TaxTMI 
TaxTMI 
2026 (2) TMI 288
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....ices and business auxiliary services. The nature of incomes booked under each of the segments along with their taxability under service tax is tabulated herein below : Name of Segment Nature of service Taxability under Service Tax TV Division Upon the request of TV channels, the Appellant records the episode into a magnetic tape which is handed over to the TV Channels in physical form for telecasting the programme Taxable under the category "Programme Producer Service" Film Division 1. Appellant assigns satellite television broadcasting rights of its own movie/s to the TV channels for a fixed period for broadcasting the movie in television. The same is recorded as satellite telecast income in the profit and loss account Taxable under the copyright services 2. Temporary transfer of copyright of cinematographic films for exhibition in cinema hall or cinema theatre Exempt from Service tax 3. Permanent transfer of copyright of cinematographic films Liable to VAT, excluded from Service Tax Digital Cinema Division 1. Appellant earns a per show fees from the distributors/ producers who telecast the movie in the cinema halls wherein the projecto....
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.... in the Balance Sheet of the Appellant without identifying/classifying the category of underlying services on which it is taxable. 3.1 He further submits that during the year 2010-11 to 2013-14, the appellant had incurred certain expenses in foreign currency for shooting of films outside India and other allied activities. The entire demand of Rs.1,24,73,378/- has been raised by the Ld. Adjudicating Authority solely on the basis of the figures reported in the balance sheet under the heading "expenditure in foreign currency", without specifying the nature of taxable service. In this regard, he submits that it is a settled law that the onus of determining taxability of a service and its classification is on the Department and demand cannot be raised merely on the basis of difference in figures between the Balance Sheet and the ST-3 returns without identifying the category of underlying service on which service tax is payable. In support his contention, he relies on the following judgements : (i) M/s. Outotec India Private Limited vs. Principal Commissioner of Service Tax-I, Kolkata [2026 (1) TMI 714 - CESTAT KOLKATA] (ii) M/s.Nirman Construction vs. Commissioner o....
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....Notice and/or impugned Order, the demand raised against the Appellant cannot sustain. Reference in this regard is invited to the judgement of this Tribunal in the case of M/s. Outotec India Private Limited vs. Principal Commissioner of Service Tax-I, Kolkata (supra). 3.4 He submits that in any event and without prejudice to the submissions made hereinabove, it is submitted that the appellant is not liable to discharge taxes on the expenses incurred towards shooting and allied activities outside India. Without prejudice to the submissions made hereinabove, it is submitted that the expenses incurred by the Appellant are majorly for the services in relation to immovable property situated outside India, as clearly forthcoming from the Annexure-A to the Notice. Even otherwise, the payments made by the Appellant to overseas line producers for arranging shooting of films outside India would not be liable to service tax under RCM as such services are performed wholly outside India. The Appellant submits that for the period prior to 01.07.2012, under Rule 3(ii) of the Import Rules, 2006, only such services were taxable which were wholly or partly performed in India. Since, the activities....
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....nt takes place i.e. the shooting takes place and therefore, no service tax can be recovered from the appellant. 3.6 He submits that the demand of Rs.30,58,083/- for short reversal of cenvat credit suffers from inherent infirmities in as much as tax amount discharged on advances received during the year have not been considered in the value of output services and "permanent sale of copyrights" has been held as service. He submits that the appellant has pro rata reversed the credit of the input services used in relation to its film division by computing the value of exempted and output services on entity basis as a whole. The reversal for common credits has been computed by the Revenue by just considering the revenues of film division, which is objectionable, as it has to be a corporate/entity level. During the relevant period, service tax registration was a centralized registration at a corporate level, therefore, there was no basis for pro rata reversal of common credit by excluding the revenues attributable to TV and Digital Cinema division. On the basis of such, division level computation, the Department has alleged short reversal of tax to the tune of Rs.30,58,083/-. 3.7 H....
