TMI Blog2019 (12) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme 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 soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al no. 03-04/ST-VI/RK//2016-17 dated 27th April 2016 of Commissioner of Service Tax, Mumbai VI which disposed off two show cause notices for recovering CENVAT credit of ₹ 2,21,75,67,529 availed on certain of the input services during 2010-13 and from April 2013 to September 2014 by the appellant-assessee. While the latter two challenge the imposition of penalties of ₹ 1,00,000 each under section 78A of Finance Act, 1994, the first appeal impugns the order of the original authority on the demand arising from the substantive issue coupled with the detriment of penalty of like amount under section 78 of Finance Act, 1994. 2. It is not in dispute that the appellant had been remitting service tax as a registered assessee and is, thereby, entitled to credit of eligible input services deployed in rendering output services and that some of these input services are available to providers of broadcasting service. According to Learned Counsel for the appellants, though 32 taxable services had been procured by them, the dispute is limited to credit of ₹ 2,21,58,24,907 availed on 12 taxable services which, according to service tax authorities, were u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. From the point of view of Revenue, the appellant-assessee was appointed, through an advertising sales agreement dated 1st October 1995, as the exclusive agent of M/s MSM Satellite (Singapore) Pte Ltd for distribution of channels of the latter, sale of airtime slots for advertisements to be carried in these channels and to conclude agreements on behalf of such channels. Invoices were allegedly issued to the advertisers by the overseas entity but the collections, as well as the remitting of taxes, devolved on the appellant-assessee. After 29th March 2011, appellant-assessee contracted with M/s MSM Discovery for the distribution of channels; the revenues of the latter comprised 10% of the subscription collection to be retained while transferring the rest back to the overseas entity. 6. Learned Authorised Representative contends that the proceedings initiated against the appellant-assessee is grounded on their being an agent of the broadcaster and the liability to tax, stemming from a legal fiction, precluded availment of credit of tax paid on services deployed for, and required by, the overseas entity to broadcast signals. It is alleged that entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or collecting revenue subscription from operators that were remitted to the overseas entity through them. Hence, their plea that the discharge of tax liability by them on the entire receipts from these sources should effect a closure of the controversy on being a provider of broadcasting service. 9. It is also claimed that the engagement of production houses, as well as acquisition of cinema, even if ultimately vested with the overseas entity, is an independent business activity of their and, hence, when subsequently transacted, is output service which, though not taxed for being exported, was, nevertheless, eligible for availment of credit of tax paid on input services . According to the appellants, the claim of export of programme production service and copyright service is undisputed as categorical intimation through ST-3 returns had not evoked any objections. In this context, the appellants advance the proposition that, in denying the CENVAT credit, the adjudicating authority has omitted to acknowledge the entitlement of ₹1,84,54,00,495 as credit of the tax liability incurred in procurement of copyright services , sound recording services , TV/r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period after 1st April 2011, has held that exclusion is contingent only upon utilization for personal benefit which is not an allegation and, hence, warranting a finding on our part. Likewise, the denial of credit taken on tax paid as recipient of rent-a-cab service, was not used for personal consumption but by the appellant-assessee. We are inclined to accept the submission as it is now settled law that the exclusions incorporated in April 2011 are intended to disallow those which are patently not for use in rendering output service. The demand of tax purportedly relating to ineligible input service for an amount of ₹17,41,622, therefore, fails. 13. Learned Authorized Representative made elaborate submissions by reference to various decisions. It is seen that none of these are directly applicable to the dispute before us but to various aspects of the submissions of the appellants that are claimed by Revenue to be incongruent with the objective of CENVAT credit scheme. In the circumstances, it would be appropriate for us examine the legal provisions and subject the cited decisions to the touchstone of the conclusions therein. 14. The rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igibility thereto has only two conditions, viz., leviability of tax and being provider of taxable service which is defined only in Finance Act, 1994 and references to input service is only in the context of specific exclusions in the said rule and in rule 6 or for determination of date on which such credit shall be allowed, thereby, requiring recourse to rule 2(k) of CENVAT Credit Rules, 2004. The schedule for taking of such allowable credit is governed by rule 4(7) of CENVAT Credit Rules, 2004 which is restricted to input service and subject to documentation prescribed in rule 9 of CENVAT Credit Rules, 2009. In the present dispute, Revenue has no cavil that the provider of broadcasting service is entitled to CENVAT credit of the specified services. Therefore, 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. 17. 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly 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. For the period prior to 1st July 2012, as we have held supra, the provider of the service, as explicitly legislated in section 65(105)(zk) of Finance Act, 1994, is the agency in India. For the period thereafter, in the absence of any reference to such agency, the levy of tax from the appellant-assessee suffices to bring them within the definition of provider of taxable service in CENVAT Credit Rules, 2004. Once the tax liability is accepted by the appellant-assessee and discharge thereof has been acknowledged by the State, the privileges arising from such cannot be denied save for express exclusion in the CENVAT Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovider of output service, were also connected with such activity. In view of findings supra, pertaining to the single premises of the appellant-assessee herein, that service has been provided by the appellant-assessee, the submission fails. 23. According to Learned Authorised Representative, the decision of the Tribunal in Star India Pvt Ltd v. Commissioner of Central Excise, Thane-I [2015 (38) STR 884 (Tri-Mumbai)] and in BBC World (I) Pvt Ltd v. Commissioner of Central Excise, Delhi-III [2009 (14) STR 152 (Tri-Del)] having held that tax liability devolves on the entity in India by a deeming fiction should logically lead to the conclusion that such entities are not the real providers of service. We find ourselves unable to accept that proposition for the said decision was rendered, as pointed out by Learned Counsel, in the context of an assessee claiming that the discharge of tax liability, as broadcaster, by debit of CENVAT credit arising from discharge of tax liability on reverse charge for rendering of services by overseas entities. On the contrary, the finding therein that the agency in India is fastened with the liability of discharging tax would support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be lifted or if on doing that, could it be said that the assessee and the buyer are related persons. That will depend on the facts and circumstances of each case and it will have to be seen who s calling the shots in the assessee and the buyer. which suggests that this access is not to be applied across the board. In the present circumstance, the existence of a surrogate of the broadcaster is mandated by law and not just for the purposes of taxation. There can be no subterfuge or artifice when the State so legislates. 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. 26. 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 and the lack of applicability of the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X
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