Service Tax on TV Serial Production Despite Perpetual Copyright Assignment Upheld: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench has upheld a service tax demand against Sathya Jyothi Films, ruling that production activities carried out for a television broadcaster constitute taxable “programme producer’s services,” even when coupled with a perpetual assignment of copyright. The bench of Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) has dismissed the appeal filed by the production house, affirming the findings of the lower authorities that service tax liability arises from the activity of producing television content on behalf of another entity. The dispute arose from an agreement between the appellant and Gemini TV for the Telugu-dubbed version of the Tamil serial “Anandam.” Under the agreement, Sathya Jyothi Films assigned exclusive copyright and ownership rights of the dubbed serial to the broadcaster for a perpetual period. In return, it received ₹10,000 per episode. During an audit, the Department observed that the appellant not only assigned rights but also undertook production work for the serial as per the broadcaster’s directions. The Revenue classified this activity under “programme producer’s services” under Section 65(105)(zzu) of the Finance Act, 1994 and raised a demand of ₹7.85 lakh along with interest and penalties for the period 2005–2008. The appellant argued that the transaction was purely a transfer of copyright, amounting to a sale rather than a service. It contended that service tax could not be levied on such assignment, particularly since copyright services were brought into the tax net only from July 1, 2010. It was further argued that the agreement represented a permanent transfer of rights, which falls outside the ambit of taxable services, and that the extended period of limitation was wrongly invoked in the absence of suppression or misstatement. Rejecting these arguments, the Tribunal held that the agreement must be read as a whole. It noted that, apart from assigning copyright, the appellant was actively involved in producing episodes under the direction and control of Gemini TV. The Bench observed that the appellant was required to deliver episodes regularly before telecast deadlines. Payments were made on a per-episode basis, linked directly to production output. The broadcaster retained rights to reject substandard content and direct production. These elements clearly established that the appellant was rendering production services on behalf of the broadcaster, thereby satisfying the definition of a “programme producer.” The Tribunal emphasized that a single transaction can have multiple taxable aspects. While the agreement involved assignment of copyright, it simultaneously involved provision of production services. Citing Supreme Court precedents, the Bench reiterated that service tax is a levy on activity, and different aspects of a transaction can be taxed independently. Thus, the presence of a copyright assignment did not negate the taxability of production services. The Tribunal also upheld the invocation of the extended limitation period, noting that the appellant had failed to disclose relevant income in its returns and had started paying service tax only from April 1, 2008, despite no change in business practice. This, according to the Bench, amounted to willful suppression of facts with intent to evade tax. Consequently, the penalty imposed under Section 78 was also sustained. The Tribunal upheld the service tax demand, interest, and penalty, concluding that the production activity undertaken by the appellant was squarely taxable under the Finance Act, 1994. “The agreement cannot be viewed solely as a copyright assignment; it clearly involves production services rendered on behalf of the broadcaster,” the Tribunal held while dismissing the appeal. Case Details Case Title: Sathya Jyothi Films Versus Commissioner of GST & Central Excise Citation: JURISHOUR-601-HC-2026(Ker) Case No.: Service Tax Appeal No.42361 of 2015 Date: 02.04.2026 Counsel For Appellant: Radhika Chandrasekhar, Advocate Counsel For Respondent: N. Satyanarayana, Authorised Representative Click Here To Read Order Read More: Limitation for Export Refund to Be Counted from Foreign Exchange Realisation, Not From Export Invoices Issuance: CESTAT

Service Tax on TV Serial Production Despite Perpetual Copyright Assignment Upheld: CESTAT

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