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2019 (2) TMI 1385 - AT - Service TaxSSI Exemption - branded service or not - N/N. 6/2005-ST dated 1.03.2005 - Cable operator service - appellants were not paying service tax on the ground that they are not liable to pay service tax and did not get some registered with the department - Extended period of limitation - best judgement under Section 72 of the Finance Act, 1994 - service tax on the gross value of the services or otherwise - CENVAT credit of service tax paid by the MSO. Whether the appellants are providing branded service or not? Consequently they are entitled for exemption under Notification No. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012? - Held that - In this case, the appellants are cable operator and providing cable services to the subscribers on the basis of signals received from the MSO. The subscriber has not asked for any brand for providing the said services. In fact, the appellant is also not providing any branded service as MSO is supplying signal to the appellants which has been transmitted to the subscribers, in that circumstances, there is no relation of brand name to the ultimate customers - the appellants are not providing any branded service to the subscribers therefore, the appellants are entitled to avail the benefit of exemption Notification No. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012. Whether the extended period of limitation is invokable or not? - Held that - The appellants were under bonafide belief that they are not liable to pay service tax as they are entitled for benefit of exemption under notification no. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012, therefore, they did not pay service tax. Moreover, there was confusion in the industry during the relevant period whether the appellants are liable to pay service tax or the MSO liable to pay service tax on their activity, in that circumstances, the benefit of doubt goes in favour of the appellants - the extended period is not invokable - penalty also not imposable. Whether the best judgement under Section 72 of the Finance Act, 1994 has been assessed correctly or not? - Held that - In this case, it is a fact on record, the appellants were not given time of supply the data of their activity and assessment has been done on the basis of the data supplied by the MSO which is not correct, therefore, we hold that the assessment under Section 72 of the Finance Act, 1994 is not correct - the impugned demand is not sustainable, but the appellants are directed to provide the data for their activity within the period of limitation to the adjudicating authority within 30 days of the communication of this order and on the basis of the data supplied by the appellants, the correct service tax liability shall be determined by the adjudicating authority - matter needs examination. Whether the appellants are liable to pay service tax on the gross value of the services provided by them or not? - Held that - In terms of Section 67 of the Finance Act, 1994, the appellants are liable to pay service tax on the gross value of subscription received by them - Admittedly, in this case, the appellants have received subscriptions from the subscribers for providing the services, on the said amounts, the appellants are liable to pay service tax. Whether the appellants are entitled for cenvat credit of service tax paid by the MSO or not? - Held that - Out of the total amount received by the appellants, some amounts of total subscriptions, the appellants are remitting to the MSO on which the MSO is paying service tax, therefore, the signal provided by the MSO to the appellant is an input services for the appellants. Therefore, the service tax paid by the MSO is available as cenvat credit to the appellants - the appellants are entitled to avail cenvat credit of the service tax paid by the MSO. Appeals disposed off.
Issues Involved:
1. Whether the appellants are providing branded service or not, and consequently, whether they are entitled for exemption under Notification No. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012. 2. Whether the extended period of limitation is invokable or not. 3. Whether the best judgment under Section 72 of the Finance Act, 1994 has been assessed correctly or not. 4. Whether the appellants are liable to pay service tax on the gross value of the services provided by them or not. 5. Whether the appellants are entitled for cenvat credit of service tax paid by the MSO or not. Issue-wise Detailed Analysis: 1. Whether the appellants are providing branded service or not, and consequently, whether they are entitled for exemption under Notification No. 6/2005-ST dated 01.03.2005 and Notification No. 33/2012-ST dated 20.06.2012: The appellants, as cable operators, provide cable services to subscribers using signals received from the MSO. The subscribers do not request any specific brand for the services, and the appellants do not provide branded services. The Supreme Court in RDB Industries clarified that markings required by law do not constitute a brand name. Similarly, in Maheshwari Industries, it was observed that a brand name must indicate a trade connection, which is not the case here. Thus, the appellants are not providing branded services and are entitled to the exemptions under the mentioned notifications. 2. Whether the extended period of limitation is invokable or not: The appellants had a bona fide belief that they were not liable to pay service tax due to the exemptions under Notification No. 6/2005-ST and Notification No. 33/2012-ST. There was also industry-wide confusion regarding the tax liability of local cable operators versus MSOs. The Tribunal in Trans Yamuna Communication Pvt. Ltd. recognized the possibility of bona fide belief and confusion in the industry. Therefore, the extended period of limitation is not invokable, and no penalties are imposable on the appellants. 3. Whether the best judgment under Section 72 of the Finance Act, 1994 has been assessed correctly or not: The assessment was based on data supplied by the MSO without giving the appellants time to provide their data. This is incorrect. The appellants should provide their data within 30 days of the order, and the adjudicating authority should reassess the service tax liability based on this data. Thus, the initial best judgment assessment is not sustainable. 4. Whether the appellants are liable to pay service tax on the gross value of the services provided by them or not: Under Section 67 of the Finance Act, 1994, the appellants are liable to pay service tax on the gross value of subscriptions received. The Supreme Court in Intercontinental Consultants and Technocrats Pvt. Ltd. affirmed that the gross amount charged for providing taxable services is the basis for service tax. Therefore, the appellants must pay service tax on the gross value of subscriptions received from subscribers. 5. Whether the appellants are entitled for cenvat credit of service tax paid by the MSO or not: The appellants remit a portion of the total subscriptions to the MSO, on which the MSO pays service tax. The signals provided by the MSO are input services for the appellants. Hence, the service tax paid by the MSO is available as cenvat credit to the appellants. The appellants are entitled to avail cenvat credit for the service tax paid by the MSO. Order: a) The appellants are entitled to exemptions under Notification No. 6/2005-ST and Notification No. 33/2012-ST. b) The extended period of limitation is not invokable, and no penalties are imposable. c) The appellants are liable to pay service tax on the gross value of services received and are entitled to cenvat credit for service tax paid to the MSO. d) The adjudicating authority shall reassess the demand within the limitation period based on data provided by the appellants within 30 days of the order. Conclusion: The appeals are disposed of with the above directions.
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