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TMI Blog2019 (12) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 2,21,58,24,907 availed on 12 taxable services which, according to service tax authorities, were utilised for the broadcasting of channels by the overseas entity and that arising from availment of credit of tax of Rs. 17,41,622 discharged on three services which allegedly are in the exclusion component comprising the definition of 'input service' in rule 2(l) of CENVAT Credit Rules 2004. 3. A brief narrative would assist in appreciating the jigsaw comprising the peculiar characteristic of the 'output service', the intricacies of determining the reci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itting 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 located in Singapore is the owner of the channels, equipment, infrastructure and other facilities required for linking and, in the absence of such, the appellant-assessee cannot claim to be the provider of 'broadcasting service.' Our attention was drawn to the reliance placed by the adjudicating authority on the definition of 'input service' in rule 2(l) of CENVAT Credit Rules, which admits of no entitlement, other than provision of 'output service', for eligibility and the attendant embargo on availing credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 Rs.1,84,54,00,495 as credit of the tax liability incurred in procurement of 'copyright services', 'sound recording services', 'TV/radio programme production service' and 'video tape production service' which could not have been utilised by the overseas entity. 10. On behalf of the appellants, it is contended by Learned Counsel that the appellant is the provider of 'broadcasting service' fastened by the definitions of the taxable service as well as that of 'broadcasting' and 'broadcasting agency or organization' in section 65 (15) and section 65 (16) of Finance Act, 1994. It is further submitted that the tax liability has been discharged by the appellant as provider of this service and not as an agent of mandator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, 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 remaining controversy revolves around the contention of Revenue that 'broadcasting services' are rendered by a broadcaster located outside the country and that though, admittedly, broadcasting requires certain 'input services' entitling the provider of service to be eligible for credit of tax discharged, the agent of such broadcaster cannot lay claim to it. The overseas entity may well be the broadcaster of signals that are received at homes within the country. The tax liability, and eligibility to credit, cannot, however, be a legacy of such reality except when the broadcaster in Singapore has an existence in the statutory framework for regulation of broadcasting industry; it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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.' 18. To be meaningful and relevant, the CENVAT credit scheme must address the issue of 'cascading effects of taxation' at each stage of discharge of tax levy in the chain of trade. The scheme straddles two indirect tax levies - duty of excise and tax on services - with the specific taxable events described in section 3 of Central Excise Act, 1944 and section 66 of Finance Act, 1994. Such straddling of diverse levies is bound to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Credit Rules, 2004. There is no recognition of agency within, or as a substitute, for person liable to tax. Non-taxability of the service is not conceded by Revenue and the tax, not being payable by the overseas entity, is statutorily recoverable from the appellant-assessee which would not have devolved on them had they been merely a representative for discharging tax liability. 20. 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. 21. In the impugned service, while the transaction may be undertaken by an overseas entity, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 the claim of the appellants herein. The decision of Tribunal in Modiopon Ltd v. Commissioner of Central Excise, Ghaziabad [2009-TIOL-1161-CESTAT-MUM] is also not relevant. Our findings supra on the absence of deeming fiction in the taxable entry discards consideration of this submission on behalf of Revenue. 24. The catena of decisions, pertaining as they do to the nexus between the 'output service' and 'input services', cited by Learned Authorised Representative traverse to the stage after determination of eligible manufacturer or provider of service. The case of Revenue being the denial of such status to the appellant-assessee is not furthered by the principles laid down in Commissioner of Central Excise, Nagpur v. Manikgarh Cement [2010 (20) STR 456 (Bom)], Maruti Suzuki Ltd v. Commissioner of Central Excise, Delhi-III [2009 (240) ELT 641 (SC)], SBI Capital Markets Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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