2014 (6) TMI 695 - AT - Service Tax

Demand of service tax - Classification - Business Auxiliary Service or Broadcasting Agency - canvassing advertisements to be broadcast on Vijay TV. - export of services - use outside India versus performance outside India - Rule 3 (1) (iii) of Export of Service Rules, 2005 - recipient of Service is located outside India - Held that - activity of selling time slot also will get classified under services of Broadcasting Agency. - there is strong prima facie case in favour of appellant on the first argument. Regarding export - Held that - concept of Export of Service has evolved over a period of time and this clause got omitted from 27-02-2010. There are large numbers of cases pending on this issue and there is also a difference of opinion between two Members of the Tribunal pending on this issue in the case of Microsoft Corporation as reported at 2011 (11) TMI 60 - CESTAT, NEW DELHI which is yet to be resolved. Prima facie, it would appear that use outside India cannot be equated with performed outside India because the expression performed outside India is already used in the case of services at Rule 3 (1) (ii) and when the Legislature is aware of one expression and if it is using a different expression in the same rules, the new expression has to be understood to be having a different meaning from what is already used. In view of this argument, we see prima facie case in the matter of claim of export of service also - Stay granted.

Summary

Issues:
Dispute of tax demanded under the category 'Business Auxiliary Service' and eligibility of CENVAT credit for medical insurance.

Analysis:

Issue 1: Dispute of tax under 'Business Auxiliary Service'
The appellant, an advertisement canvasser for a TV channel owned by a foreign company, was alleged to have not paid service tax on the commission received. The Revenue contended that the service should be categorized under Business Auxiliary Service, leading to a demand for tax payment. The appellant argued that they had already paid tax under the category of 'Broadcasting Agency' and should not be liable for further tax. They relied on a Tribunal decision stating no double taxation for commission agents. Additionally, they claimed exemption under Export of Service Rules, as the service was used for business development outside India. The Revenue opposed, emphasizing the difference between broadcasting and canvassing activities, citing a previous case where both were treated separately. They questioned if the consideration was received in foreign exchange. The Tribunal found merit in the appellant's argument, considering the definition of broadcasting agency and the contentious issue of service export under the rules.

Issue 2: Eligibility of CENVAT credit for medical insurance
Regarding the ineligible CENVAT credit for medical insurance, the appellant argued that pre-2011 decisions supported the credit eligibility. The Revenue did not provide substantial opposition. The Tribunal, after considering the arguments, granted a waiver of predeposit for the tax dues and stayed its collection during the appeal process. The decision was based on the strong prima facie case in favor of the appellant on both issues, highlighting the evolving interpretation of Export of Service Rules and the pending disputes in similar cases.

In conclusion, the Tribunal granted relief to the appellant by waiving the predeposit and staying tax collection, acknowledging the complexities involved in determining tax liabilities under different service categories and export rules.