2021 (3) TMI 358 - AT - Service Tax

Scope of SCN - advertising agency service - classification of service at the end of recipient of service - CENVAT Credit - HELD THAT - The show cause notice is wholly misconceived as the Department is trying to classify the service at the end of the recipient of service. CENVAT Credit - input service or not - advertising agency service - HELD THAT - Admittedly appellant have received the input service and utilised in providing the output service. Further, in terms of Rule 2(l), it is found that the appellant is entitled to take cenvat credit of any input service which is received, by any name called, which are utilised in providing output service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of cenvat credit on services provided by advertising agencies.
2. Denial of cenvat credit by the Department.
3. Adjudication by the Assistant Commissioner, CGST, Kota.
4. Appeal before the Commissioner (Appeals), Jodhpur.
5. Applicability of Rule 2(l) of the Cenvat Credit Rules.
6. Entitlement to cenvat credit for input services used in providing output services.

Analysis:

1. The appellant, engaged in commercial coaching services, availed cenvat credit on input services, including those provided by advertising agencies for advertisement services in various media. The Department sought details of cenvat credit availed, leading to a show cause notice proposing to deny cenvat credit amounting to a specific sum, alleging wrongful availment of service tax paid on commission amounts invoiced by advertising agencies.

2. The show cause notice was adjudicated by the Assistant Commissioner, CGST, Kota, who confirmed the demand, imposed interest, and penalty under the Finance Act. The appellant, aggrieved by this order, filed an appeal before the Commissioner (Appeals), Jodhpur, who dismissed the appeal citing a circular stating that advertising agency services are not classifiable under taxable services, thus not qualifying as input services for cenvat credit.

3. The appellant contended that the services provided by advertising agencies were indeed input services as per Rule 2(l) of the Cenvat Credit Rules, and the appellant had paid the service tax on the commission amounts, making them eligible for cenvat credit. The appellant argued against the demand invoking an extended period of limitation and cited a previous Tribunal decision supporting their entitlement to cenvat credit.

4. The Tribunal analyzed the contentions and found the show cause notice misconceived as it attempted to classify services based on the recipient rather than the nature of the service. It acknowledged that the appellant had received and utilized the input services in providing output services, meeting the criteria under Rule 2(l) for cenvat credit eligibility. Consequently, the Tribunal set aside the impugned order, allowing the appellant to avail of the cenvat credit and consequential benefits.

This detailed analysis of the judgment highlights the issues, arguments presented, and the Tribunal's decision, providing a comprehensive understanding of the legal aspects involved in the case.