TaxTMI 
TaxTMI 
2016 (1) TMI 23
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.... cenvat credit availed on advertisement services. Adjudicating authority in his impugned order dt. 21.3.2011 denied cenvat credit and confirmed the demand of Rs. 1,30,17,458/- being the credit wrongly availed on ineligible input services by appellant during the period 2007-08 and 2008-09 along with interest. He also imposed equal penalty under Section 78 of the Finance Act, 1944. ST/42452/2013 3. In this appeal, the issue is on the denial of cenvat credit on the service tax paid on upfront brokerage charges paid to the broker/distributor under reverse charge mechanism. Adjudicating authority issued SCN dt. 15.3.2013 and in vide order dt. 11.9.2013, confirmed the demand of Rs. 5,03,81,074/- on "Upfront Brokerage" being ineligible input service credit along with interest and also imposed equal penalty under Section 78. Hence the both appeals before Tribunal. ARGUMENTS OF ADVOCATE IN APPEAL No. ST/356/2011 4. Learned Advocate Shri S. Muthuvenkatraman assisted by Shri Rajaram Ramanan, Consultant and Shri N.V.S Ramani, Consultant on behalf of the appellants submitted a written synopsis and reiterated the same. The matter was heard on 12.11.2015, 27.11.2015 and 8.12.2015. ....
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....e him to perform his services as an estate agent. Counsel submits that same illustration is applicable to their case where in order to promote the scheme, they have advertised as an Asset Manager. Accordingly, they have paid service tax on all expenses including advertisement expenses. Therefore, they are eligible to avail credit on the advertisement services. He further drew our attention to the agreement clauses 3.1, 3.1.1, 3.1.10, 3.1.13 and 3.1.14. In respect of this agreement, he submits that they not only manages the assets but also undertakes all the activities as per the agreement and to exercise all general powers necessary for management and administration of the scheme. Therefore, as per the agreement, they have to incur this advertisement expenses and also he relied VI Schedule of the SEBI (Mutual Funds) Regulations 1996 [Regulation 30(1)] and clause 13 therein. It clearly stipulates that advertisement can be issued by Mutual Fund or its sponsor or Asset Management. He submits that as per the SEBI guidelines itself they are required to issue advertisements and also submits that there is no distinction or difference between the statutory advertisement and non-statutory a....
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....here the total expenditure is allowed upto 6%. Further, she submits that advertisement expenditure incurred by the appellant is only for the benefit of mutual fund and not related to Asset Management Service. It relates to marketing of business whereas they are not doing any marketing in this case but only their full service is to manage the assets of the mutual fund. 5.1 On limitation, she reiterated the findings in para-26 of OIO and submits that appellant never submitted copy of the agreement to the department and only during the audit, it was detected as a case of wrong availment of credit. She submits that both SCN and OIO are in conformity on the issue and not contradictory. 6. Ld. Advocate, in his rejoinder, countered the arguments and refers to para 5 & 6 of the SCN and findings of OIO at para 26 and submits that the Hon'ble Bombay High Court judgement in the case of Coca Cola India Private Ltd. (supra) is clearly applicable to this case. He drew our attention to para-5 of the Tribunal's order in the case of Coca Cola India Pvt. Ltd. Vs CCE Pune reported in 2008 (223) ELT 69 (Tri.-Mumbai) where the Tribunal denied the credit on the ground that advertisement is....
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.... as credit to them for paying Service Tax on their output services. He submits that this was the same position prior to the exemption granted under the negative list where the appellants were paying service tax on the commission paid under reverse charge mechanism. Therefore, they are eligible for availing credit. 7.1 Regarding denial of credit on the T.R.6 challans on the ground that this document is not mentioned as one of the documents in CCR, he relied Hon'ble Madras High Court judgement in the case of Commissioner of C.Ex & ST, LTU, Chennai Vs M.R.F. - 2015 (40) STR 211 (Mad.) where the High Court dismissed the Revenue's appeal on this issue and upheld the Tribunal's decision in the case of CCE Chennai Vs MRF Ltd., reported in 2007 (244) ELT 601 (Tri.-Che.). 7.2 On the limitation issue, he relied their letter dt. 11.9.2009 addressed to Asst. Commissioner of C.Ex/ST, LTU, Chennai informing that they would be discharging service tax liability on the brokerage paid to Distributors/Agents and the tax so paid would be availed as CENVAT credit whereas the Adjudicating Authority held that they have only informed about payment of service tax and they have not informe....
