The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) of Chennai bench in a recent judgement held that CENVAT Credit is allowable on service tax paid by an Advertising agency and an extended period is not applicable.
Aniksha Productions Private Limited, the assessee challenged the Order-in-Original passed by the Commissioner of Central Excise and Service Tax, Chennai. The appellant is engaged in producing teleserial and programmes for broadcasting on television channels and the appellant is paying Service Tax under the category of “Sale of Space or Time for Advertisement”.
The Revenue received intelligence that the appellant was not paying the entire appropriate amount of Service Tax. Further viewed that the appellant had entered into agreements with television channels who allotted the time slot to the appellant for telecasting the teleserial/programmes on a chargeable basis (as slot fee).
It was viewed that as per Section 67(3) of the Finance Act, 1994 with effect from 01.05.2006, the taxable value would comprise the gross amount charged for providing the service, which included any amount received towards the service before, during and after the provision of such service,
The appellant had only paid the Service Tax on the variable cost which was nothing but the cost received from the advertising agency and the appellant had excluded the fixed cost collected from the advertising agency, which was nothing but the slot fee payable to the television channels for telecasting the programme and that therefore it was sought to be recovered, the Service Tax component on the fixed cost as well from the appellant vide Show Cause Notice dated 31.03.2009.
The Commissioner confirmed the demand for Service Tax after holding that based on the agreements entered into by the appellant with the advertising agencies, the fixed cost, i.e., the telecast fee, was collected by the appellant along with Service Tax and therefore the onus was on the appellant to discharge the same.
Further, about invoking the extended period of limitation for issuing the Show Cause Notice, the Adjudicating Authority has negated the arguments of the appellant holding that the collection of fixed cost/telecast fee was not made known to the Revenue as the same was not reflected in the periodical returns filed by the appellant which amounted to withholding of information which, according to him, was deliberate.
Section 73(1) of the Finance Act, 1994 prompts for issuing a Show Cause Notice for the recovery of Service Tax not levied or paid or short-levied or short-paid or erroneously refunded. The Show Cause Notice or even in the impugned Order-in-Original there was not any allegation as to the Service Tax not levied or not paid or short-levied or short-paid or erroneously refunded.
Further, there is also no dispute either in the Show Cause Notice or in the impugned Order-in-Original of the fact that the advertising agency had remitted the Service Tax component to the Government Exchequer.
A Coram comprising of Mr P. Dinesha, Member (Judicial) and Mr M Ajit Kumar, Member (Technical) observed that when the Service Tax on the service involved stands remitted by the advertising agency,the extended period of limitation is not invokable.While allowing the appeal the impugned order is set aside.
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