 of
the Finance Act, 1994. The Cenvat Credit of Rs. 2,34,148/- availed and utilized by the noticee also
appears to be recoverable from the Noticee under Rule 14 of the Cenvat Credit Rules, 2004. On the said
Service Tax and wrongly availed/utilized Cenvat credit, interest also appears to be recoverable from the
Noticee under Section 75 of the Act. The Noticee also appears to be liable for penal action under Section
78 of the Act as the Noticee in the ST-3 returns filed by them / figures supplied by them, appears to have
suppressed the value of Taxable Services provided by them and have not provided the correct amount
collected from the subscribers. The noticee willfully suppressed the value of taxable services by not
adding the amount charged by Fastway to the amount retained by the Noticee with an intent to evade
payment of Service Tax. The Noticee also appears to be liable to penal action under Section-77 for non
supplying of the invoices based on which Cenvat Credit has been availed by them. Further, the noticee
also appears to be liable to penal action under Rule 15(3) of the CENVAT Credit Rules, 2004.
16.

Thus, it appeared that the Noticee have contravened the provisions of:

(i)
Section 72 of the Act in as-much-as they have failed to assess the correct value of Taxable
services provided by them, as explained in foregoing paras for the period Apr-2014 to Sep-2014;
(ii)
Section 68 of the Act read with Rule 6 of the Service Tax Rules, 1994 in as-much-as they have
failed to pay Service Tax amounting to Rs. 5,08,010/- as explained in foregoing paras for the period Apr2014 to Sep-2014, as calculated in the manner mentioned at para-13 above to the credit of the
Government within the stipulated time limit;
(iii)
Rule 9 of the Cenvat Credit Rules 2004, in as much as they appears to have wrongly availed
Cenvat Credit of Rs. 2,34,148 as mentioned in Para 14 above.
Thus, the noticee have rendered themselves liable to penal action under Section-77 and Section78 of the Act and Rule-15(3) of the Cenvat Credit Rules, 2004 for contravention of the provisions
referred supra.
17.
Now, therefore, M/s Arora Cable TV , # Rama Complex 2 nd Floor, Old Sabji Mandi Market,
Moga are hereby called upon to show cause to the Additional Commissioner, Central Excise
Commissionerate, F-Block, Rishi Nagar, Ludhiana within 30 days of receipt of this notice, as to
why :
(i)
(ii)
(iii)
(iv)

The provisions of Section 72 of the Finance Act, 1994 should not be invoked to assess the
taxable value and Service Tax payable by the noticee;
Service tax amounting to Rs. 5,08,010/- (Rupees Five Lacs Eight Thousand and Ten
only) should not be recovered from them under Section 73 of the Finance Act, 1994.
Cenvat Credit of Rs. 2,34,148/- (Rs. Two Lacs Thirty Four Thousand One Hundred &
Forty Eight only) should not be recovered from them under Rule 14 of the Cenvat Credit
Rules 2004 read with Section 73 of the Act.
Interest on the Service Tax and Cenvat Credit recoverable should not be recovered from
them under Section 75 of the Finance Act, 1994.
6 of 7

(v)
(vi)
(vii)

Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 for
suppressing the value of taxable services with intent to evade payment of Service Tax;
Penalty should not be imposed upon them under Rule 15(3) of the Cenvat Credit Rules,
2004 read with Section 78 of the Act.
Penalty should not be imposed upon them under section 77 of the Finance Act, 1994 for
contravention of the provisions explained supra.

18.
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.
19.
The Noticee 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.
20.
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.

