2024 (6) TMI 502 - AT - Service Tax

CESTAT allows CENVAT credit on advertisement services as input services, sets aside impugned order

M/s Allen Career Institute Versus Commissioner, Central Goods and Service Tax, Jodhpur

CESTAT New Delhi allowed the appeal regarding CENVAT credit on advertisement services. The Tribunal relied on precedent establishing that service tax paid ... CENVAT Credit - input services - advertisement services - HELD THAT:- In M/S BANSAL CLASSES PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX [2018 (7) TMI 1012 - CESTAT NEW DELHI], on which reliance has been placed by the Commissioner (Appeals), the Tribunal held 'the appellant will be entitled to the Cenvat Credit of service tax paid on Advertising Services as input service.' It also needs to be noted that the Additional Commissioner (Appeals), by order dated 31.01.2013, also dropped the proceedings that had been initiated by the show cause notice dated 17.07.2012 issued to the appellant for the prior period from 2009 to 2011 and nothing has been pointed out by the department to show that this order has been set aside. The order impugned dated 15.03.2018 passed by the Commissioner (Appeals) deserves to be set aside and is set aside - Appeal allowed. Issues Involved:1. Eligibility of CENVAT Credit on service tax paid by advertising agencies.2. Validity of the order passed by the Commissioner (Appeals) dated 15.03.2018.Summary:1. Eligibility of CENVAT Credit on service tax paid by advertising agencies:The appellant, a coaching institute, availed services of advertising agencies and claimed CENVAT Credit on the service tax paid by these agencies. The Deputy Commissioner, in the order dated 04.10.2013, dropped the proceedings initiated by the show cause notice dated 17.07.2012, reasoning that the 15% commission retained by advertising agencies was a consideration for services provided to the client and thus, the service tax paid on this amount was available as input service credit. The Deputy Commissioner emphasized that the assessment of service tax paid by the advertising agencies was not challenged by the department, citing the case of NAV BHARAT TUBES LTD. vs. CCE., JAIPUR-I-2010 (18) S.T.R. 470 (Tri-Del.).2. Validity of the order passed by the Commissioner (Appeals) dated 15.03.2018:The Commissioner (Appeals) set aside the Deputy Commissioner's order, holding that the service provided by the advertising agencies was essentially Business Auxiliary Service, not an input service for the appellant, and thus, the CENVAT credit was inadmissible. The Commissioner (Appeals) observed that the modus operandi appeared to be a trick to pass on the burden of Service tax to the appellant, and held that the wrongly availed input service tax credit was liable to be recovered along with interest and penalty u/s 73(1) and 75 of the Finance Act, 1994, and Rule 15 of the CENVAT Credit Rules, 2004.Tribunal's Findings:The Tribunal noted that for the subsequent period (April 2012 to March 2015), the same Commissioner (Appeals) accepted the appellant's case, relying on the Tribunal's decisions in M/s Bansal Classes Pvt. Ltd. vs. Commissioner, Central Goods and Service Tax, and Career Point Info Systems Ltd. vs. C.C.E, Udaipur. In these cases, it was held that the service tax paid to advertising agencies could be allowed as CENVAT Credit as input service, as the activities carried out by the advertising agencies included preparation and publication of advertisements, which fell under the definition of input service u/r 2(l) of the CENVAT Credit Rules, 2004.Conclusion:The Tribunal concluded that since the show cause notices for the previous and subsequent periods were discharged based on the same allegations, the impugned order dated 15.03.2018 passed by the Commissioner (Appeals) deserved to be set aside. The appeal was allowed, and the order was set aside.(Order pronounced in the open court)