2018 (9) TMI 41 - AT - Service Tax

Liability of Service Tax - Programme Producer s Service - appellant hired the services of certain nonresident service providers namely M/s IMG and M/s Hawkeye for producing the live feed of the cricket matches being played in India to be telecasted on various TV Channels, against payment of commercial consideration for the IPL 2008, IPL 2009 IPL 2010 - services were being provided by the nonresident service provider and hence service recipient - Revenue Neutrality. Held that - There is no dispute about the fact the services provided by the nonresident service providers namely M/s IMG and M/s Hawkeye for producing the live feed of the cricket matches being played in India for the appellants have been held to be classifiable as Programme producer s Service and hence liable to service tax under the said category - the service tax in respect of this service was due from the Appellant on reverse charge basis and was to be paid by them on the due date as prescribed. Revenue Neutrality - Held that - The case cannot be revenue neutral in view of the fact that in this case because service tax is being demanded from the Appellant only for the reason that the service provider is nonresident, in case service provider was located in India, service tax would have been paid by him in respect of the present transactions. Manner of payment of the tax would not change the nature of levy and in any case if the argument of revenue neutrality is accepted as permissible defense in the present case entire scheme of payment of taxes on reverse charge basis will become otiose and no business liable to pay service tax would be required to pay service tax in respect of services received by them from nonresident service providers, for the reason that the tax so paid will be available as credit to them. Penalty u/s 76 - delay in payment of service tax from the due date - Held that - Various authorities as follows have upheld imposition of penalty under section 76 in case of delay in payment of service tax from the due date - reliance placed in the case of COMMISSIONER OF C. EX. CUSTOMS VERSUS SJ. MEHTA CO. 2010 (10) TMI 135 - GUJARAT HIGH COURT - penalty upheld. Appeal dismissed - decided against appellant.

Issues Involved:
1. Classification of services received by the appellant.
2. Confirmation of service tax demand and its appropriateness.
3. Recovery of interest on the service tax.
4. Imposition of penalties under various sections of the Finance Act, 1994.
5. Applicability of revenue neutrality.
6. Invocation of Section 80 for waiver of penalties.

Issue-wise Detailed Analysis:

1. Classification of Services:
The Commissioner classified the services received by the appellant from non-resident service providers, M/s IMG Media Ltd and M/s Hawkeye Innovations, under the category of "Programme Producer’s Service" as per sections 65(105)(zzu), 65(86a), and 65(86b) of the Finance Act, 1994. This classification was upheld by the tribunal, referring to the previous case of Board of Cricket Control for India Vs Commissioner, which was affirmed by the Apex Court.

2. Confirmation of Service Tax Demand:
The Commissioner confirmed the demand of service tax amounting to ?1,59,92,743 under Section 73(2) of the Finance Act, 1994, and ordered the appellant to pay the amount in terms of Section 66A read with Section 68. The tribunal upheld this confirmation, noting that the service tax liability was due on a reverse charge basis since the services were provided by non-resident entities.

3. Recovery of Interest:
The Commissioner ordered the recovery of interest on the service tax amount under Section 75. The tribunal upheld this decision, emphasizing the appellant's obligation to pay interest due to the delay in service tax payment.

4. Imposition of Penalties:
The Commissioner imposed penalties under various sections:
- ?93,58,512 under Section 76 for delay in payment.
- ?5,000 under Section 77 for non-compliance.
- No penalty under Section 78 was imposed.
The tribunal upheld these penalties, citing various precedents that support the imposition of penalties for non-compliance and delay in payment of service tax.

5. Applicability of Revenue Neutrality:
The appellant argued that the demand was revenue neutral as the service tax paid on input services would be available as CENVAT credit for discharging tax liability on output services. The tribunal rejected this argument, distinguishing the present case from others cited by the appellant. It noted that the service tax in question was payable on a reverse charge basis, and accepting the revenue neutrality argument would undermine the reverse charge mechanism.

6. Invocation of Section 80 for Waiver of Penalties:
The appellant contended that the penalties should be waived under Section 80, as there was no gain in non-payment of service tax. The tribunal found no reasonable cause to invoke Section 80, noting that penalties under Section 76 are mandatory for delay in payment, and the appellant did not provide sufficient justification for the waiver.

Conclusion:
The tribunal upheld the Commissioner’s order in its entirety, confirming the classification of services, the demand and recovery of service tax, the imposition of interest, and the penalties. The appeal was dismissed as devoid of merits.

← Previous Next →