2019 (5) TMI 1809 - AT - Service Tax

CENVAT Credit - receipt of input services, under common invoice, wherein service is also provided to other offices of the appellant which are separately registered - Revenue Neutrality - HELD THAT - Admittedly the appellant company is one entity which is running radio stations at four places and providing output services being sale of time slot, etc. on which they are paying output service tax. The invoices for input services are not disputed by the Revenue and it is also admitted that appellant had paid to the service provider on the common bills for more than one centre of the appellant, along with the service tax - The Court below has observed in the impugned order, that had the appellant taken registration as an ISD distributor, the credit taken for the other centre, at the Jaipur office, service tax would not be attracted. Admittedly, for procedural deficiency, it has been held in several cases that the substantial benefit of the Cenvat credit provision, should not be denied. Revenue Neutrality - HELD THAT - The situation is wholly Revenue neutral as all the four centres had paid service tax, also in cash and the Cenvat credit could have been distributed and thus availed by the other centres, and hence no gain. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Cenvat credit for receipt of input services under common invoice, procedural irregularity in availing Cenvat credit, demand of service tax, interest, and penalty under Section 73(1) and Section 78 of the Act, appeal against Order-in-Original and Order-in-Appeal, revenue neutrality in availing Cenvat credit, comparison with a similar case.

Analysis:

1. Cenvat Credit for Input Services:
The issue in these appeals revolved around the appellant's availing of Cenvat credit for input services under common invoices. The appellant, a private limited company engaged in print media and running FM Radio Stations, faced objections during a departmental audit for wrongly availing Cenvat credit without receiving input services. The audit team raised concerns about service tax charged on services availed by other branches of the appellant, separately registered as output service providers. The appellant had four FM Radio stations located at different places, each with separate service tax registrations. However, vendors provided services to all stations and issued common bills to the Jaipur office of the appellant. The appellant changed its practice post-audit to avail Cenvat credit only at the office mentioned in the invoices.

2. Procedural Irregularity and Revenue Neutrality:
The appellant's contention was that they received input services at all broadcasting centers, paid service charges including service tax, and took Cenvat credit, leading to a procedural irregularity. The appellant argued that had they centralized registration or registered as an Input Service Distributor (ISD) for the Jaipur office, there would have been no issue in availing Cenvat credit. Comparisons were drawn with a similar case before the Hon'ble Gujarat High Court, emphasizing revenue neutrality in availing Cenvat credit. The High Court's ruling highlighted that procedural irregularities could be curable if records were maintained and the situation was revenue-neutral, as in the appellant's case.

3. Demand of Service Tax and Penalty:
The proceedings culminated in a show cause notice demanding service tax, interest, and penalty under Section 73(1) and Section 78 of the Act. The appellant contested the notices, leading to separate Order-in-Original and Order-in-Appeal confirming the demands and imposing penalties. The appellant, aggrieved by these decisions, appealed before the Tribunal, arguing for the allowance of the appeal based on the revenue neutrality of the situation and procedural irregularity in availing Cenvat credit.

4. Tribunal's Decision:
After considering the contentions from both sides, the Tribunal found that the appellant, as one entity running radio stations at multiple locations, had paid service tax on common bills for input services. The Tribunal noted that had the appellant registered as an ISD distributor, the procedural deficiency would not attract service tax. Emphasizing that the situation was revenue-neutral as all centers had paid service tax, the Tribunal allowed the appeals, setting aside the impugned orders. The appellant was entitled to consequential benefits as per the law.

In conclusion, the Tribunal's decision favored the appellant, highlighting the importance of maintaining revenue neutrality in availing Cenvat credit and addressing procedural irregularities to ensure compliance with the law.