TMI Blog2017 (4) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... ed fact that even though if the contention of the Revenue is accepted that services were provided by MSM Singapore, but it is also a fact that services were received in India therefore service per se is taxable and the government is legally required to collect the service tax on such services and it had indeed collected. Therefore service tax even though paid by MSM Singapore through their office in India discharged the service tax payment of services tax cannot be disputed. In such a situation Cenvat credit is legally admissible to the appellant - once registration was granted by the department and the service tax was collected consequent Cenvat credit cannot be denied. As per the service tax provisions the service tax liability is based on the place of consumption, therefore in the present case not only the services provided in India but also consumed in India therefore place of provisions is India only. Hence service tax registration obtained by M/s. MSM Satellite (Singapore) Pte. Ltd in India is absolutely in order. Extended period of limitation - penalty - Held that: - entire activity was in the knowledge of the department as the appellant vide their letter dated 24-5-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India obtained Service Tax registration w.e.f. July, 2012 for provision of Broadcasting Services. MSM India are not having any physical establishment in India for provision of Broadcasting Services in India. Channel such as SET, Max, SAB, Pix, etc are uplinked from Singapore by MSM Singapore and are down-linked in India as well as many other countries for viewing by general public; that the channels are telecast from satellite situated outside India; the signals are encrypted and beamed from outside India; that these signals are received by the Multi System Operators(MSO) and Cable TV operators through decoders; that these decoders enable MSOs and Cable TV operator to re-transmit the signals to the viewers who have subscribed to them; that the advertisement recorded in videotapes by the advertising agencies and programs/serial recorded in the videotapes by or on behalf of the sponsor are procured from India and sent to MSM-Singapore for use in the channels which are to be broadcasted. MSM-India does not have any person as employee or otherwise in India and also does not maintain any books of accounts pertaining to their activity in India. MSM-India discharges Service Tax on the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation it was revealed that MSM-India does not undertake any activity from the premises declared in their ST-1 application form. In fact, me premises declared in ST-1 are the premises actually used by MSMPL and not by MSM-India. MSM-India does not have any organizational setup or human resources to undertake any actual activities so as to provide any taxable output services. MSM-India makes payment to service providers for the domestically procured services in India from the funds received in the NRO (A/c. No.0638239010 maintained in Deutsche Bank, India) of MSM-Singapore. MSM-Singapore is operating the NRO bank account in India. MSM-India does not maintain any separate Balance Sheet or Books of accounts for income generated and expenditures incurred in India. MSM-India started paying Service Tax for the Broadcasting of channels by MSM-Singapore in India w.e.f. July, 2012 without actually providing any services. Prior to July, 2012, MSM-Singapore issued invoices to MSM Discovery for 'distribution fees'. The invoice mentions the amount in US $ and Indian Rupees. The invoice also mentions that the amount is to be remitted to MSMPL. The invoice also mentions the PAN AABCS922 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities of MSM-Singapore are as follows: The programs (including IPL broadcasting rights) and advertisement content are out-sourced from all over the world including India and thereafter the channels produced using the said contents which are broadcasted from Singapore to India and other parts of the world. Invoices are raised by MSM Singapore from Singapore on Advt. agencies in India for sale of time slots in relation to broadcasting services. Such invoices contain instructions to make payments to MSMPL. Invoices are raised on MSM Discovery by MSM Singapore from Singapore for 'Distribution fees' in relation to broadcasting services decoded by Cable Operators, DTH 8b MSO in India. Such invoices contain instructions to make payments to MSMPL. MSM-Discovery pays 'Distribution Fees' to MSMPL both prior to and from 1st July, 2012, MSM-Singapore indicated the consideration for distribution of channels in US$ and the exchange rate applicable. MSM Discovery was directed to remit the amount in Indian rupees by converting the US$ amount as per exchange rate specified. However, Service Tax for 'Distribution Fees' received was paid prior to July, 2012 by MSMPL and by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals. 3. Shri. V. Sridharan, Ld. Sr. Counsel with Shri. Prakash Shah, Ld. Advocate and Shri. Arun Jain, Ld. Advocate appeared for the for the Appellants. He submits that appellant disclosing entire facts regarding their status, activities and provision of services by their Singapore company, obtained registration and discharged service tax on the output services, which is much more than the Cenvat credit availed on the input services. Therefore appellant was allowed by the department to act as a service tax assessee and to pay service tax. The Cenvat credit so availed was utilized for payment of service tax therefore now for any reason the said Cenvat credit cannot be disallowed as same was utilized for payment of service tax on output services. He further submits that impugned order by virtue of explanation 3(b) to Section 65B(44) of the Act contends that appellant have two establishment, one in India and other in Singapore and both establishments are to be treated differently. He. submits that the said explanation was not invoked in the show cause notice. On the contrary show cause notice preceded on the premise that the appellant has no physical setup to undertake any