2014 (11) TMI 673 - AT - Service Tax

Tribunal grants CENVAT credit on broadcasting services, waives penalty, and stays recovery

Jyothy Laboratories Versus Commissioner of Central Excise Puducherry

The Tribunal allowed the appellant's appeal, granting CENVAT credit on broadcasting services. It found the appellant eligible for the credit as they had ... Waiver of service tax, interest and penalty - ineligible cenvat credit - advertisement service and broadcasting services - Held that:- Appellant has availed input service credit on broadcasting services for advertising their products in the media through their advertising agencies. The advertising agency raised two sets of invoices, one for the services rendered by the agency for development of design and content and another is billed for the reimbursements of the broadcasting charges. I find that the copy of the invoice dt. 15.10.2009 raised by Zee News Ltd. is in the name of Jyothy Laboratories Ltd. and the agency name is mentioned as Lintas Media Group, Mumbai. Following decision of IOCL [2014 (11) TMI 659 - CESTAT MUMBAI] - appellant has prima facie made out a case for waiver of predeposit. Accordingly, the predeposit of amount of tax, interest and penalty is waived and its recovery is stayed till disposal of the appeal - Stay granted. Issues:1. Denial of CENVAT credit on broadcasting service availed by the appellant.2. Imposition of equal penalty by the adjudicating authority.3. Appeal for waiver of predeposit and stay on recovery.Analysis:Issue 1: Denial of CENVAT credit on broadcasting serviceThe appellant, a manufacturer of detergent products, availed CENVAT credit on advertisement and broadcasting services. The adjudicating authority denied the credit on broadcasting service as ineligible, amounting to Rs. 24,05,904, and imposed a penalty. The Commissioner (Appeals) upheld this decision. The appellant argued that the advertising agencies, registered for rendering advertisement services, passed on the credit for broadcasting services without paying service tax directly. They cited precedents and a Tribunal decision in a similar case, supporting their claim that they are eligible for the credit. The Tribunal found that the appellant had indeed availed broadcasting services through advertising agencies, which invoiced for design/content development and broadcasting charges reimbursement. Referring to a previous case involving Indian Oil Corporation Ltd., the Tribunal concluded that the appellant had borne the Service Tax incidence on broadcasting service and was eligible for CENVAT credit.Issue 2: Imposition of equal penaltyThe appellant's contention was that the broadcasting service was crucial for advertising their products, and the advertising agencies passed on the credit without directly paying service tax. The Tribunal's analysis of the invoices and the appellant's transactions confirmed that the appellant had indeed availed and borne the Service Tax on broadcasting services. Therefore, the Tribunal found no merit in the penalty imposed and allowed the appeal, setting aside the impugned order. The Tribunal emphasized that the appellant had a prima facie case for waiver of predeposit, leading to the waiver of the tax, interest, and penalty amount, with the recovery stayed until the appeal's disposal.Issue 3: Appeal for waiver of predeposit and stay on recoveryThe Tribunal's decision was based on the appellant's fulfillment of the conditions for CENVAT credit eligibility on broadcasting services. The Tribunal's detailed analysis of the transactions, along with the precedent involving Indian Oil Corporation Ltd., supported the appellant's claim. As a result, the Tribunal granted the waiver of predeposit and stayed the recovery of the tax, interest, and penalty amount until the appeal's final resolution.This comprehensive analysis of the issues involved in the judgment highlights the Tribunal's decision to grant relief to the appellant based on the eligibility for CENVAT credit on broadcasting services and the absence of merit in the penalty imposition.