2014 (8) TMI 379 - AT - Service Tax

Waiver of pre deposit - Sub letting of services - Invoices issued in name of company whom applicant alloted work - Held that - Court have gone through the copies of sample invoices produced by the applicant, issued by Times Global Broadcasting Co. Ltd. In the invoices it is specifically mentioned that the advertiser is Indian Oil Corporation Ltd. (applicant) - advertising agencies while discharging the service tax liability are not to take into consideration the expenses in respect of the advertisement in the electronic media - as the invoices on the strength of which credit has been availed are in the name of the applicant, therefore prima facie the applicant has made out a case for waiver of pre-deposit of the dues. The pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal - stay granted.

Summary

Issues:
Waiver of pre-deposit of duty, interest, and penalty due to denial of credit for service tax paid on broadcasting services provided by a company engaged by advertising agencies.

Analysis:
The applicant, a Public Sector Undertaking manufacturing petroleum products, sought waiver of pre-deposit of duty amounting to &8377; 3,62,24,989/-, interest, and penalty. The issue arose when the Revenue denied the applicant credit for service tax paid on broadcasting services provided by a company engaged by advertising agencies. The broadcasting company paid service tax for the taxable service provided and recovered the amounts from the advertising agencies, who, in turn, invoiced the applicant. The Revenue contended that since the broadcasting company was engaged by the advertising agencies, the applicant did not directly engage the broadcasters for advertisement in electronic media, hence credit was denied.

The adjudicating authority confirmed the demand and imposed a penalty, leading to the applicant's appeal. The applicant argued that the broadcasting company specifically mentioned the applicant as the advertiser in the invoices, supported by a Board Circular clarifying the liability of advertising agencies for service tax on advertisement preparation. The applicant claimed that since the invoices identified them as the advertiser, credit should not be denied. On the other hand, the Revenue maintained that the broadcasters were engaged by the advertising agencies, making the credit available to the advertiser engaged by the applicant, not the applicant directly.

Upon reviewing sample invoices issued by the broadcasting company, which specifically named the applicant as the advertiser, the Tribunal found merit in the applicant's argument. Citing the relevant portion of the Board circular, the Tribunal noted that the advertising agencies were not required to consider expenses for advertisement in electronic media when discharging service tax liability. Consequently, the Tribunal concluded that the applicant had established a prima facie case for waiver of pre-deposit, as the invoices indicated the applicant as the advertiser. As a result, the Tribunal granted the waiver, stayed the recovery of dues during the appeal's pendency, and allowed the stay petition.

In summary, the Tribunal's judgment revolved around the waiver of pre-deposit of duty, interest, and penalty concerning the denial of credit for service tax paid on broadcasting services. The decision hinged on the interpretation of invoices identifying the applicant as the advertiser, supported by the Board Circular's guidelines on service tax liability for advertising agencies. Ultimately, the Tribunal sided with the applicant, granting the waiver and staying the recovery of dues pending the appeal process.