2021 (4) TMI 516 - AT - Service Tax

CENVAT Credit - input services - advertising service availed from the print media to foster the business - appellant is a coaching institute - HELD THAT - The definition of input services as amended with effect from 01.07.2012, make it clear that inclusive part of the definition specifically include among various activities, the service provided by advertising agency. It is sufficient to hold that advertisement service is an input service. Also it is apparent that the appellant has availed the same to foster its business i.e. in relation to its business. Hence the same is definitely an input service for the appellant for which appellant can claim credit of service tax paid on such service. Hence, Cenvat Credit cannot be at all denied. While disallowing this Cenvat Credit, Commissioner (Appeals) has relied on Master circular dated 23.08.2007, the said adjudicating authority has miserably failed to take into consideration the subsequent amendment to the definition of the input service. Any provision prior to that amendment could not therefore, be taken into consideration. The findings of Commissioner (Appeals) based on unamended provision of input service are, therefore, held unreasonable and illegal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant coaching institute could avail advertising services from print media as input services and claim cenvat credit on such services.

Analysis:
The case involves a dispute regarding the appellant coaching institute availing advertising services from a company and claiming cenvat credit on the invoices issued by the advertising company. The Department contended that the appellant was not eligible to claim cenvat credit on these services as they were related to printing media and not directly linked to the appellant's business. The Department issued a show cause notice proposing the recovery of the credit availed by the appellant. The Commissioner (Appeals) upheld the disallowance of the cenvat credit, leading to the appeal before the Tribunal.

The appellant argued that the advertising agency services were essential for promoting the appellant's business and were eligible for cenvat credit. They highlighted that the advertising agency had correctly invoiced the services, including service tax separately. The appellant also referred to circulars clarifying the tax liability on commission earned by service agents in advertising services. The appellant cited precedents where cenvat credit for advertising services was allowed to coaching institutes, emphasizing that the issue was no longer res integra.

The Department, on the other hand, relied on a Master Circular from 2007 to support the disallowance of cenvat credit. They argued that the findings in the impugned order were sound and requested the dismissal of the appeal.

After hearing both parties, the Tribunal delved into the definition of input services under the Cenvat Credit Rules 2004. The Tribunal noted that the amended definition included advertising services as input services used in relation to business activities. The Tribunal emphasized that the appellant had availed the advertising services to enhance its business, making it a legitimate input service for claiming cenvat credit. The Tribunal criticized the Commissioner (Appeals) for relying on an outdated provision and failing to consider the amended definition of input services. Consequently, the Tribunal set aside the findings of the Commissioner (Appeals) and allowed the appeal in favor of the appellant.