TaxTMI 
TaxTMI 
2025 (3) TMI 782
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom 2012-13 to 2016-17, the Appellant provided 'Advertising Agency services', by advertisement in print media, also by way of sale of space on hoardings/unipoles/roof tops and also claimed CENVAT credit on input services used for providing taxable services. The Appellant submitted ST-3 returns discharging service tax liability on taxable services after availing deduction in terms of Circular No. 341/43/96 TRU dated 31.10.1996. During the same period, the Appellant also supplied goods such as flex material, boards etc., on which the Appellant discharged VAT liability under the U.P VAT Act, 2008 and also submitted returns under the said Act. 3. Acting on the basis of some intelligence that the Appellant is providing advertising services but was not discharging appropriate service tax liability, the Officers of preventive branch of Central Excise & Service Tax Commissionerate, Lucknow, visited the business premises of the Appellant on 28.09.2016. On examination of documents produced, the Officers prima-facie detected evasion of service tax on the ground of difference in figures of Profit & Loss A/c and ST-3 returns. The Officers also formed an opinion that CENVAT credit to the tune....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....02.2019, 17.07.2019, 13.02.2020 and 30.06.2020 submitted reply to SCN inter-alia submitting that the total receipts during the period in question includes the amounts received against sale of goods and also against services falling under negative list and after applying admissible deduction under Circular No. 341/43/96 TRU dated 31.10.1996, there is no difference in figures of Profit & Loss A/c and ST-3 returns. The Appellant also submitted complete invoices on the strength of which cenvat credit of Rs 9,06,89,426/- was claimed. The Appellant also contested the demand of late fees and imposition of penalties. 6. By the impugned Order-in-Original dated 18.08.2020/19.08.2020, the Ld. Principal Commissioner confirmed part of the demands proposed in the SCN, as under :- ORDER (i) I confirm the demand of service tax amounting to Rs 5,94,38,654/-. I drop the demand amounting to Rs 4,13,83,504/- against the noticee under the proviso to sub-section (1) of Section 73 of the Act; (ii) I drop the demand of service tax amounting to Rs 96,96,785/- against the noticee under the proviso to sub-section (1) of Section 73 of the Act; (iii) I drop the demand of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9. By way of oral and written submissions, ld. counsel for the Appellant has made the following submissions:- (i) Demand of service tax only on the basis of difference of figures in Balance Sheet and ST-3 returns is contrary to law laid down by this Tribunal. At any rate, once the amounts representing sale of goods and services falling under negative list are reduced from the total receipts and deduction under Circular No. 341/43/96 TRU dated 31.10.1996 is applied, the taxable value of Rs 8,25,85,408/- has been correctly disclosed in the ST-3 returns and therefore, demand of service tax of Rs 5,94,38,654/- is not sustainable in law; (ii) CENVAT credit of Rs 97,36,884/- has been denied on the basis of some verification report mentioned in the impugned order, which was neither confronted to the Appellant nor provided to the Appellant and at any rate, paragraph 20 of the show cause notice contains grounds on which denial of entire cenvat credit of Rs 9,06,89,426/- was proposed and none of such grounds are legally sustainable to justify denial of credit; (iii) Late fee of Rs 2,05,100/- has been wrongly demanded on the ground that the Appellant has not aver....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der negative list and value of credit notes. In support of its contention, the Appellant submitted copies of contracts/purchase orders along with additional reply dated 13.02.2020 along with corresponding purchase and sale invoices wherein VAT was also charged along with the copies of VAT returns under the U.P VAT Act, 2008. 12.3 While dealing with the aforesaid contentions, the impugned order in paragraph 16.1 records that the Appellant has entered into contracts with clients for providing advertisement services on unipole/rooftop, the Appellant has failed to provide any contract/purchase order made exclusively for supply of flex material and sale of goods is nothing but supply of goods in the execution of service contract of advertisement. The impugned order then proceeds to quantify the service tax liability amounting to Rs 5,94,38,654/- and drops remaining demand of 4,13,83,504/-, after allowing deduction in terms of Circular No. 341/43/96 TRU dated 31.10.1996 but without considering the amounts representing services falling under negative list. 12.4 A perusal of the two invoices reproduced in the impugned order also shows that the Appellant has separately charged for adv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd that the same were issued for sale of goods where applicable VAT was charged. The said Annexure-B also contains VAT returns filed by the Appellant for the period in question and therefore there was enough evidence on record to show that the Appellant had also sold goods simpliciter. Thus, the amounts representing sale of goods cannot be subjected to service tax. 12.6 This takes us to the next submission of the Appellant that the amount of Rs 30,42,96,081/- represents consideration received for sale of space on hoarding/unipoles/roof tops, which falls under the negative list and hence not liable to tax. In this regard, we find that the impugned order does not dispute the nature of services and also records examination of the contracts for providing services of advertisement on hoarding/unipole/roof top, but the impugned order fails to take note of the specific case set up by the Appellant. As the nature of services provided is not in dispute and is rather admitted in the impugned order and also by the Ld. AR, we proceed to examine the matter on merits. On perusal of the contracts on record, we find that the same are for advertisement on hoarding/unipoles/roof tops. The issue a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....als and institutions including Lucknow Golf Club, India Industries Association and others for installation of bill boards, LED signage etc. Since the institutions charge service tax on lease rentals, the Appellant provides advertisement services through such bill boards, LED signage etc., hence the payment of service tax is clearly an input service used for providing output service; (ii) The Appellant has not availed any credit on any input in relation to services used for providing output services which are exempt from tax or are non- taxable; (iii) Detailed list of CENVAT invoices alongwith copy of CENVAT invoices on which the Appellant had taken credit was also submitted; In reply to the allegation made in paragraph 21 of the show cause notice, the Appellant in paragraph 7 of the very same reply submitted that the Appellant has maintained proper and separate accounts for exempted and taxable services and that the Appellant has availed CENVAT credit on services used for providing taxable services only, for which copy of ledger account was also submitted. 13.3 The impugned order also shows that the invoices produced by the Appellant were also got verified f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eduction is not an exemption and therefore it has been concluded that the Appellant has not provided any exempted services. The last allegation of non-submission of invoices also does not survive, as the order records that the invoices were subsequently produced by the Appellant, which were verified and after verification credit of only Rs 97,36,884/- has been denied, the merits of which has already been discussed in this order. Thus, we find that the denial of credit in the present case is not warranted. 14. Issue C : Imposition of penalties and demand of late fee : 14.1 Once it has been held that the demand of service tax and denial of CENVAT credit cannot be sustained, then the imposition of penalties under Section 78 also cannot be sustained. 14.2 As regards other penalties, the show cause notice proposed imposition of penalty u/s 77 (1)(c) for failure to furnish information, u/s 77(1)(d) for failure to pay tax electronically and Section 77(2) for contravention of the provisions, without alleging anything as to when and what information was not furnished by the Appellant, when and what amount of tax was not paid electronically and which provisions have been contravened....