2014 (11) TMI 659 - AT - Service Tax

Appellant wins dispute over service tax credit for broadcasting services

M/s INDIAN OIL CORPORATION LTD Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI - II

The tribunal ruled in favor of the appellant, a public sector undertaking manufacturing petroleum products, in a dispute over the denial of credit on ... CENVAT Credit - input services - Advertisement and broadcasting agency service - assessee born the incidence of service tax or not - Held that:- Broadcasting of advertisement has been done on behalf of the appellant and the bills have also been raised on the appellant and the appellant has borne the incidence of Service Tax on the broadcasting service. Further, while passing the order dated 30.9.2013, the adjudicating authority has caused verification of the transactions undertaken by the appellant in respect of broadcasting services and advertising agency services. After verifying that the appellant had availed both the services and has also borne the incidence of Service Tax, he came to the conclusion that the appellant is rightly eligible for the benefit of the CENVAT Credit of the Service Tax paid on broadcasting service. The same ratio shall apply for the previous period also. Therefore, we do not find any merit in the impugned order. Accordingly, we set aside the same - Decided in favour of assessee. Issues:1. Denial of credit on service tax paid for broadcasting services.2. Interpretation of Board's circular dated 1.11.1996.3. Applicability of service tax credit to the appellant.Issue 1: Denial of credit on service tax paid for broadcasting services:The appeal challenged the denial of credit on service tax paid for broadcasting services by the appellant, a public sector undertaking engaged in manufacturing petroleum products. The dispute arose when the Revenue issued a show cause notice questioning the credit availed by the appellant, contending that the broadcasting company did not provide services directly to the appellant but to the advertising agency engaged by them. The adjudicating authority upheld the denial, leading to the imposition of a penalty. The appellant argued that since the broadcasting company issued invoices specifically mentioning the appellant as the advertiser, the services were rendered to them. Additionally, the appellant relied on a Board circular clarifying the liability of advertising agencies for service tax on advertisement material preparation. The appellant highlighted that subsequent show cause notices on similar grounds were dropped in favor of the appellant. The Revenue, however, maintained that the broadcasting services were provided to the advertising agency and not directly to the appellant.Issue 2: Interpretation of Board's circular dated 1.11.1996:The interpretation of the Board's circular dated 1.11.1996 played a crucial role in the judgment. The circular clarified that the service tax computation by advertising agencies should include the gross amount charged for advertisement material preparation, excluding expenses for advertisement publication in print or electronic media. The appellant argued that the broadcasting company's invoices explicitly mentioning the appellant as the advertiser aligned with the circular's provisions. However, the Revenue contended that the circular's relevance was diminished as broadcasting services were not taxable when the circular was issued. They further argued that since the appellant received the broadcasting service through the advertising agency, the service should be treated as an input service to the agency, making the appellant ineligible for service tax credit.Issue 3: Applicability of service tax credit to the appellant:The tribunal analyzed sample invoices provided by the appellant, issued by the broadcasting company, which specifically identified the appellant as the advertiser. The tribunal noted that the appellant had borne the service tax incidence on broadcasting services, and the bills were raised directly on the appellant. Referring to a previous order by the same adjudicating authority, where similar proceedings were dropped in favor of the appellant, the tribunal concluded that the appellant was rightly eligible for the benefit of CENVAT credit on service tax paid for broadcasting services. The tribunal emphasized that the appellant had availed and borne the service tax for both advertising agency and broadcasting services, justifying their eligibility for the credit. Consequently, the tribunal set aside the impugned order and allowed the appeal with any consequential relief as per the law.