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ST – Services provided as Cable operator – gross value should stand reduced by value of entertainment tax paid: CESTAT

2019-TIOL-2455-CESTAT-AHM

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, AHMEDABAD

Appeal No. ST/388/2009-DB

Arising out of OIA-245/2009/AHD-III/CE/KCG/COMMR-A, Dated: 20.07.2009
Passed by Commissioner of Central Excise, Customs and Service Tax-Ahmedabad-III

Date of Hearing: 22.06.2018
Date of Decision: 22.06.2018

M/s HARSH COMMUNICATION

Vs

COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX
AHMEDABAD-III

Appellant Rep by: Shri Nirav Shah, Adv.
Respondent Rep by: Shri G Jha AR

CORAM: Ramesh Nair, Member (J)
Raju, Member (T)

ST – The assessee is engaged in providing service as cable operator – They were paying service tax from 2002 to 2005 thereafter Multi System Operator (MSO) was brought into tax net – Therefore, they were under bonafide belief that since MSO was brought into tax net, the MSO are supposed to pay the service tax and assessee was not required to pay service tax on the same service, and therefore they have not discharged the service tax – There is no dispute regarding the levy of service tax as submitted by assessee, however, he strongly argued that the assessee was entitled for Cevnat Credit on service received from MSO, therefore, to that extent the demand should be reduced – If the assessee is entitled to Cenvat Credit accordingly the demand of Service Tax should stand reduced to that extent – As regard entertainment tax, there is a finding of adjudicating authority that though they made a submission but no evidence was adduced in this regard – Assessee has invited attention to Chartered Accountant Certificate by which it appears that they have paid the entertainment tax – If it is found correct, the gross value should stand reduced to the value of entertainment tax and the Service Tax demand should be computed accordingly – Both these aspects were not dealt with by both the lower authorities – It is also a fact that the assessee have not produced any documents in support of their claim of Cenvat Credit as well as entertainment tax before the original authority – Therefore, the matter is remanded to the adjudicating authority: CESTAT

Matter remanded

Case law cited:

UCN Cable Network Pvt. Ltd. vs Commr. of C.E. Cus – 2016-TIOL-2529-CESTAT-MUM… Para 3

FINAL ORDER NO. A/11308/2018

Per: Ramesh Nair:

The appellant are engaged in providing service as cable operator. They were paying service tax from 2002 to 2005 thereafter Multi System Operator (MSO) was brought into tax net. Therefore, they were under bonafide belief that since MSO was brought into tax net, the MSO are supposed to pay the service tax and the appellant was not required to pay the service tax on the same service, and therefore, during the period April 2005 to August 2006 they have not discharged the service tax. Accordingly the SCN was issued which was culminated into adjudication order. Demand of service tax was confirmed along with interest and penalty, which was challenged by the appellant before the Commissioner (Appeals) who granted the relief of cum tax value, however, the demand in principal was upheld. Therefore, the appellant filed the present appeal.

2. Sh. Nirav Shah, Ld. Counsel appearing on behalf of the appellant fairly concedes that the appellant is not contesting the demand of service tax on merit, however, he submits that the appellant are received the service from MSO under the cover of invoice on which the service tax was paid by MSO. They are entitled for the Cenvat Credit of such service tax paid by the MSO. He also submits that they are paying entertainment tax to the Government of Gujarat which is required to be deducted from the gross value of the service. Both the submissions were made before the original authority as well as before the Ld. Commissioner (Appeals), but no finding was given. He submits that the demand of service tax confirmed by the original authority should stand reduced to the extent of Cenvat Credit and service tax attributed to the entertainment tax. He also submits that since it is a case of Revenue neutrality, after adjustment of the Cenvat Credit, there was no malafide intention accordingly, penalty is not imposable in terms of Section 80 of the Finance Act, 1994.

3. Sh. G. Jha, Ld. Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He also relied upon the judgment of this Tribunal in case of UCN Cable Network Pvt. Ltd. vs Commr. of C.E. Cus. Nagpur 2016 (45) STR 565 (Tri-Mum). = 2016-TIOL-2529-CESTAT-MUM

4. On careful consideration of the submission made by both the sides and perusal of records, we find that there is no dispute regarding the levy of the service tax as submitted by the Ld. Counsel, however, he strongly argued that the appellant was entitled for the Cevnat Credit on the service received from MSO, therefore, to that extent the demand should be reduced. We agree with the submission of the Ld. Counsel that if the appellant is entitled to the Cenvat Credit accordingly the demand of Service Tax should stand reduced to that extent. As regard entertainment tax, there is a finding of the adjudicating authority that though they made a submission but no evidence was adduced in this regard. Now the Ld. Counsel has invited our attention to Chartered Accountant Certificate by which it appears that they have paid the entertainment tax. If it is found correct, the gross value should stand reduced to the value of entertainment tax and the Service Tax demand should be computed accordingly. We observe that both these aspects were not dealt with by both the lower authorities. It is also a fact that the appellant have not produced any documents in support of their claim of Cenvat Credit as well as entertainment tax before the original authority. Therefore, the entire matter needs to be reconsidered. We, therefore, set aside the impugned order and allow the appeal by way of remand to the adjudicating authority for passing a fresh order after considering our above observation. All the issues except levy of service tax are kept open.

(Dictated and pronounced in the open court)

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