USHAKIRAN MOVIES Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) IN these revisions, the orders passed by the Andhra Pradesh Sales Tax Appellate Tribunal (hereinafter referred to as, "the Tribunal"), dated September 3, 2004 in T. A. Nos. 975 and 976 of 2002 have been challenged. It appears that the Tribunal passed common order in T. A. Nos. 575-A/01, 576/01, 975/02 and 976/02. Two revisions have been filed, being T. R. E. V. C. Nos. 213 of 2004 and 214 of 2004. T. R. E. V. C. No. 213 of 2004 has been filed against the order passed in T. A. No. 976 of 2002 and T. R. E. V. C. No. 214 of 2004 has been filed against the order passed in T. A. No. 975 of 2002. With regard to the other tax appeals there are no revisions filed.

(2.) THE facts, which led to this litigation, are that the petitioner claimed that it was a member of Hindu undivided family and was a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as, "the Act" ). For the assessment years 1995-96 and 1996-97, the petitioner's assessments were completed by the Assistant Commercial Tax Officer by his orders dated March 27, 1996 and June 9, 1997. The petitioner claimed that it was engaged in the business of production of movies, acquisition of satellite rights of feature films produced by the other film producers. The petitioner was also engaged in production of tele-serials and film based programmes. The films produced/acquired or programmes produced were exploited by the petitioner to earn income by telecasting. Depending on the popularity of the programmes, sponsors and advertisers would pay for telecasting them. The programmes are telecast along with advertisement material of the sponsors and advertisers. During the relevant years, the petitioner did not have a satellite telecast facility. "eenadu Television" (hereinafter referred to as, "etv"), a division of "ushodaya Enterprises Limited" (UEL) had booked transponder of satellite with "videsh Sanchar Nigam Limited" (hereinafter referred to as, "vsnl") and entered into an agreement dated July 7, 1995 with "srilanka Telecom" for up-linking video signals from their earth station at "padukka" in Srilanka to the designated satellite. ETV also entered into similar agreement on June 26, 1996 with "st Teleport Private Limited", a company incorporated in Singapore, having teleport facility at Singapore, to provide up-link facility to the satellite. ETV paid necessary licence fee to VSNL for the transponder and fees for up-link facility provided by "srilanka Telecom" from its earth station at "padukka" in Srilanka and by "st Teleport Private Limited" from their teleport facility at Singapore. The petitioner entered into a Memorandum of Understanding (hereinafter referred to as "mou") on August 1, 1995 and April 1, 1996 with ETV for telecasting the films or programmes produced or acquired by it. ETV had infrastructure and satellite time and the parties were desirous of exploiting the programmes produced by the petitioner for mutual commercial benefit by telecasting, and earn the advertisement revenue. By this MOU, ETV was required to pay certain minimum guaranteed fee per episode per telecast or re-telecast and 50 per cent as share of advertisement revenue over and above such minimum guaranteed fee. Such minimum guaranteed fee ranged from Rs. 13,000 to Rs. 80,000 for first telecast and Rs. 4,000 to Rs. 25,000 for re-telecast for other than cinemas and Rs. 60,000 to Rs. 90,000 for first telecast and Rs. 10,000 to Rs. 30,000 for re-telecast for cinema. This arrangement was made under MOU signed on August 1, 1995. Under the arrangement made under MOU dated April 1, 1996, the amounts ranged from Rs. 5,000 to Rs. 75,000 per telecast and Rs. 2,500 to Rs. 37,500 for re-telecast of programmes other than cinema and for cinema, it was from Rs. 60,000 to Rs. 90,000.

(3.) THE case of the petitioner had been that its entire activity of producing and telecasting the films was with an intention to earn income from advertisement and sponsors. As it had no satellite facility, it associated with ETV who had the satellite time and infrastructure. The programmes were accordingly entrusted to ETV who copied them with their own equipment and carried them to Sri Lanka/singapore via Chennai and telecast the programmes. In this transaction, there was no transfer of right to use goods effected by the petitioner in favour of ETV and such a transaction would not attract provisions of the Act.