act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 2(h) of Rule 4 of Service Tax Rules, referred to service provider providing services from more than one premises. It also refers to service receiver and Rule 4(2)(iii) reference indicate in relation to such service in any other manner i.e. other than as per service provider or service receiver. Rule 4(2)(iii) reveals that such person can seek registration for any of premises or office even if that premises or office is not directly connected with actual provision of services therefore registration was legally and correctly granted to the appellants, which clearly covered by registration provisions as provided under sub male 2 of Rule 4 of Service Tax, Rules, 1994. He placed reliance on the judgment of Apex Court in case Commissioner of Central Excise v. Tata Tech Limited. [2008] (11) S.T.R. 449 (S.C.). He further submits that in any event if it is accepted that the service was provided by MSM Singapore but the services were received in India and the service receiver in India is taxable therefore payment of service tax on the services received in India is inevitable. Accordingly, consequent Cenvat credit can also not be disputed. Section 68(2) of the Finance Act, 1994 enables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax services by such Foreign Service provider. He, without prejudice, further submits that in any event and assuming without admitted that the revenue is right in holding that the appellant has provided service from Singapore and not liable to pay service tax, the payment of service tax amounts to reversal of Cenvat credit and the same cannot be recovered once again. Without prejudice to above and in any event, Rule 4 of CCR provides for utilization of credit. The show cause notice admits that Cenvat credit availed by the appellant is utilized for payment of service tax. In that event, it being held that the appellant is not liable to pay service tax by virtue providing services from Singapore, utilization of the credit for payment of tax amounts to reversal/return of the credit to the Government of India and the appellant is not required to pay credit once again. It is submitted that the appellant has already reversed the Cenvat credit by debit in the Cenvat register when it utilized the same towards payment of service tax and therefore, there is no question of payment the amount once again. He placed reliance on the following judgments: (a) Infosys Technologies Ltd. v. Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simply amount to refund by department into the cenvat account of Appellant. Without prejudice to above and in any event, extended period of limitation is not invocable in the facts of the present case and the demand for the period July 2012 to September 2012 is liable to be set aside. It is submitted that the Appellant vide letter dated 24 May 2012 had made a representation to CBEC to seek continuance of the Deemed Broadcaster status of MSMPL under the negative list regime. On not receiving any clarification from CBEC, the Appellant made an application for registration dated 02 July 2012 setting out in detail the reason for seeking registration and stated that the Appellant will be paying service ax on distribution and ad-sales revenue and claim input service credit. The department issued registration after having satisfied that the appellant are providing services in India. Thus, department at all time aware of that Appellant was availing cenvat credit and therefore no fraudulent intention to avail ineligible cenvat credit can be attributed to the Appellant. On the same ground, penalties imposed on the Appellant under Section 77 85 78 of the Act is also liable to be set aside. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that no reason has been given either in the show cause notice or in the O-I-O for not charging service tax. As per show cause notice and O-I-O, the services provided upto June 2012 were export and since there is no change in agreement between BCCI and MSM, service tax is not payable even after July 2012. It is submitted that service tax has rightly been charged, collected and paid by BCCI due to the following reasons: (a) MSM took registration in India w.e.f. 1st July 2012. The same was informed by them to BCCI vide email dated 26.03.2013 - copy attached as Annexure 6 to the appeal memorandum. As per rule 3 of POPS rule, the place of provision where place of provision for any service is not specified under Rule 4 to 12 of POPS rule, will be location of service receiver. Rule 2(i) of Place of Provision of Service Rule, 2012. Hence, place of provision of service is in India and service tax is rightly paid by BCCI. (b) The invoice dated 01.04.2013 (which is subject matter of dispute) was raised on MSM Singapore in INR and payment of the same was also received in INR. As per rule 6A of Service Tax Rules, 1994, any service qualifies as 'export' only if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground alone shall be set aside. (vii) The provisions of personal penalty are given u/s 78A of Finance Act 1994. This section has been introduced on 10.05.2013. There were no such provisions prior to this section. Hence, it is submitted that no penalty can be imposed on Mr. Sanjay Patel in the present case. He placed reliance on following judgments of Mumbai CESTAT: Shri Diwan Rahul Nanda 2012-TIOL-688-CESTAT-MUM T Venkatadri 2014-TIOL-2486-CESTAT-MUM Z.U Alvi v. Commissioner of C. Ex. Bhopal [2000] (117) ELT 69 (Tri.) (viii) In the present case, the demand of Appx. ₹ 445 crores has been confirmed against MSM on the ground that they have availed ineligible cenvat credit. Further, penalty has been imposed on BCCI on the ground that they have incorrectly charged service tax on invoice raised on BCCI. It is submitted that out of ₹ 445 crores, BCCI has charged 20% of the total credit. There are other service providers who have charged service tax amounting to 80% of the credit taken by MSM. (ix) In Para 30 of the show cause notice, it has been stated that all service providers raised invoice on MSM Singapore address upto June 2012 and at I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertisers and customers of MSM-Singapore. 