Custom, Excise & Service Tax Tribunal
M/S. Synergy Audio Visual Workshop Pvt. ... vs The Commissioner Of Service Tax on 28 January, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No: ST/353/2007 (Arising out of Order-in-Appeal No: 73/2007-CE dated 30.4.2007 passed by the Commissioner of Central Excise (Appeals-I), Bangalore.) 1. Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Synergy Audio Visual Workshop Pvt. Limited Appellant Vs. The Commissioner of Service Tax Bangalore. Respondent
Appearance S/Shri K. S. Ravi Shankar & K. S. Naveen Kumar, Advocates for the appellant.
Mrs. Sudha Koka, Authorised Representative (JDR) for the Revenue.
CORAM DR. S.L. PEERAN, HONBLE MEMBER (JUDICIAL) SHRI T. K. JAYARAMAN, HONBLE MEMBER (TECHNICAL) Date of Hearing: 28.01.2008 Date of decision:
ORDER No._______________________2008 Per Dr. S. L. Peeran The appellant is aggrieved with Order-in-Appeal No.73/2007 CE dated 30.4.2007 by which the Commissioner (A) has confirmed the Order-in-Original No.22/IVNIII/2006-07 dated 23.6.2006 passed by the Assistant Commissioner, Service Tax Division-III.
2. The appellant was rendering services under the category of Advertising Agency and were registered and discharging Service Tax. Revenue proceeded to recover differential Service Tax on the basis of the balance sheet and the declarations made in ST-3 Returns for the year 2000-2001. Proposal for imposing penalty was also raised. Revenue has also proceeded to recover Service Tax on the basis of the returns filed with the Income Tax Department showing certain amounts due from the parties. The appellants have contested these levies. It is the contention of the appellant that certain elements pertaining to service rendered by them to another advertising company is not liable for Service Tax. In this regard they rely on the judgment rendered in the case of Semac Pvt. Ltd. Vs. CST, Bangalore - 2006 (4) STR 475 (Trib.-Bang.) and that of Zee Telefilms Ltd. Vs. CCE (Appeals), Mumbai-IV - 2006 (4) STR 349 (Tri.-Mumbai). They contend that an amount of Rs.8,44,100/- will not be liable to be taxed on this account. With regard to non-receipt of Service Tax from their parties and it was shown as due in the returns, it cannot be subjected to Service Tax. Therefore, an amount of Rs.3,15,214/- is not liable to be confirmed. In this regard, ruling rendered in Pharma 2006 (2) STR 492 is relied.
3. The learned Counsel submits that the sub-contractor / sub-consultant are not required to discharge Service Tax, as the main consultant had discharged the same. In this regard, the citation of Semac Pvt. Ltd. (supra) is relied.
3.1 It is submitted that in the case of Zee Telefilms Ltd. (supra), it has been held that the definition of Advertising Agency cannot be read literally and out of context, so that every person somewhere connected with Advertising Agency will be advertising agency Advertiser being person wanting to advertise their goods/service alone can be treated as client.
3.2 Further reliance has been made on Euro RSCG Advertising Ltd. Vs. CCE - 2007 (7) STR 277 (Tri.-Bang.) wherein it has been held that any amount received by service provider from his client only is liable to service tax and not amounts received from others.
3.3 The learned Counsel submits that demands based on balance sheet is also not sustainable as held in Paro Food Products Vs. CCE - 2005 (184) ELT 50 (Tri.-Bang.).
3.4 He submits that there has to be a client nexus between the client and the service provider as held in the case of BBR (India) Limited Vs. CCE - 2006 (4) STR 269 (Tri.-Bang.).
3.5 The learned Counsel submits that the appellant is a sub-contractor and that the tax arises only against the main contractor. In this regard, he relies on the decision rendered in the case of OIKOS Vs. CCE - 2007 (5) STR 229 (Tri.-Bang.).
3.6 He submits that Service Tax cannot be confirmed on the basis of amounts shown as receivables in the Income Tax Returns. In this regard, he relies on Tempest Advertising (P) Ltd. Vs. CCE - 2007 (5) STR 312 (Tri.-Bang.); Alpha Management Consultants P. Ltd. Vs. CST - 2007 (6) STR 181 (Tri.-Bang.); Free Look Outdoor Advertising Vs. CCE - 2007 (6) STR 153 (Tri.-Bang.); Kirloskar Oil Engines Ltd. Vs. CCE - 2004 (178) ELT 998 (Tribunal) and Hindalco Industries Vs. CCE - 2003 (161) ELT 346 (T).
4. The learned SDR took us through the findings and prays for confirming the same.
5. We have carefully considered the submissions and gone through the records. It is seen from the impugned order that the assessee had relied on the instructions given in Circular dated 31.10.1996 on the ground that they are not liable to pay Service Tax on the amounts received from the main advertising agency. This clear instruction clarifies that once the main advertising agency has paid the Service Tax, then the sub-contractor is not liable to pay the Service Tax. The Commissioner (A) has not followed this circular although the demands are on that ground. In terms of the allegations and grounds taken by the appellants, we find that this is a tenable ground. The appellants have not collected the amounts from the persons to whom they have provided the service. They are sub-contractors and the amounts received were from their advertising company, who had already discharged the Service Tax. In the light of the citations relied by them, the Service Tax of Rs.57,965/- is not liable to be confirmed and hence, the same is set aside.
5.1 The other ground is for confirming demands is that the appellants had shown certain amounts due from the parties in their Income Tax returns and Revenue has proceeded to demand Service Tax on this amount shown in the Balance Sheet. The appellants have relied on large number of judgments which has settled the issue that amounts shown in the Income Tax returns or Balance Sheet are not liable for Service Tax. In view of these judgments, the appellant succeed on this ground also. The impugned order is set aside and the appeal is allowed.
(Operative portion of this Order was pronounced in open court on conclusion of hearing) (T.K. JAYARAMAN) Member (T) (S.L.PEERAN) Member (J) /rv/ ??
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