Additional Commissioner
Through Division Office:M/s Arora Cable Tv
# Rama Complex, 2nd Floor,
Old Sabji Mandi Market, Moga.
Copy to:1.
The Assistant Commissioner, Central Excise & Service Tax, Division, Moga alongwith copy
meant for noticee. It is requested that SCN may please be got delivered alongwith Annexure(s)
and RUD(s) under proper receipt. Receipt so obtained may please be sent to this office for
record.
.
2.
The Superintendent, Central Excise & Service Tax Range, Moga

Superintendent (Adj.)
Additional Commissioner Competency

7 of 7

OFFICE OF THE PRINCIPAL COMMISSIONER

CENTRAL EXCISE & SERVICE TAX COMMISSIONERATE,
F-BLOCK, RISHI NAGAR,
LUDHIANA
C. No.-V(ST)ADC/Ldh/17/2016

Dated:

SHOW CAUSE NOTICE

M/s Arora Cable TV, # Rama Complex, 2 nd Floor, Old Sabji Mandi Market, Moga (here-inafter referred to as the Noticee) are registered with the Service Tax Department vide Service Tax
Registration No. AANFA6393FSDOO1 dated 14.05.2010 under Section 69 of the Finance Act, 1994
(hereinafter referred to as the Act) and have filed ST-3 returns for the half year ending Sep-2014 on
21.10.2014 and were 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).
2.
M/s. 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.
3.
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.6/2005-ST dated 01.03.2005 (as amended) (valid upto
30.06.2012) and /or 33/2012 ST 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:

8 of 7

(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.
4.
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. However, it has been
observed that the Noticee has neither obtained the service tax registration from the department during
the said period nor have discharged the service tax liability on the gross amount so received from the
customers.
5.
Accordingly, the Noticee vide letter C.No. ST-20/Misc/LCO/Moga/01/2015/364 dated
23.03.2015 and 372 dated 01.04.2015 was requested to provide the details of the amount charged from
each subscriber and the details of service tax payment, if any during the financial years 2009-10, 201011, 2011-12, 2012-13 and 2013-14. The Noticee did not respond to the departmental communication.
6
However, Hqrs. Preventive, Central Excise Commissionerate, Ludhiana provided the details of
LCOs based in the jurisdiction of Range Office, Moga as received from Fastway indicating the name,
address and contact number of the person concerned and the copies of ledger account of LCOs
associated with them and sample copies of the agreements executed with the LCOs for the period 200910 to 2013-14.
7.
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 lumpsum 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;
8.
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:
9 of 7

xix.
xx.
xxi.

xxii.
xxiii.

xxiv.

xxv.

xxvi.

xxvii.
xxviii.

xxix.
xxx.

xxxi.
xxxii.

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 substantially;
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
10 of 7

xxxiii.
xxxiv.
xxxv.
xxxvi.

xix

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;

9
A Show Cause Notice was issued to the noticee for the period Apr-2010 to Mar-2014 vide C.No.
V(ST)JC/Ldh/133/2015/7315 dated 17.06.2015 for recovery of Service Tax of Rs. 40,62,343/- on the
basis of best judgment assessment as provided under Section 72 of the Act by the Joint Commissioner,
Central Excise Commissionerate, F Block, Rishi Nagar, Ludhiana.
10.
For the subsequent period 2014-15, the Jurisdictional Range Office vide letter dated 14.10.2015
requested the Noticee to provide the amount charged by them from the customers on account of services
provided by them and Service Tax paid, if any, for the period 2014-15 and the Noticee vide their letter
dated 30.10.2015 intimated that they have collected an amount of Rs. 77,43,399/- and paid Service Tax
of Rs. 9,57,085/- for the financial year 2014-15. From the ST-3 return filed by the party for the period
April to September 2014 it has been ascertained that the Noticee has paid Rs. 3,70,045/- (PLA +Cenvat)
on taxable Services of Rs. 29,93,888.
11
In the meanwhile the Jurisdictional Range office vide letter C.No. ST-20/Misc/LCO/
Moga/01/2015/448 dated 08.12.2015 and 496 dated 01.01.2016 also requested the Fastway to provide
the details of the amount raised by Fastway to the LCO and the amount retained by the LCO during the
period 2014-15. The Fastway vide their e-mail dated 06.01.2016 provided the copies of Noticees ledger
account for the period 2014-15. Further, Range Office vide letter of even No. 552 dated 13.01.2016
requested Fastway to clarify as to whether the amount mentioned is the amount paid to Fastway or the
amount retained by the LCO. Fastway vide their letter dated 11.02.2016 clarified that the soft data
regarding LCO mailed to Range Office on 06.01.2016 shows the amount of billing raised by Fastway to
LCOs during the period under consideration and has the following figures.
(a)
Value means value of services provided to LCO.
(b)
Service Tax means Service Tax on Service provided.
(c)
Gross Total means total of both (a+b) i.e. value of service provided plus service tax.
LCO collect the gross amount of bill raised by Fastway from end consumer.
LCO retained his share and the balance paid to Fastway.
11 of 7

