Order Date – 24 July 2023

Parties: M/s Dish TV India Ltd Vs Commissioner of Central Excise & service Tax-Aurangabad

Facts – 

• The Appellant, M/s Dish TV India Ltd, engaged in broadcasting services through Direct To Home (DTH) satellite television, a taxable service as per the definition under the Finance Act, 1994. For providing broadcasting services to their customers, the appellants are purchasing STBs and installing the same at the customers’ premises on rental basis under an agreement.
• A show cause notice was issued to the appellant alleging that the transfer of right to use the STBs, without involving transfer of possession or effective control of the goods should be subjected to levy of service tax as an indispensable part of the broadcasting services.

Issue – 

• Whether the transfer of STBs is leviable to service tax?

Order – 

• The Tribunal observed that from the plain reading of Direct to Home Broadcasting Services (Standards of Quality of Service and Redressal of Grievances) Regulations, 2007 it is clear that every DTH operator is required to provide STBs to their subscribers in order to provide DTH service, inasmuch as STB is a necessary equipment to receive the DTH signals sent in encrypted form, to be received through the dish antenna, and which can be decoded and displayed on the television of the subscriber. 
• Thus, the nature of activity undertaken by the DTH operator in providing STB to a subscriber, is provision of an equipment, which is one-time activity, and it is not a part of DTH service in providing television channels for viewing by the subscriber.
• Further, the subscriber had control over the STBs during the time when he pays for the lease rental for the same and he can exercise the right of control by viewing free to air channels like Doordarshan etc., even if does not able to view the other channels for non-payment of requisite charges.
• Hence, the supply of STBs cannot be categorized as a taxable service under the definition of ‘broadcasting’. Even considering the same as a taxable service under the category of STGU, the same cannot meet the requirement of levy of service tax in the case of the appellants inasmuch as the right to use the STBs were transferred by the appellants to the subscribers. Guidelines issued in this regard has clarified that right to use the goods, would be subjected to levy of service tax, in cases where VAT is not payable on such goods. 
• Thus, the supply of STBs, conferring the right to use the same by the subscriber, would not fall either under broadcasting service or under STGU for levy of service tax thereon. Rather, the activity of such supply, would more appropriately be considered as a deemed sale and recognizing such aspect, the appellants had rightly discharged the VAT liability thereon and also adoption of such modus operandi had been accepted all along by the jurisdictional VAT authorities, while finalizing the tax assessments.