2018 (9) TMI 1136 - AT - Service Tax

CENVAT Credit - duty paying invoices - It was alleged that the invoices of OMS are not proper documents for taking credit - case of Revenue is that Since the CENVAT credit claim has become delinked, appellant is not entitled to avail CENVAT credit - Held that - Ld. Adv. has been at pains to demonstrate that there is no break-up in CENVAT credit chain right from the broadcaster upto Amurtanjan. We do not find any infirmity in the manner of passing of the Cenvat credit. In any case, OMS was merely acting as a conduit for transfer of the amount from the broadcaster to the appellant. The ratio of M/s. Zapak Digital Entertainment Ltd. 2016 (12) TMI 737 - CESTAT, MUMBAI , is applicable on all fours to the case on hand, where Reliance placed on the decision of the case of Marigold Coatings 2016 (5) TMI 10 - GUJARAT HIGH COURT , wherein it was held that duty credit cannot be taken on the strength of endorsed invoice. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Proper documentation for taking credit of service tax.
2. Validity of Cenvat credit chain.
3. Applicability of Tribunal's decision in M/s. Zapak Digital Entertainment Ltd. case.

Analysis:
1. The issue in this case revolves around the documentation required for availing credit of service tax. The appellant, M/s. Prakatana Pvt. Ltd., provided Advertising Services to M/s. Amurtanjan Ltd. through an agreement with M/s. Optimum Media Solutions (OMS). The department alleged that the invoices from OMS, on which the appellant claimed Cenvat credit, were not proper documents for credit availing. The department initiated proceedings to recover the service tax credit amounting to ?92,45,316 for the period Mar '07 to Mar '08. The adjudicating authority confirmed the demand, along with interest and penalty under section 78 of the Finance Act, 1994.

2. The appellant challenged the decision before the Appellate Tribunal CESTAT Chennai. During the hearing, the appellant's counsel submitted that there was no break in the Cenvat credit chain. He argued that the invoices from OMS clearly indicated the service tax paid by them and by the broadcaster, and the appellant discharged its service tax liability by adding their commission to the bill raised on Amurtanjan. The counsel relied on the Tribunal's decision in M/s. Zapak Digital Entertainment Ltd. case, stating that the facts were similar and supported the appellant's position.

3. On the other hand, the department's representative contended that the link in the Cenvat credit chain was broken as the appellant wrongly claimed credit of service tax paid by OMS and the broadcaster. The department argued that OMS only paid service tax on the commission earned by them, not on the total value of services provided. The department highlighted that the appellant's claim for Cenvat credit was delinked due to this discrepancy.

4. After hearing both sides and reviewing the records, the Tribunal found that there was no break in the Cenvat credit chain from the broadcaster to Amurtanjan. The Tribunal agreed with the appellant's counsel that OMS acted as a conduit for transferring funds from the broadcaster to the appellant. The Tribunal cited the case law on the Tribunal's decision in M/s. Zapak Digital Entertainment Ltd., emphasizing that the invoices clearly showed the appellant as the advertiser, and the agency acted as a conduit for payment. Therefore, the Tribunal held in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential benefits as per the law.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant legal principles and precedents.