2013 (8) TMI 338 - AT - Service Tax

Broadcasting Service CENVAT credit input services - service tax paid towards telecast fee - Assesse was engaged in producing programmes/tele-serials and obtained service tax registration under TV or Radio Programme Production and Sale of Space for Advertisement services - Assesse availed service tax paid on telecast fees as Cenvat Credit as input service credit Held that - The chain was clearly established and the assesse was entitled for cenvat credit on service tax paid towards telecast fee. Waiver of Pre-deposit - ABB Ltd. Vs. Commissioner of Central Excise 2009 (5) TMI 48 - CESTAT, BANGALORE - the expression activities relating to business had a wide import and includes both essential and auxiliary activities of business - the definition of the input service had to be interpreted in the light of the requirements of the business and it cannot be read restrictively - unless the serials were broadcast the assesse was not eligible for free commercial time and the payment of service tax under the category of Sale of space or time for advertisement - assesse had made out a good prima facie case on merit and there was no serious contest from the department for the grant of waiver of pre-deposit Thus the waiver of pre-deposit and stay was allowed till the disposal Decided in favor of assesse

Summary

Issues:
Cenvat credit denial on telecast fees for the period October 2007 to September 2010.

Analysis:
The applicant, engaged in producing TV programmes, obtained service tax registration under 'TV or Radio Programme Production and Sale of Space for Advertisement' services. The applicant booked a 30-minute slot from TV channels for telecasting their serials and paid telecast fees with service tax. The TV channels allowed the applicant to use 240 seconds for commercial advertisements on Free Commercial Time (FCT). The applicant sold the FCT to advertising agencies, paying service tax under 'Sale of Space or Time for Advertisement' and utilized Cenvat credit for this purpose.

The Cenvat credit of Rs. 4,68,55,299 was denied as the telecast fees on which service tax was paid were considered unrelated to 'Sale of Space or Time for Advertisement'. The appellant argued that their case was similar to a previous Tribunal stay order where unconditional stay was granted. The respondent contended that the applicability of Cenvat Credit Rules was not considered in the previous case, and since the appellant's serials were exempted, they were not eligible for credit on input services. The respondent highlighted that the show cause notice did not invoke specific rules.

The Tribunal found that the issue was similar to the appellant's previous case where the appellant was entitled to Cenvat credit on service tax paid towards telecast fee for broadcasting serials and selling FCT to advertising agencies. The Tribunal referred to a previous case involving ABB Ltd. where it was held that activities relating to business include essential and auxiliary activities, and the interpretation of input service should align with business requirements. The Tribunal concluded that the appellant was entitled to Cenvat credit on service tax paid towards telecast fee.

The Tribunal granted waiver of pre-deposit and stayed recovery proceedings during the appeal, considering the appellant's strong prima facie case on merit and lack of serious opposition from the department. The Tribunal linked the appeal with a previous case for reference.

In summary, the Tribunal ruled in favor of the appellant, allowing Cenvat credit on service tax paid towards telecast fees for broadcasting serials and selling FCT for advertisements, based on the precedent set in the appellant's previous case and the interpretation of input service in alignment with business requirements. The Tribunal granted waiver of pre-deposit and stayed recovery proceedings during the appeal.