Date:04/04/2004 URL: http://www.thehindubusinessline.com/2004/04/04/stories/2004040401410500.htm

Back Service tax not applicable to TV serial producers

K.R. Srivats

New Delhi , April 3

THE Finance Ministry has now clarified that service tax is not leviable on television serial producers for selling TV serials to the channels.

The Central Board of Excise and Customs (CBEC) has, however, held that payments made for services rendered by a videographer or an editor, who is hired by the serial producer, would attract service tax at the hands of the service provider.

This clarification has been made in response to the representations received by the CBEC with regard to levy of service tax on the activities undertaken by television serial producers. The serial producers either sell TV serial episodes to the TV channels or allow such episodes to be telecast by the channels in lieu of procurement of free commercial time (FCT), which is sold by them to advertising agencies for showing advertisements.

The CBEC has observed that in some jurisdiction service tax is being demanded on the sale of TV serial episodes to the TV channels, by considering such an activity as "videotape production services".

CBEC has highlighted in a circular that the taxable service i.e. "videotape production service" is on the process of recording of any programme, event or function on magnetic tapes (including editing thereof).

"The tax is therefore limited to the technical function of recording or editing what is recorded and not on the entire gamut of production of serials. In case the producer hires a videographer or an editor, the payment made for services would be taxable at the hands of such service providers. However, no tax is leviable on the producers for selling the serial to the channel," the circular said.

Similarly, in the case of FCT, selling the time allotted to a producer does not fall within the purview of "advertisement service" since this activity is not connected to making, preparation, display or exhibition of advertisement. In some jurisdictions, the sale of FCT were being categorised as "advertisement agency services" and brought under service tax.