From the above, it appears that MSO i.e. Fastway is only billing the amount pertaining to service
provided to LCO only, however the LCO collects the gross amount from the end consumer and after
retaining his share, pays the balance amount to Fastway as billed by them.
12.
Scrutiny of the data received from Fastway reveals that the amount for which bills have been
raised on the Noticee for the period April to September 2014 is as under:Sr.
Period
Amount for which the payment made by the Noticee to Fastway
No.
1 2014-15
(Upto
28,41,600/Sep-2014)
13.
On scrutiny of ST-3 Return (April-Sept 2014) filed by the Noticee, it appears that the noticee in
their ST-3 return declared the value of taxable services as Rs. 29,93,888/- and paid Service Tax of Rs.
18,823/- in cash and Rs. 3,51,222/- from Cenvat credit (Total Service Tax shown as paid in ST-3 Return
- Rs. 3,70,045/-). The Noticee was not entitled for Cenvat Credit of Service Tax paid to Fastway as the
amount i.e Rs. 29,93,888 on which Service Tax has been calculated by the noticee appears to be the
amount retained by them and the amount charged by Fastway i.e. Rs. 28,41,600/- was not included for
calculating their Service Tax laibility. The noticee were entitled for Cenvat credit only, had the Service
Tax payable by them been calculated on the amount collected from the ultimate subsciber i.e. the
amount charged by Fastway from the Noticee plus the amount retained by the Noticee. However, they
have availed CENVAT credit of Rs. 3,51,222/- i.e the Service Tax charged by Fastway on the amount
charged from them. 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 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, the details of
service tax liability in respect of the Noticee are as under:-

S.
No.

Amount
for which
bill raised
by Fastway
for
subscriptio
n
(40%)
2841600

Amount
which
is
retained by
the Noticee
(60%)

Service
Tax
Total amount
Rate of
already
Net Service
collected from
Service Tax
Servic
paid as Tax
ultimate
payable
e Tax
shown
recoverable
subscriber
in ST-3
return

42,62,400

71,04,000/-

12.36% 8,78,055/-

370045

5,08,010/-

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. 71,04,000/- as arrived on the basis of statement of
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 recorded on 28.02.2015 by applying the 40/60 ratio. Service Tax of Rs. 5,08,010/appears to be recoverable from the Noticee under Section 73 of the Act.
14.
Further, the Noticee were requested vide range office letter 29.03.2016 to provide copies of
invoices on the basis of which Cenvat Credit was availed by the noticee in financial year 2014-15. The
counsel of the noticee submitted copies of Invoices for the month of Apr-2014 and May 2014 only but
failed to furnish the invoices for the remaining 10 months of the financial year 2014-15. As per invoices
12 of 7

