2018 (8) TMI 554 - AT - Service Tax

CENVAT Credit - service received from MSO - cable operator service - appellant were under bonafide belief that since MSO was brought into tax net, the MSO are supposed to pay the service tax and the appellant was not required to pay the service tax on the same service, and therefore, during the period April 2005 to August 2006 they have not discharged the service tax - Held that - If the appellant is entitled to the Cenvat Credit accordingly the demand of Service Tax should stand reduced to that extent. As regard entertainment tax, there is a finding of the adjudicating authority that though they made a submission but no evidence was adduced in this regard. The Ld. Counsel has invited our attention to Chartered Accountant Certificate by which it appears that they have paid the entertainment tax - If it is found correct, the gross value should stand reduced to the value of entertainment tax and the Service Tax demand should be computed accordingly. The appeal by way of remand to the adjudicating authority for passing a fresh order.

Summary

Issues:
1. Applicability of service tax on cable operator services.
2. Entitlement to Cenvat Credit and deduction of entertainment tax from gross value.
3. Imposition of penalty under Section 80 of the Finance Act, 1994.

Analysis:
1. The appellant, engaged in providing cable operator services, had not paid service tax from April 2005 to August 2006 under the belief that since the Multi System Operator (MSO) was taxed, they were not required to pay. The demand of service tax was confirmed along with interest and penalty, which was partially upheld by the Commissioner (Appeals). The appellant contested the demand, acknowledging the tax liability but claiming entitlement to Cenvat Credit for service tax paid by the MSO.

2. The appellant argued for a reduction in the demand by the amount of Cenvat Credit and the service tax attributed to entertainment tax paid to the Government of Gujarat. The Revenue reiterated the findings of the impugned order and relied on a previous Tribunal judgment. The Tribunal found no dispute on the levy of service tax but agreed with the appellant's submission on Cenvat Credit entitlement. Regarding entertainment tax, the Tribunal noted the lack of evidence in the record and directed a reevaluation by the adjudicating authority based on new evidence presented, such as a Chartered Accountant Certificate.

3. The Tribunal set aside the impugned order, allowing the appeal by remanding the case to the adjudicating authority for a fresh decision considering the observations made. It was emphasized that all issues except the levy of service tax were to be reconsidered, as the appellant had not provided sufficient documentation to support their claims of Cenvat Credit and entertainment tax deduction. The Tribunal highlighted the need for a thorough review of the entire matter to ensure a fair and accurate determination.

Conclusion:
The judgment by the Appellate Tribunal CESTAT AHMEDABAD addressed the issues of service tax liability for cable operator services, entitlement to Cenvat Credit, and deduction of entertainment tax from the gross value. The Tribunal directed a reevaluation by the adjudicating authority based on new evidence presented, emphasizing the importance of proper documentation and thorough consideration of all aspects before reaching a decision.