Custom, Excise & Service Tax Tribunal
N S Publicity India Pvt Ltd vs Jaipur-I on 29 January, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi - 110 066.
Principal Bench, New Delhi
COURT NO. IV
DATE OF HEARING : 12/10/2018.
DATE OF DECISION: 29/01/2019.
Service Tax Appeal No. 50157 of 2015
[Arising out of the Order-in-Original No. JAI-EXCUS-001-COM-40-
14-15 dated 30/09/2014 passed by The Commissioner, Central
Excise, Jaipur.]
M/s N.S. Publicity India Pvt. Ltd. Appellant
Versus
CCE, Jaipur Respondent
Appearance Shri S.L. Poddar, Advocate - for the appellant. Shri G.R. Singh, Authorized Representative (DR) - for the Respondent.
CORAM: Hon'ble Shri C.L. Mahar, Member (Technical) Hon'ble Ms. Rachna Gupta, Member (Judicial) Final Order No. 50118/2019 Dated : 29/01/2019 Per. C.L. Mahar :-
The facts of the case are that the appellants are engaged in providing the output service of "advertising agency service"
and earning income from displaying advertisements on spaces provided by Jaipur Development Authority (hereinafter called JDA). To display advertisements, it was necessary for them to acquire space and time rights of advertisement display from JDA which was contingent upon providing and maintaining certain
2 ST/50157 of 2015 civic amenities; erecting kiosks, etc.; providing and maintaining escalator -elevators, maintaining the roads; making security arrangements etc. for JDA. These services were to be provided to JDA on BOT i.e. build, operate and transfer basis. To provide all these services to JDA, the appellant sub-contracted all these works to sub-contractors and incurred expenses on maintenance of road and beautification of road service; security service, supply; installation and commissioning of escalators/elevators; fabrication, erection and commissioning of Unipoles and gantries; construction & Misc. repair/finishing/electric work at various sites, bus shelters and foot over bridge. The appellants availed Cenvat credit on the bills raised to them by these sub- contactors. The Cenvat credit has been disallowed to them on the ground that above services provided to JDA were not covered under the definition of input service in as much as those had no nexus to their output service i.e. advertisement agency service.
2. The learned advocate appearing on behalf of the appellants have strongly defended the availment of Cenvat credit of these services on the ground that these services are activities relating to their business duly covered under the definition of "input service" as per Rule 2(l) of the Cenvat Credit Rules, 2004 in as much as all these activities(services) received from sub- contractors were related to acquiring rights of "advertising agency service" and fall within the category of eligible input Cenvat credit. He further contended that there was no 3 ST/50157 of 2015 requirement of establishing nexus between input service and output service as the definition of input service is wide enough to cover the type of services acquired by him for providing the output service. The services availed by the appellants are activities integrally related to the business covered under the definition of input service under Rule 2(l). They relied upon the case law in CCE Vs. Ultratech Cement Ltd.[2010 (260)E.L.T. 369 (Mum.)] that the expression "activities in relation to business" postulates activities integrally connected with the business of the assessee. He also relied upon case law in Rane TRW Steering Systems Pvt. Ltd. [2010] (19) S.T.R.- 251(Tri.-Chennai) in support that that definition of input service is wide and the impugned services are activities related to their business of providing output service. On the other hand the learned DR has argued that the input service credit on impugned services is not available for the reason that if the appellant had paid the consideration money to the JDA for obtaining "space or time for advertisement", the appellant would not become eligible for availing of the Cenvat credit because no such service tax was paid by the JDA. Thus the appellant would have to pay service tax on advertisements service sought to be provided by them in cash. Clearly knowing this fact that they were not entitled for availing of any service tax credit because of non-payment of service tax by JDA, the appellant procured disputed services from sub-contractors to fulfill their obligations to JDA. He further added that the expression „input service" needed to be 4 ST/50157 of 2015 interpreted in the context of "for providing output service" and was restrictive in scope. He further contended that their activities cannot be construed as "activities relating to business" as the disputed services had no connection with their business which was rendition of advertisement service.