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....ncluded in the value of exempt services in so far as it is a settled law that permanent transfer of copyright is outside the purview of service tax. Reference in this regard is invited to the following judgements: (i) M/s Narne Networks Pvt Ltd. Versus Commissioner of Central Excise and Service Tax Hyderabad [2025 (10) TMI 1132 - CESTAT HYDERABAD] (ii) Pr. Commissioner of CGST & Central Excise, Chennai Vs Wunderbar Films Private Ltd [2024 (3) TMI 17 - MADRAS HC]. However, the Ld. Adjudicating Authority has disregarded the appellant's contention on an erroneous ground that discharge of VAT on a service does not necessarily exclude its liability from service tax. In this regard, the Appellant submits that it is a settled principle of law that service tax cannot be levied on the same transaction on which VAT has been discharged as VAT and service tax are mutually exclusive. The said proposition has also been clarified by the CBIC vide Circular No. 334/1/2008-TRU dated 29.02.2008 (Para 4.4.3).Reliance in this regard is placed on the following judgements: (i) Imagic Creative Pvt Ltd. vs. Commissioner of Commercial Taxes [2008 (9) S.T.R. 337 (S.C.)] ....
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.... availed on input services (digital mastering services) received from RIMT Pvt. Ltd. on the purported ground that the said services have been used by the Appellant for rendering both taxable (video tape production services) as well as exempt services (advertisement services and services by way of temporary transfer of permitting the use or enjoyment of copyright of cinematographic film or exhibition in a cinema hall). In this regard it would be pertinent to note that "digital cinema mastering" refers to the technical process of converting a film's digital intermediate outputs (images) into a DCI/SMPTE-compliant Digital Cinema Package (DCP) by compressing, encrypting and synchronising image, audio and subtitle files for theatrical exhibition. 3.11 He further submits that the findings of the Ld. Adjudicating Authority that the mastering services formed an integral part of exempted advertising services or temporary transfer of copyright for exhibition is based on mere assumptions and presumptions without any evidence of actual use. The Revenue has not adduced any evidence whatsoever to prove that the services received from RIMT were availed by the Appellant for rendering exempt ser....
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....s unfounded and rendered without proper appreciation of facts in so far as it was used for provision of taxable services in the form of "distributor per show fees". The said projectors were used for exhibiting films in cinema theatres by the film distributor/exhibitor and the Appellant charged such distributor a pre-agreed share of the revenue on per show basis, on which tax was duly discharged by the Appellant under the category of "video tape production service". The Ld. Adjudicating Authority brushed aside the contentions of the Appellant by stating that video tape production services ceases its operation after transfer of digital films to distributor and that video production service (taxable) cannot be corelated with an exempt service of transfer or enjoyment of copyright of cinematographic film for exhibition in a cinema hall. In this regard, it is submitted that in terms of Section 66F(1) of the said Act, it is not necessary that a service used to provide an exempt service shall also be an exempt service. Thus, the finding of the Adjudicating Authority that there is no co-relation between a taxable service and exempt service is completely misplaced. Moreover, even if it is a....
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....facts or contravention of any provisions of the law, with the intent to evade payment of Service Tax. However, in the present case, the appellant has never suppressed any facts regarding the activities undertaken by them. In fact, the entire demand has been computed solely on the basis of the figures provided by the appellant, sourced from its audited annual accounts and S.T.-3 Returns filed during the relevant period. The Department has failed to adduce any evidence to establish suppression of facts on the part of the appellant with the intent to evade payment of Service Tax and hence penalty under Section 78 is not imposable. In this regard, he relies on the decision of this Tribunal in the case of M/s Outotec India Private Limited vs. Principal Commissioner of Service Tax-I, Kolkata (supra). Further, he submits that it is a well settled principle in law that penalty cannot be demanded under Section 78 of the Act, when tax has been paid even before the issuance of show cause notice. In this regard, he also relies on the judgement of this Tribunal in case of M/s Reliable Industries Versus Commissioner of CGST & Central Excise, Bhubaneswar [2023 (12) TMI 1065 - CESTAT KOLKATA]. ....
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.... liable to pay service tax under reverse chance mechanism on the expenses incurred in foreign currency towards shooting of films and other related expenses or not ? 8. The demand of service tax has been confirmed under reverse charge mechanism on the expenses incurred in foreign currency towards shooting of films and other related expenses for the period 2010-11 to 2013-14. In fact, the appellant incurred certain expenses in foreign currency for shooting of films outside India and other allied activities. The demand has been raised on the basis of figures shown in the balance sheet under the Heading "expenditure in foreign currency" without specifying the nature of the taxable service. It is not mentioned in the show-cause notice. The contention of the appellant is that the onus of determining taxability of a service and its classification is on the department and the demand cannot be raised merely on the basis of difference in figures between the Balance Sheet and the ST-3 Returns without identifying the category of underlying service, on which service tax is payable. Admittedly, no description of service has been identified by the Revenue while issuing the show-cause notice. T....