for the month of April and May, 2014, Cenvat Credit of Rs. 1,17,074/- was admissible to the noticee as
per Rule 9(i)(f) of the Cenvat Credit Rules 2004, as the notice was entiltled for the Cenvat Credit only
on the basis of an invoice, a bill or challan issued by a provider of Input Service i.e M/s Fastway. The
Balance amount of Cenvat Credit of Rs. 2,34,148/- availed and utilized by the noticee appears to be not
admissible to them as no supporting documents have been provided to the Range Office and appears to
be recoverable from the Noticee under Rule 14 of the Cenvat Credit Rules, 2004. Hence, it appears that
Cenvat Credit of Rs. 2,34,148/- has been availed and utilized by the noticee by reason of fraud,
collusion, willful mis-statement or suppression facts with an intent to evade payment of Service Tax.
15
From the above, it appears that the Noticee have failed to pay service tax amounting to Rs.
5,08,010/- 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 Service Tax Rules, 1994 which appears to be recoverable from them under Section 73 of
the Finance Act, 1994. The Cenvat Credit of Rs. 2,34,148/- availed and utilized by the noticee also
appears to be recoverable from the Noticee under Rule 14 of the Cenvat Credit Rules, 2004. On the said
Service Tax and wrongly availed/utilized Cenvat credit, interest also appears to be recoverable from the
Noticee under Section 75 of the Act. The Noticee also appears to be liable for penal action under Section
78 of the Act as the Noticee in the ST-3 returns filed by them / figures supplied by them, appears to have
suppressed the value of Taxable Services provided by them and have not provided the correct amount
collected from the subscribers. The noticee willfully suppressed the value of taxable services by not
adding the amount charged by Fastway to the amount retained by the Noticee with an intent to evade
payment of Service Tax. The Noticee also appears to be liable to penal action under Section-77 for non
supplying of the invoices based on which Cenvat Credit has been availed by them. Further, the noticee
also appears to be liable to penal action under Rule 15(3) of the CENVAT Credit Rules, 2004.
16.

Thus, it appeared that the Noticee have contravened the provisions of:

(i)
Section 72 of the Act in as-much-as they have failed to assess the correct value of Taxable
services provided by them, as explained in foregoing paras for the period Apr-2014 to Sep-2014;
(ii)
Section 68 of the Act read with Rule 6 of the Service Tax Rules, 1994 in as-much-as they have
failed to pay Service Tax amounting to Rs. 5,08,010/- as explained in foregoing paras for the period Apr2014 to Sep-2014, as calculated in the manner mentioned at para-13 above to the credit of the
Government within the stipulated time limit;
(iii)
Rule 9 of the Cenvat Credit Rules 2004, in as much as they appears to have wrongly availed
Cenvat Credit of Rs. 2,34,148 as mentioned in Para 14 above.
Thus, the noticee have rendered themselves liable to penal action under Section-77 and Section78 of the Act and Rule-15(3) of the Cenvat Credit Rules, 2004 for contravention of the provisions
referred supra.
17.
Now, therefore, M/s Arora Cable TV , # Rama Complex 2 nd Floor, Old Sabji Mandi Market,
Moga are hereby called upon to show cause to the Additional Commissioner, Central Excise
Commissionerate, F-Block, Rishi Nagar, Ludhiana within 30 days of receipt of this notice, as to
why :
(vii)
(viii)

The provisions of Section 72 of the Finance Act, 1994 should not be invoked to assess the
taxable value and Service Tax payable by the noticee;
Service tax amounting to Rs. 5,08,010/- (Rupees Five Lacs Eight Thousand and Ten
only) should not be recovered from them under Section 73 of the Finance Act, 1994.
13 of 7

(ix)
(x)
(xi)
(xii)
(vii)

Cenvat Credit of Rs. 2,34,148/- (Rs. Two Lacs Thirty Four Thousand One Hundred &
Forty Eight only) should not be recovered from them under Rule 14 of the Cenvat Credit
Rules 2004 read with Section 73 of the Act.
Interest on the Service Tax and Cenvat Credit recoverable should not be recovered from
them under Section 75 of the Finance Act, 1994.
Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 for
suppressing the value of taxable services with intent to evade payment of Service Tax;
Penalty should not be imposed upon them under Rule 15(3) of the Cenvat Credit Rules,
2004 read with Section 78 of the Act.
Penalty should not be imposed upon them under section 77 of the Finance Act, 1994 for
contravention of the provisions explained supra.

18.
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.
19.
The Noticee 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.
20.
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.

Additional Commissioner
Through Division Office:M/s Arora Cable Tv
# Rama Complex, 2nd Floor,
Old Sabji Mandi Market, Moga.
Copy to:1.
The Assistant Commissioner, Central Excise & Service Tax, Division, Moga alongwith copy
meant for noticee. It is requested that SCN may please be got delivered alongwith Annexure(s)
and RUD(s) under proper receipt. Receipt so obtained may please be sent to this office for
record.
.
2.
The Superintendent, Central Excise & Service Tax Range, Moga

Superintendent (Adj.)
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Additional Commissioner Competency

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