Custom, Excise & Service Tax Tribunal
Jaipur Ipl Cricket Pvt. Ltd vs Commissioner Of Service Tax on 20 January, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.ST/277/09 (Arising out of Order-in-Original No.12/STC/BR/09-10 dated 01/10/2009 passed by Commissioner of Service Tax, Mumbai) For approval and signature: Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Jaipur IPL Cricket Pvt. Ltd., Appellant Vs. Commissioner of Service Tax, Respondent Mumbai Appearance:
Shri.Neerav Mainkar, Advocate for appellant Shri.S.V. Nair, Asst. Comm. (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical) Date of Hearing : 20/01/2015 Date of Decision : /01/2015 ORDER NO Per P.R.Chandrasekharan M/s Jaipur IPL Cricket Pvt. Ltd., Mumbai, the appellant herein, collected sponsorship charges from M/s United Breweries Ltd., and M/s United Spirits Ltd., both based in Bangalore and M/s Sporting Excellence, Mumbai, towards sponsorship of their team Rajasthan Royals for the Indian Premier League (IPL) Series during April, 2008, to the extent of Rs.8 crore. They also collected service tax of Rs.62,17,080/- from their sponsors. The amount so collected was remitted to the exchequer by way of debit in their Cenvat Credit account. The department was of the view that the said activity was not a taxable service and remitting of the amount by way of debit in the Cenvat Credit account was not permissible and the amount collected should have been remitted in cash to the exchequer. The appellant once again remitted in cash the amount collected by way of service tax under protest on 24-2-2009. A show cause notice dated 10-6-2009 was issued to the appellant for vacation of protest and appropriation of the amount paid in cash and for imposition of penalty under section 77 of the Finance Act, 1994. The said notice was adjudicated vide order-in-original No. 12/STC/BR/09-10 dated 1-10-2009, the order impugned herein. The amount paid in cash was appropriated under the provisions of section 73A(2) & (3) and the appellant was directed to pay interest on the delayed payment as per section 73B of the said Finance Act. A penalty of Rs.5000/- was imposed on the appellant under section 77 ibid. Aggrieved of the same the appellant is before us.
2. The ld. Counsel for the appellant made the following submissions.
2.1 During the material period, as far as sponsorship services were concerned, the person liable to pay service tax was the sponsor and not the recipient of the sponsorship. Further, sponsorship of sporting events were excluded from the levy of service tax. Therefore, there was no liability to pay service tax on the said activity. However, in as much as the appellant had wrongly collected the service tax from the sponsors, they remitted the tax so collected to the exchequer in terms of section 73A(2) of the Finance Act, 1994.
2.2 The discharge of tax liability through cenvat credit account is permissible in law and therefore, the demand of service tax in cash by the department is clearly unsustainable in law. Reliance is placed on the decisions of the Tribunal in the case of Sangam India Ltd. [2012 (28) STR 627 (Tri.-Del)] and Unison Metals Ltd.[2006 (204) ELT 323 (LB)] in support of the above contention.
2.3 In as much as the appellant had discharged the liability, they are not liable to pay any interest and no penalty is imposable in view of the bonafide conduct of the appellant.
2.4 The appellant has sought for refund of the service tax paid in cash which is pending adjudication. In any case, the adjudicating authority should have restored the cenvat credit debited towards discharge of liability which has not been done in the present case. In view of the above, he pleads for allowing the appeal.
3. The Asst. Commissioner (AR) appearing for the Revenue submits that the appellant is not a service provider of any output service as defined in law and therefore, he could not have availed any cenvat credit at all for discharge of liability. Section 73A(2) mandates that any person who has collected any amount which is not required to be collected from any other person, in any manner representing service tax, is required under the law to pay the amount so collected forthwith to the credit of the exchequer. The said section speaks of payment of the amount and not any tax and hence utilisation of cenvat credit is contrary to the provisions of Cenvat Credit Rules, 2004. Accordingly he pleads for upholding the impugned order.
4. We have carefully considered the rival submissions.
4.1 At the material time, the taxable service in relation to sponsorship under section 65 (105) (zzzn) read as follows:-
any service provided or to be provided to any body corporate or firm, by any person receiving sponsorship, in relation to such sponsorship, but does not include services in relation to sponsorship of sports events.
Further Rule 2 (1) (d) (vii) of the Service Tax Rules, 1994, prescribed that,-
In these Rules, unless the context otherwise requires, person liable for paying service tax means, in relation to sponsorship services provided to any body corporate or firm located in India, the body corporate or, as the case may be, the firm who receives such sponsorship service.
At the material time, the Cenvat Credit Rules, 2004, defined output service, person liable for paying service tax and provider of taxable service as follows under Rules 2 (p),(q) and (r):-
(p) output service means any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be. And the expressions provider and provided shall be construed accordingly.
(q) person liable for paying service tax has the meaning as assigned to it in clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994.
(r) provider of taxable service include a person liable for paying service tax. 4.2 From a combined and harmonious reading of the above provisions, it clearly emerges that ,-
(a) Sponsorship of sporting events was not a taxable service and therefore, it was not an output service as defined in law;
(b) Since provider of taxable service also included a person liable for paying service tax, in respect of sponsorship services, the provider of output service was the recipient of sponsorship service, that is, the sponsor.