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....nch in the case of M/s. Nirman Construction Versus Commissioner of Central Excise, Service Tax and Customs, Durgapur Commissionerate, Burdwan (West Bengal) [2025 (8) TMI 6 - CESTAT Kolkata] wherein it has been held that no Service Tax can be demanded merely on the basis of difference between Balance Sheet and S.T.-3 Returns. The relevant observation made by the Bench in the aforesaid decision reads as under: - "10.1. From the above, it is evident that Service Tax has been demanded on the basis of the value of taxable services as observed from the balance sheet / Profit & Loss Account of the appellant and the value declared in their S.T.-3 Returns. No separate category-wise Service Tax has been demanded. Therefore, we find force in the contention of the Ld. Counsel for the appellant that the Show Cause Notice, issued merely on the basis of difference observed between the figures furnished in the balance-sheet and S.T.-3 Returns without specifying any particular category of service for levy of Service Tax, is not sustainable." 6.4. Even for the period after 01st July, 2012, Service Tax can be levied only when there is a clear identification of service provider, serv....
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....f Rs.1,65,03,949/- confirmed in the impugned order, we find that the said demand has been raised on the advances received, by taking into account the balance of advances received as mentioned in the trial balance sheet of the appellant for the respective Financial Years. However, we find that the ld. adjudicating authority has not adduced any reasons to justify the demand of Service Tax confirmed in this regard. For levy of Service Tax, identification of the underlying service is the mandatory requirement, which has not been done in the present case. It was incumbent upon the Department to specify the taxable service being provided by the appellant and in the absence of any specific taxable service being pointed out in the impugned Show Cause Notice, the demand raised against the appellant cannot sustain. 7.1. We find that the same issue came up for consideration before the Tribunal in the case of Commr. of Service Tax, Kolkata Versus M/s. Haldia Logistics Pvt. Ltd and vice-versa [2025 (5) TMI 2187 - CESTAT Kolkata], wherein the appeal filed by the Revenue has been dismissed, as service wise quantification was not done in that case. The relevant paragraphs of the above dec....
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.... India. As it is settled law that prior to 1st July, 2012, the onus to determine the taxability and classification, was on the Revenue, which the Revenue has failed to discharge. Therefore, the demand of service tax is not sustainable for the period prior to 1st July, 2012. The said view has been affirmed by this Tribunal in the case of M/s India Streamship (supra), wherein this Tribunal has observed as under : "8.1. in the case of United Telecoms Limited Vs. Commissioner of Service Tax [2011 (22) S.T.R. 571 (Tri. -Bang), it has been observed as under: "6. We find that no demand can be confirmed against any person towards service tax liability unless helt is put on notice as to its exact liability under the statute. In the show-cause notice basic to the proceedings, the impugned activities were proposed to be classified under BAS and BSS This proposal was confirmed by the Original Authority. We find that this order is not in accordance with the law. The impugned order held that UTL provided services on behalf of the client le Director, e-Seva and sustained the demand. We find that under BAS, there are seven sub-clauses. Demand under sub-clause (vii) could be on ac....
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.... to be made physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service, in order to provide the service: PROVIDED that when such services are provided from a remote location by way of electronic means the place of provision shall be the location where goods are situated at the time of provision of service: PROVIDED FURTHER that this sub-rule shall not apply in the case of a service provided in respect of goods that are temporarily imported into India for repairs, reconditioning or re-engineering for re-export, subject to conditions as may be specified in this regard. (b) services provided to an individual, represented either as the recipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the person acting on behalf of the receiver, with the provider for the provision of the service. 5. Place of provision of services relating to immovable property The place of provision of services provided directly in relation to an immovable property, including services provided in this regard by experts and esta....
