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2019 (5) TMI 58 - AT - Service TaxExtended period of limitation - Cable operator service - multi system operator -N/N. 25/2004-ST dated 10th September 2004 - HELD THAT - We do not consider it proper that the issue of classification, once settled by the Tribunal, should be reopened in the absence of a contrary order from a judicial authority. Hence, for all practical purposes, the appellant is a multi system operator and such operators were brought within the ambit of taxation only from 10th September 2004. The notice leading to the impugned proceedings has erred in seeking to recover tax beyond the normal period of limitation. CENVAT Credit - HELD THAT - It is not in dispute that the tax burden of input service had been discharged by the appellant and, in the absence of any specific bar, the entitlement for availment of CENVAT credit of such tax paid by the appellant cannot be denied. This would, doubtlessly, alter the quantum of demand on, as well as the complexion of the proceedings against, the appellant. In particular, the scope for applicability of section 73(3) of Finance Act, 1994 would need to be ascertained in the light of lack of ingredients for the invoking of the extended period of limitation. Matter remanded back to the original authority for a fresh determination of the final tax liability.
Issues:
1. Demand confirmation for cable operator service under section 65(105)(zs) of Finance Act, 1994. 2. Ignored submission leading to demand quantification. 3. Tax liability discharge foreclosing proviso in section 73 of Finance Act, 1994. 4. Classification as cable operator or multi-system operator. 5. Reopening of settled classification issue. 6. Entitlement to CENVAT credit and its impact on tax liability. 7. Validity of the impugned order and remand for fresh determination. Analysis: Issue 1: The appeal challenged the demand confirmation of ?2,25,71,987 on the appellant for providing cable operator service, taxable under section 65(105)(zs) of Finance Act, 1994, for the period from May 2004 to June 2006, along with penalties under sections 76, 77, and 78 of the Act. Issue 2: The appellant contended that a limited aspect submitted before the original authority, which could have restricted the period of dispute and demand quantification, was ignored. The argument was based on the timeline of tax incorporation for cable operators and multi-system operators, emphasizing that services rendered prior to 10th September 2004 should not have been included in the demand calculation. Issue 3: The appellant argued that discharging the tax liability precluded any proceedings under the proviso in section 73 of the Finance Act, 1994. Reference was made to the Nizam Sugar Factory case, highlighting the decision's relevance to the current scenario. Issue 4: The classification of the appellant as a cable operator or multi-system operator was debated, with the Authorized Representative pointing out a joint venture with a program distributor as evidence. However, the Tribunal's previous order determining the appellant as a multi-system operator was upheld. Issue 5: The Tribunal emphasized that the settled classification issue should not be reopened without a contrary judicial order. It was established that the appellant was a multi-system operator, and the impugned proceedings erred in seeking tax recovery beyond the normal limitation period. Issue 6: Regarding CENVAT credit entitlement, the appellant's receipt of taxable services was acknowledged, but the eligibility for credit was disputed. The Tribunal found that the appellant's discharge of tax burden for input services warranted the availment of CENVAT credit, impacting the quantum of demand and the proceedings against the appellant. Issue 7: Considering the circumstances, the Tribunal deemed the impugned order unsustainable, setting it aside, and remanding the matter for a fresh determination of final tax liability, evaluation of CENVAT credit denial reasons, quantification of differential tax, and reconsideration of penalty imposition under section 76 of the Finance Act, 1994. Penalties under section 78 of the Act were set aside. This detailed analysis of the judgment provides insights into the legal complexities and arguments presented, leading to the Tribunal's decision to remand the case for a fresh determination.
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