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.... of the agreement are reproduced as under :- "3.1 SAMCL will assume the day to day management of the Fund and in that capacity subject to the supervision of the Trustees shall be responsible for and have powers of implementing Schemes and make investment decisions and manage the assets of the Schemes of the Mutual Fund in accordance with the Scheme objectives, Deed of Trust and provisions of SEBI Regulations in the best interest of Unit holders. Without prejudice to the generality of the foregoing but subject to the provisions of the Deed of Trust, SEBI Regulations and directives of the Trustees, SAMCL shall : 3.1.1. frame and launch Schemes from time to time after seeking approval from the Board of Trustees and SEBI. 3.1.2 Prepare a prospectus/offer document for each Scheme in accordance with the provisions of the SEBI Regulations and shall ensure that no offer document of a scheme, key information memorandum, abridged half yearly results and annual results is issued or published without the Trustees' prior approval in writing, and contains any statement or matter extraneous to the Deed of Trust or offer document or Scheme particulars approved by ....
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....e above clause clearly confirms that advertisements for promoting the mutual fund can be issued or incurred by the mutual fund or its sponsor or Asset Management Company. There is no bar on the Asset Management Company in paying expenses for advertisement. We find that as per SEBI Regulations, the prescribed limit of upto 6% is reimbursable from the fund owner and in the present case appellant not claimed any credit on the amount reimbursed from SMF only after exceeding the limit, the expenses on the advertisement cost was duly included in the value of output taxable service and discharged service tax on the gross value. Further, we find that appellants have taken credit on the input documents issued by their vendors towards advertisement. The Chartered Accountant vide his certificate dt. 1.2.1011 has duly certified that the expenditure on the advertisement charges are debited in the Profit and Loss Account of the company and have not been recovered as reimbursements from M/s.SMF. Therefore Revenue's contention that it is not an input service is not justified as it is clearly stipulated in the agreement under clause (3) where Duties, Functions and Powers of Managers are given w....
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....ission paid to the brokers on the brokerage charges and the tax is to be paid by the appellant as recipient of services under reverse charge mechanism. The taxability and payment of service tax on the commission by the appellant is not under dispute and the adjudicating authority denied credit only on the ground that service tax paid on the brokerage is not an eligible input service. Adjudicating authority also held that the document on which credit availed, is not an eligible document prescribed under CCR. The adjudicating authority has accepted the fact that in the impugned order appellants have not reimbursed the amount. We find that this issue has been already settled by various High Courts/Tribunals. Further, it is seen that the Revenue had issued a clarification to the appellant in their letter dt. 3.10.2012 to the appellant that they are eligible for cenvat credit on the service tax incurred and paid by the appellant on brokerage charges. We also find support from the Government advertisement issued by CBEC after the introduction of negative list wherein the Board has categorically clarified that service tax paid on the brokerage commission by Mutual Fund and Asset Managemen....
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....re otherwise not entitled to such credit. 8. The Punjab &Haryana High Court, in the case of Commissioner of Central Excise, Ludhiana v. Ralson India Ltd., reported in 2006 (202) E.L.T. 759 (P & 11) held that if the duty paid has the character of inputs and their receipt in manufacturer's factory and utilization in manufacture of final product is not disputed, then the credit cannot be denied to such person. It is also to be noted that the Departments Circular dated 19. November, 2001 observes that once the duty payment is not disputed and it is found that the documents are genuine and not fraudulent, then the manufacturer would be entitled to CENVAT credit on duty paid inputs. 9. In the present case, the authorities below have accepted that the respondents are entitled to such Cenvat Credit. The only point for consideration, in such circumstances is the type of document required to be produced to avail of such credit. The respondents have produced the TR 6 Chahar which is emanated from the office of the appellants themselves to support their claim for such CENVAT Credit, which material was accepted by the authorities below whilst passing the impugned order. ....