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2021 (7) TMI 402 - Commissioner - Service Tax


Issues Involved:
1. Taxability of services provided by the appellant company.
2. Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).
3. Entitlement to CENVAT credit.
4. Invocation of extended period of limitation.
5. Imposition of penalties under Section 78 and Section 78A of the Finance Act, 1994.

Detailed Analysis:

1. Taxability of Services Provided by the Appellant Company:
The appellant company, engaged in TV broadcasting, advertising, and operation of studios, provided taxable services such as sale of time for advertisements and supply of content for YouTube. It was alleged that they collected service tax but failed to remit it to the government from October 2014 to June 2017. The appellant company did not dispute the taxability or the quantification of the service tax liability.

2. Eligibility Under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS):
The appellant company filed an application under SVLDRS on 31.12.2019, declaring their total service tax liability. However, their premises were searched by DGGI on 20.12.2019, which was after the relevant date of 30.06.2019. As per Section 125(1)(f)(i) of the Finance (No 2) Act, 2019, a person cannot make a voluntary disclosure after being subjected to any enquiry or investigation. The designated committee issued Form SVLDRS-3 on 09.01.2020, but the appellant failed to pay the dues within 30 days, leading to the non-issuance of Form SVLDRS-4. The original authority took up the show cause notice for adjudication and found no infirmity in these findings.

3. Entitlement to CENVAT Credit:
The appellant company contended that they should be allowed CENVAT credit claimed in their books of accounts. The original authority rejected this claim on the ground that ST-3 returns were not filed. However, the appellate authority found merit in the appellant's contention, citing various case laws, including Target Corporation India Private Limited, which held that non-disclosure of CENVAT credit in ST-3 returns does not disentitle the assessee from claiming it. The matter was remanded to the original authority to allow CENVAT credit subject to the conditions laid in the Cenvat Credit Rules, 2004.

4. Invocation of Extended Period of Limitation:
The appellant company failed to pay the collected service tax and did not file ST-3 returns for the impugned period. The original authority invoked the proviso to Section 73(1) of the Finance Act, 1994, for recovery of service tax and imposing penalties. The appellate authority upheld this decision, noting that the appellant's claim of financial crisis was not acceptable since they had collected the service tax from their customers.

5. Imposition of Penalties Under Section 78 and Section 78A of the Finance Act, 1994:
Penalties were imposed on the appellant company and its directors under Section 78 and Section 78A for failure to remit the collected service tax. The appellate authority found that the directors were in charge of the company during the impugned period and knowingly retained the collected service tax, indicating an intent to evade payment. The appeals by the directors contesting the penalties were dismissed.

Conclusion:
The appeal by the appellant company was remanded to the original authority to re-compute the tax liability after considering the CENVAT credit. The appeals by the directors contesting the penalties were dismissed.

 

 

 

 

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