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....that the services are in the nature of services relating to immovable property location selection, which are outside India. For better appreciation of facts, the details are extracted below : Admittedly, all these expenses have been incurred by the appellant outside India for reference of services relating to immovable property location or shooting services, which are performed based on the services relating to immovable property-location and the same shall be place of providing services. Admittedly, all the services have been performed by the appellant outside India. Therefore, the same will be treated as availed outside India. Therefore, no service tax is payable by the appellant. In view of this, the demand of Rs.1,24,73,378/- is set aside. Issue (b) Whether an amount of Rs.30,58,083/-, is required to be reversed on account of alleged short reversal of cenvat credit on input services used commonly for making both taxable and exempt supply or not ? 13. We find that the appellant has pro rata reversed the cenvat credit of the input services used in relation to its film division by computing the value of exempted and output services on entity basis as a whole and ....
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....e related services purported used exclusively for providing exempt services or not ? 15. The cenvat credit sought to be denied on projector and the related services to the projector for their maintenance etc. on the ground that the said projector has been used for providing exempted services. In fact, the said capital goods have been used by the appellant for providing exempted as well as taxable services. In that circumstances, the cenvat credit on the capital goods cannot be denied to the appellant as in respect of the said capital goods have been used by the appellant for providing taxable as well as exempted services, this Tribunal in the case of Electro Casting Ltd. vide Final Order No.77612/2024 dated 21.11.2024, has observed as under : "6. We find that in this case it is a fact on record that Respondent is manufacturing captively consume goods i.e. coke which have been ultimately used in manufacturing of final dutiable goods. In that circumstances, the provision of Rules 6(4) are not applicable to the facts of this case. As these capital goods received have not been used exclusively for fabrication for manufacturing of final exempted goods. 7. In that ci....
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....de India during the perlod 2010-11 to 2013-14 St. No. Nature of services received Amount involved (Rs.) 2010-11 2011-12 2012-13 2013-14 1 Services relating to immovable property- Location Selection 825000 1519976 5906231 18913188 2 Accomodation charges 803685 1350140 1857705: 2782744 3 Car & Van hire with fuel reimbursement 15385 724991 1858980: 2576336 4 ¡Local travelling & Accomodation chargés 105795 840468 27218175 0 5 Senior Technicians & Artist remuneration 0 223860 6 Local Technicians & Crew wages 0 589666 11070885: 6569326 7 Set expenses 736515 0 0: 10579494 8 Equipment hire charges 0 736285 3334552 5844300 9 Co-ordinator fees with asst. O 445000! 786532 5721419 10 Publicity expenses O 1887500 0 1555992 11 Casting remuneration 0 0 3169077] 2771198 12 Jurilor Artist wages 0 526500 1280120| 1093050 13 Print Cost (Digitisation cost to foreign party) 0 0 284973 14 Negative Development charges 0 0 211118| 453561 15 Telephone charges- 0 40900 60999 Total taxable value: 2486380 8661426| 32258016: 59369441 Rate of Service Tax payable 10.30%| 10.30% 12.36%| 12.36% Amount of Service Tax payable 256097 892127 39870....
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....Tax No. Company's PAN : AAECS8975P for SHREE VENKATESH FILMS PVT LTD Declaration In terms of Notification no.102/2007. No Credit of Additional duty of Customs/CENVAT levied under section 3(5) of the customs tariff Act 1975 is admissible Authorised Signatory SUBJECT TO KOLKATA JURISDICTION This is a Computer Generated Invoice KATESH Document 3 products excluding exempled goods and fer the provision of output services excluding exempted services) and paying an amount equivalent to CENVAT Credit attributable to In- put services used in or in relation to manufacture of exempted goods or provision of ex- empted services [refer to Rule 6(3)(III) of CENVAT Credit Rules, 2004] (VPN) 12 AMOUNT PAYABLE UNDER RULE 6 [3] OF THE CENVAT CREDIT RULES, 2004 SI No Month Oct Nov Dec Jan Fab Ma 12.1 Value of Exempted good cleared 0 0 0 0 0 12.2 Value of exempted services provided O o O 0 0 O 12.3 Amount paid under Rule 6(3) of CENVAT Crece Rules, 2004,by debiting CENVAT Crest account 0 0 0 O 0 0 124 Amount paid under Rule 6(3) ef CENVAT Credt Rules, 2004 by cash O 0 0 0 125 Total amount paid under Rule 6(3) of CENVAT Credit Rules, 2004 | 2.5* @ 2.3+....