5.13 It is MSM Discovery who collects the service tax from the customers for distribution of channels in India and deposits the amount of service tax so collected under 'Broadcasting Services' to the Govt. Treasury. 5.14 Service tax is paid by MSM Discovery on the entire amount collected from the customers for provision of channels. 5.15 However, MSM Discovery does not pay any service tax for import of services under the reverse charge mechanism on the amounts paid to MSM-Singapore through MSMPL. 5.16 MSMPL also does not pay service tax for import of services under the reverse charge mechanism on the amount received from MSM Discovery in Indian Rupees, but remitted to MSM-Singapore in foreign exchange. 5.17 MSMPL is authorised by MSM-Singapore to collect the amount from MSM Discovery and thereafter transfers the amount so collected to MSM-Singapore. This arrangement remains the same both prior to July 2012 and w.e.f. July, 2012. 5.18 Even though channels for broadcasting in India are provided by MSM-Singapore and payment received by it in convertible foreign exchange, no service tax has been paid by anyone in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant enabling them to pay service tax on the service provided by the MSM Singapore. The appellant admittedly discharged service tax on the output services whether it is considered to have been provided by MSM Singapore. There is no dispute that the entity in India and Singapore is the same entity i.e. M/s. MSM Satellite (Singapore) Pte. Ltd therefore the service provider is the same company even though the service was provided from different location i.e. Singapore but the M/s. MSM Satellite (Singapore) Pte. Ltd obtained registration on address C/o. Multi Screen Media Pvt Ltd, Interface, Building 7, 4th Floor, Off. Malad Link Road, Malad(W), Mumbai 400064. It is also provided under Section 66A that any service provided from outside India and received in India is invariably taxable service. In the present case it is admitted fact that even though if the contention of the Revenue is accepted that services were provided by MSM Singapore, but it is also a fact that services were received in India therefore service per se is taxable and the government is legally required to collect the service tax on such services and it had indeed collected. Therefore service tax even though paid by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable service -Transport of Goods by Rail services not taxable prior to 1-5-2006 -Service tax paid on mistaken belief that the same was payable and credit availed on bona fide belief that such credit was available -Tax amount paid for the impugned period not at all due and no revenue loss to the exchequer by the act of appellant of merely taking credit of the amount which in the first place not recoverable from them - Demand of Service tax, interest and penalty set aside -Section 11A of Central Excise Act, 1944 and Section 65(105)(zzzp) of Finance Act, 1994. (d) V.G. Steel Industry v. Commissioner of central Excise [2012] (27) S.T.R. 94 (P H) Cenvat/Modvat credit - Availment of - Duty paid on inputs in excess of due amount - HELD : Unless excess duty paid was refunded, assessee/input receiver could claim their Cenvat credit as the Department could not get the duty twice - View that entitlement of input supplier, who had paid duty wrongly, to seek its refund does not create any right in favour of assessee who had procured the inputs, rejected - Rule 3 of Cenvat Credit Rules, 2004. (e) Commissioner of Central Excise, Chandigarh v. Ranbaxy Labs Ltd. [2006] (203) E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king from Singapore but services are provided in India by decoding, downlinking, broadcasting therefore provision of services is taken place in India only. As per the service tax provisions the service tax liability is based on the place of consumption, therefore in the present case not only the services provided in India but also consumed in India therefore place of provisions is India only. Hence service tax registration obtained by M/s. MSM Satellite (Singapore) Pte. Ltd in India is absolutely in order. We also agree with the contention of the Ld Counsel that in one hand Revenue sought to disallow the Cenvat credit on the ground that appellant is not service provider and on the other hand service tax was collected from the appellant even if it is accepted that appellant is not service provider. In such a case the payment of service tax made by appellant also does not remain as payment of service tax. In such situation whatever Cenvat credit taken by the appellant it stands reversed in the form debit towards of payment of service tax. If the contention of the department is accepted that the appellant cannot be treated as service provider then in the such case payment made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service-provider, who, better than anyone else, knows the nature of activity undertaken. We note that, in their attempt to stretch the CBNVAT Credit Rules, 2004 beyond the rule affording the option of refund, the two authorities have conveniently not adverted to the scheme and contents of Chapter V of Finance Act, 1994 without which the CENVAT Credit Rules, 2004 have no locus standi in the present context. Once an entity has declared that it is liable to tax under the statute of a State, there is no power to deny that status. We note that no such denial was even contemplated until the entity sought the invoking of provisions which the original authority was disinclined to extend. Tax is paid on self-assessment with the 'proper officer' empowered, under section 73 of Finance Act, 1994, to determine merely non-levy or short-levy and demand the amount so evaded. The primary obligation to determine liability to tax as provider of 'taxable service' vests with the person who renders such service with tax authorities intervening solely for prevention of evasion of tax in a self-assessment regime. In this limited dichotomy, we find no statutory provision by which a tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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