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2019 (12) TMI 1171 - CESTAT MUMBAIRecovery of CENVAT credit - input services - allegation that input services were not utilized by the assessee but utilised for the broadcasting of channels by the overseas entity - penalties u/s 78A of Finance Act, 1994 - exported services or not - exclusion from the definition of ‘input service’ in rule 2(l) of CENVAT Credit Rules 2004 or not - insistence on the part of Revenue that the responsibility for discharge of tax liability is distinct from provision of service which alone entitles availment of CENVAT credit. HELD THAT:- It is not disputed that the appellant-assessee has discharged tax liability but it has been held that such compliance is as a mere agent who does not consume the ‘input service’; implicit in this hypothesis is that even the procurement of service is as an agent even though Learned Authorized Representative is unable to draw sustenance for deeming such agency in the taxing statute or in the CENVAT Credit Rules, 2004. It is not the entitlement of the ‘broadcaster’ within the scheme of CENVAT credit that is objected to but the claim of the appellant-assessee to that entitlement as ‘surrogate’ of provider of service - There is no allegation that the disputed services are not ‘input services’ for a ‘broadcaster’ and, hence, the exclusions or the schedule, for which that definition is intended, are not relevant for deciding on eligibility in the dispute before us. The perception conflict between surrogacy and agency seems to be the genesis of the controversy; while the appellant-assessee claims to be the surrogate, Revenue is prepared only to concede status of agency for discharge of liability and, that too, as a legal fiction which excludes categorization as ‘broadcaster.’ The levy on manufacture is crystallised on the product without having to take recourse to manufacturer making abundantly clear, by implication, that the manufacturer pays the duty and takes eligible credit. Likewise, in section 66 of Finance Act, 1994, there is no reference to any person but only to the taxable events described in section 65(105), and in the successor section 65B, even less so. The complexity of definition of taxable activity, necessitating human presence, is now sought to be superimposed on the CENVAT credit scheme which recognises only the taxpayer within its ambit. The deployment of expressions in CENVAT Credit Rules, 2004 warrants recourse to Finance Act, 1994 only for interpreting expressions that are not defined therein. As the said Rules do not allude to ‘taxable service’ except with the qualification ‘provider of’, and is defined in rule 2(q) and rule 2(r) as a composite expression, which is not untrammeled, even the parent statute may be unable to afford an interpretation. By inclusive qualification, rule 2(r) of CENVAT Credit Rules, 2004 brings ‘person liable to pay tax’ within its ambit - The levies devolve on the person liable to tax as laid out in the Service Tax Rules, 1994 and, in view of rule 9 of CENVAT Credit Rules, 2004, credit can be taken only by the entity burdened with the incidence of tax. That is the sole criteria of eligibility to take credit and not the process by which broadcast signals are received in India. The relationship between the overseas entity and the appellant-assessee is open and declared and the tax law sought to be invoked against the latter is not premised on the existence of a relationship between the two. The laudable morality that guided the widening of investigative jurisdiction cannot be read out of context to impute an allegation that is not acknowledged in the law pertaining to levy of service tax. In the light of findings that the appellant-assessee is not only de facto but also de jure provider of ‘output service’ as well as consumer of the impugned ‘input service’, the recovery ordered in the impugned order as well as the penalties on the appellant-assessee and the individual appellants is set aside - appeal allowed - decided in favor of assessee.
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