Custom, Excise & Service Tax Tribunal
M/S Zapak Digital Entertainment Ltd vs Commissioner Of Service Tax, Mumbai-Ii on 19 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II Appeal No. ST/234/12 (Arising out of Order-in-Original No. 09-12/ST-II/WLH/2012 dated 19.1.2012 passed by the Commissioner of Service Tax, Mumbai-II). For approval and signature: Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri Raju, 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? ====================================================== M/s Zapak Digital Entertainment Ltd. Appellant Vs. Commissioner of Service Tax, Mumbai-II Respondent Appearance: Shri Gopal Mudra, C.A. with Shri Parth Parekh, C.A. for Appellant Shri Roopam Kapoor, Commissioner (AR) for Respondent CORAM: SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 19.10.2016 Date of Decision: 19.10.2016 ORDER NO. Per: Raju
The appellants, M/s Zapak Digital Entertainment Ltd., are providing inter alia the services of sale of space ad time for advertisement. The appellants were engaged in promoting its business by placing advertisement in various forms of Media through advertising agency such as M/s Optimum Media Solutions (also known as Mudra Radar). The advertising agency acted as a facilitator between the broadcaster and the advertiser i.e. the appellant. The broadcaster raised the invoices on the advertising agency wherein it was clearly mentioned the name of advertiser as well as the advertising agency. The amount charged by the broadcaster is paid by the advertising agency and subsequently reimbursed by the advertiser. In the instant case, the appellant are the advertiser and they have claimed CENVAT Credit on the strength of the invoices issued by the broadcaster in favour of the appellants and the advertising agency. A demand show-cause notice was issued to the appellant seeking to deny the credit of Service Tax availed in respect of invoices to broadcaster issued in respect of advertisement of appellant broadcasted by the broadcaster. The demand was confirmed by the Commissioner and a penalty was also imposed under section 78 of the Finance Act, 1994. Aggrieved by the said order, the appellants are before Tribunal.
2. Learned Counsel for the appellant argues that they engaged the advertising agency for advertisement, who in turn, organizes a broadcaster for carrying the advertisement. The advertising agency has asked to charge their own fee as well the reimbursement of the amount paid to the broadcaster for carrying their advertisement on behalf of the appellants. He argued that while they pay the fee to the broadcaster of the advertising agency on an actual basis but in turn passed to the broadcaster. He argued that they have not availed credit of the invoices of the advertising agency but on the invoices of the broadcaster, which clearly mentions their name. Learned Counsel took us through one such invoices of the advertising agency namely Mudra Radar, who has used the services of broadcaster namely, Star India Pvt. Ltd. (SIPL). It is seen that the invoices of Mudra Radar clearly indicates the total amount invoiced by Mudra Radar to the appellant, which consists of the -
(i) Total fee paid to the broadcaster,
(ii) Service Tax paid by the broadcaster in respect of the transaction,
(iii) The amount of commission of advertiser
(iv) The Service Tax on the said commission.
It can be seen from the invoices that the Service Tax for the commission of advertiser is paid by Mudra Radar while the Service Tax on the fee of the broadcaster is paid by SIPL. In support of the said assertion, learned Counsel had also taken us through the invoices issued to the SIPL. From such invoices, it is seen that the said invoices has been issued in favour of the advertiser namely, M/s Zapak Digital Entertainment Ltd. (the appellant) and the invoices also feature the name of the agency namely, Mudra Radar. The amount of Service Tax paid on the broadcasting fee is indicated in this invoice. The learned Counsel argued that in these circumstances, the credit taken by them is on the strength of two different invoices. In respect of Service Tax paid by Mudra Radar on the agency commission they have taken credit on the invoice of Mudra Radar. In respect of Service Tax paid on the broadcasting fee collected by SIP and paid by the appellants through the advertising agency on the strength of invoices of the SIPL. Learned Counsel argued that in such circumstances credit cannot be denied.
3. Learned AR relies on the impugned order. He argued that the tax paid by the advertising agency to the broadcaster i.e. SIPL was an input services by the advertising agency and not for the appellants. Learned AR argued that the invoice was not raised by the broadcaster on the appellant but the invoice was raised by the broadcaster on advertising agency. In these circumstances, he argued that it cannot be considered that the broadcasting service was received by the appellant. Learned AR argued that endorsement of an invoice is not provided for in the Rules. For this assertion, he relied on the decision of the Hon'ble High Court of Gujarat in the case of Marigold Coatings Pvt. Ltd. 2016 (337) ELT 515 (Guj). He also relied on the decision of the Tribunal in the case of Balmer Lawrie & Co. Ltd. 2000 (116) ELT 364 (Mum).
4. We have gone through the rival submissions. We find that it is not disputed that the appellants have engaged the services of an agency for advertisement. Agencies are by definition working on behalf of their client. In the instant case, the agency being an advertising agency has engaged the broadcaster for the purpose of advertisement. A perusal of the invoices clearly shows that the agency has merely acted as a conduit for transfer of money from the appellant to the broadcaster. The invoices of the broadcaster clearly show the name of advertiser as M/s Zapak Digital Entertainment Ltd. (the appellant). Name of the advertising agency is mentioned and is an agent in the said invoice. In the said circumstances, there is no doubt that the invoices of the broadcaster is issued in the name of Zapak Digital Entertainment Ltd. and not in the name of Mudra Radar as alleged in the notice. Learned AR has relied on the decision of the Larger Bench of the Tribunal in the case of Balmer Lawrie (supra). It is seen that the said decision of the Tribunal was overruled by the Hon'ble High Court of Gujarat in the case of Vimal Enterprises as reported in 2006 (192) ELT 267 (Guj). Learned AR has also relied on the decision of the Gujarat High Court in the case of Marigold Coatings (supra), wherein it was held that duty credit cannot be taken on the strength of endorsed invoice. It can be seen that the instant case is not a case of endorsed invoice. A perusal of invoice clearly shows that the appellants name mentioning as a advertiser and therefore it is an invoice issued in the name of the appellant. The advertising agency in the instant case is only act as a conduit for payment.
5. In these circumstances, we do not find any merit in the impugned order. The appeal is accordingly allowed.
(Operative portion of the order pronounced in Court)
(M.V. Ravindran) (Raju)
Member (Judicial) Member (Technical)
Sinha
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Appeal No. ST/234 /12