3. We have carefully gone through the arguments made by the learned advocate as well as the learned DR. We find that the definition under part (i) of the Rule 2(l) defines input service as "used by the provider of taxable service for providing an output service". There is no denying of the fact that all the impugned services were performed by the sub-contractors on behalf of the appellant and the sole purpose of the appellant was to procure time and space rights of advertisements from JDA which were to be further used for providing the output service of advertising agency. It is undisputed fact that the appellant is discharging tax liability on advertising agency. The learned DR could not give any other purpose for availing of the impugned services. Acquiring advertisements rights were inalienable requirement for displaying the advertisements and any service undertaken to obtain these rights was integrally connected with providing the output service of advertisement agency. Thus, we have no doubt to hold that the impugned service obtained from the sub-contractors were input services used for proving the output taxable service of advertisement agency. It has no relation with the fact whether or not JDA has discharged any service tax on space and time rights 5 ST/50157 of 2015 of advertisement. This reasoning of the learned DR does not hold ground for another reason because the JDA, inter-alia, is not into the business of earning income from advertisement rights but they are in fact of performing the public service of providing basic amenities to the citizens which may not attract any tax. Thus we hold that the services performed by the appellant to JDA through sub-contractors were integrally connected with the output service of providing advertisement agency service and Cenvat credit on these services is duly available to the appellants. The demand of Rs. 16,06,441/- on this ground is not sustainable.
4. Further, the demand has been confirmed by disallowing a Cenvat credit of Rs. 47,34,852/- on the three DMRC documents on the basis that the same are not proper documents in terms of Rule 9(1) of the Cenvat Credit Rules, 2004. Regarding first document (letter dated 01/03/2010) containing a service tax amount of Rs. 23,48,400/- The learned advocate has pleaded that all the prescribed particulars viz. name, address and registration no. of the provider of service(DMRC), name, address of the receiver of service (appellants), Description, value of taxable service have been contained therein. Only there is one deficiency that the old address is mentioned. As regards document containing credit amount of Rs. 38,048/-, he stated that the contract-cum-bill contains all the particulars required under Rule 4A of the Service Tax Rules, 1994. As regards the third document containing service tax amount of Rs. 23,48,404/-
6 ST/50157 of 2015
he stated that the invoice no. 2029/2010 dated
19/03/2010(actual 19/08/2010), the only reason for disallowing the credit was that an old address of the appellant was mentioned in the invoice. He further argued that all these documents were merely procedural irregularities and substantial benefit could not be denied on procedural irregularities in terms of case law in Dhampur Sugar Mills Ltd., Vs. CCE- 2010 (260) E.L.T. - 106(Tri.-Del.), Hindustan Coca-cola Beverages Pvt. Ltd. - 2009 (242) E.L.T. - 45(Tri.-Mum.) and BSNL Vs. CCE 2012 (28) S.T.R.-624 (Tri.-Chennai). He further argued that the whole demand was time-barred as the appellants have filed ST-3 returns regularly showing availment of Cenvat credit.
5. We have carefully examined the availability of Cenvat credit on the basis of documents issued by the DMRC we find that the substantial particulars i.e. name and address of the service provider, service tax registration number of the service provider, amount of service tax, assessable value, name and address of the service receiver has been mentioned in the letters dated 01/03/2010 and 15/12/2010 having service tax incidence of Rs. 23,48,404/- each and are in the nature of payment advice. These can be considered an invoice and can be accepted in terms of the proviso to Rule 9 of the Cenvat credit Rules, 2004 as there is no allegation that the services covered by these bills have not been accounted for by the appellant. The appellant has also produced 7 ST/50157 of 2015 the invoice dated 19/08/2010 in support of letter dated 15/12/2010. Merely that these letters are not in the form of invoice cannot be a reason to disallow the Cenvat credit as substantial compliance of the provision under Rule 9(1) of Cenvat Credit Rules have been made. The mention of an old address in the letter due to in-advertence is a rectifiable mistake and cannot be a ground to disallow the credit. However, we are not inclined to accept Letter of acceptance dated 22/02/2010 for a service tax amount of Rs. 38,048/- as a proper document as the same does not bear the registration no. of the service provider and cannot be considered as bill/invoice/ challan in terms of Rule 9(1) of the Cenvat Credit Rules, 2004. The appellant has failed to produce a corresponding invoice, payment advice etc. for this amount. Accordingly, demand of Rs. 46,96,808/- on the first two documents is set aside and we uphold a demand of Rs. 38,048/- as sustainable under Rule 14 Of Cenvat Credit Rules, 2004 read with proviso to Section 73(1) of the Finance Act, 1994 as the appellant has failed to justify taking of lawful credit of Rs. 38,048/- on the basis of any acceptable document. The extended period of limitation as well as the equivalent penalty of Rs. 38,048/- under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 and interest as applicable under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 on this amount of Rs. 38,048/- is also upheld. Consequential benefit, if any, on the demands set-aside is allowed. Accordingly, the appeal is partly 8 ST/50157 of 2015 allowed and is dismissed so far as demand of Rs. 38,048/- is concerned.
(Order pronounced in the open court on 29/01/2019.) (Rachna Gupta) (C.L. Mahar) Member (Judicial) Member (Technical) PK