If we apply the legal provisions as discussed above to the facts of the present case, it can be clearly seen that the appellant herein was not involved in rendering any output service nor was he a provider of output service.
4.3 It is in this factual and legal scenario, the question whether the appellant could have utilised cenvat credit for payment of the amount envisaged in Section 73A(2) has to be considered. The said section envisaged that,-
where any person who has collected any amount, which is not required to be collected from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government. 4.4 Further Rule 3(1) of the Cenvat Credit Rules, 2004, envisaged that a manufacturer or producer of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as Cenvat credit) of the duties specified therein. Also Rule 3(4) of the said Rules provided for utilisation of cenvat credit for the purposes of 1) payment of excise duty on any final product; 2) payment of an amount equal to the cenvat credit taken on inputs if such inputs are removed as such or after partially processed; 3)payment of an amount equal to the cenvat credit on capital goods if such capital goods are removed as such; 4) payment of an amount under sub-rule (2) of rule 16 of the Central Excise Rules, 2002; or 5) payment of service tax on any output service. The said rule did not provide for utilisation of cenvat credit for payment of the amount specified in section 73A(2) of the Finance Act, 1994 or section 11D of the Central Excise Act, 1944.
4.5 Since in the present case, the appellant was not a provider of any output service, he could not have taken any cenvat credit on the input or input services. Further he could not have utilised the credit for payment of the amount envisaged under section 73A(2). Thus, the discharge of the liability under section 73A(2) utilising cenvat credit was improper and illegal. Consequently, the demand of the department for payment of the liability under section 73A(2) of the Finance Act, 1994, in cash, is correct in law and cannot be faulted. As a consequence, the appellant is also liable to pay interest for the default period during which the amount was not made good in cash.
4.6 There is one more reason to come to the above conclusion. Cenvat Credit Rules 2004 have been framed under the Rule making powers delegated to the Central Government under section 37 of the Central Excise Act, 1944 and section 94 of the Finance Act, 1994. While Section 37(2) (xviaa) provides for credit of service tax leviable under Chapter V of the Finance Act, 1994 paid or payable on taxable services used in or in relation to the manufacture of excisable goods, Section 94(2)(eee) of the Finance Act, 1994, provides for credit of service tax paid on the services consumed or duties paid or deemed to have been paid on goods used for providing a taxable service. In other words, provision of Cenvat credit is available only of the duties/taxes paid on taxable services used in or in relation to the manufacture of excisable goods or consumed for providing a taxable service. In the present case, it is an admitted position that the appellant has not rendered any taxable service. If that is so, the Cenvat Credit Rules cannot be interpreted in such a way as to go beyond or contrary to the Rule making powers conferred on the Central Government.
4.7 As regards the reliance placed by the appellant on the decision of the Tribunal on the Unison Metals case, we find that the same is misplaced. In the said case the issue for consideration was whether the amount of 8% debited from the RG23A Part II in terms of provisions of Rule 57CC(1) and collected from the customers is required to be deposited with the Govt. in terms of the provisions of section 11D of the Central Excise Act. The Tribunal held that since the amount collected was not retained by the manufacturer but had already been remitted to the exchequer, provisions of section 11D are not applicable. That is not the issue before us in the present case. Therefore, the ratio of the said decision has no bearing or relevance. As regards the reliance placed on the Sangam India case (supra), the said decision has been rendered by a Single Member Bench which is not binding on a Division Bench. Secondly, the said decision was based on the decision in the Unison Metals case which we have already held as inapplicable. It is a settled position in law that the ratio of a decision can be applied only when the fact situation obtaining is identical. The honble Supreme Court in CCE Vs. Alnoori Tobacco Products, 2004 (170) ELT 135 (SC) held that-
"Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed.... These observations must be read in the context in which they appear to have been stated ..... Judges interpret statutes, they do not interpret judgments. They interpret words of statute, their words are not to be interpreted as statutes". The Supreme Court further observed that "circumstantial flexibility, one additional or different fact may make a word of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper".
4.8 The last issue for consideration is whether the appellant is liable to any penalty. Since the issue related to interpretation of law and there was no intention to evade or avoid payment of tax, there is no warrant to impose any penalty and accordingly, we set aside the penalty imposed on the appellant. Since the appellant has subsequently paid the amount in cash, the appellant would be entitled to restoration of credit which was debited from the cenvat account subject to the condition that the appellant does not claim any refund of the amount paid in cash.
5. To conclude, we hold that,-
(1) the appellant is not entitled to utilise Cenvat credit for discharge of the liability under section 73A(2) of the Finance Act, 1994, and the said liability has to be discharged in cash. For the delayed discharge, the appellant is liable to pay interest thereon under section 73B ibid.
(2) in the facts and circumstances of the case, there is no warrant to impose any penalty and the penalty imposed under section 77 ibid is set aside.
(3) the appellant shall be entitled for restoration of the Cenvat credit utilised in as much as the liability under section 73A(2) has been subsequently discharged in cash. This is subject to the condition that the appellant does not claim any refund of the amount paid in cash.
6. The appeal is disposed of in the above terms.
(Operative part of the order pronounced in the Court on /2015) (MV Ravindran) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 10