2018 (7) TMI 702 – CESTAT CHENNAI – TMI – CENVAT Credit – input services for providing output service namely sponsorship service – The department was of the view that appellant being not eligible to pay service tax for sponsorship services and credit cannot be allowed – The demand arises out of the basic allegation that the appellant has wrongly paid the service tax on sponsorship service when actually service recipient ought to have paid.
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Held that:- The department has no case that the appellant has not paid the service tax on these input services nor is there a case that they are not used for providing sponsorship service. The only allegation is that the appellant ought not to have collected the service tax on sponsorship service. Generally, it is the output service provider who has to pay the service tax and in some cases like sponsorship services, the Service Tax Rules provide that the liability to pay service tax is upon the service recipient. Appellant has collected servic
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icial) Shri T.R. Ramesh, Advocate for the Appellant Shri R. Subramaniam, AC (AR) for the Respondent ORDER Brief facts are that the appellants is a publisher of newspapers The Hindu, Business Line and magazines such as Front Line and Sports Star and also engaged in providing various other services. During the course of audit, it was observed that the appellant had conducted various competitive programmes for kids and students in the field of painting and quiz competition etc. They had received sponsorship from various sponsors for conducting the above programme and collected service tax for the sponsorship services provided by them. It appeared that in terms of Rule 2(1)(d)(viii) of Service Tax Rules, 1994, the recipient of sponsorship service is to discharge the service tax liability. The appellant has thus wrongly collected the service tax on sponsorship service and paid the same to the Central Government. The department was of the view that appellant being not eligible to pay service
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tral Government. The department now alleges that the input services availed for providing the sponsorship services are not eligible for credit. Merely because the appellant had wrongly discharged the service tax on sponsorship services instead of the service recipient, the input services cannot be held to be ineligible for credit. Since the sponsorship services are taxable services, for which the input services were used by the appellant, the department has wrongly denied the credit. He submitted that there are several decision which have held that even though the process does not amount to manufacture, the credit availed on the inputs cannot be denied and the same analogy shall be applied to the facts of the present case. He relied upon the decision in the case of Vinayak Industries reported in 2003 (159) ELT 456. It is also pointed out by him that the department has not issued any show cause notice to the service recipient of the sponsorship services and the service tax on such servi
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the output services and therefore the credit availed is eligible. 3. The ld. AR Shri R.Subramaniam supported the findings in the impugned order. He submitted that the appellant is not liable to pay service tax on sponsorship services. The service recipient ought to have paid the same. The appellant has wrongly collected the service tax on sponsorship services and utilized the credit on various input services to discharge the payment of service on sponsorship service. Thus, the input services used for providing the output service namely sponsorship services are not eligible for credit. He relied on the decision of the Tribunal in the case of Jaipur IPL Cricket Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai – 2015 (38) STR 1193 (Tri. Mumbai). He adverted to para 3.20 and 3.21 of the adjudication order and submitted that the intention of the assessee to suppress the facts in an intelligent manipulative way to evade payment of service tax and utilization of inadmissible CENVAT credit b
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rship services, the Service Tax Rules provide that the liability to pay service tax is upon the service recipient. Appellant has collected service tax wrongly from service recipient and paid to Central Government instead of the service recipient paying it directly to Central Government for sponsorship services. For the mere same reason, it is alleged that the credit has been wrongly availed on various input services used for providing sponsorship services. In para 3.15 of the adjudication order, it is brought out that the appellant has declared the credit of service tax paid on input services in their ST-3 returns. Thus, the credit availed as well as the service tax paid has been correctly reflected in their ST-3 returns. Other than this allegation of wrongly paying the service tax on sponsorship service, I do not find any evidence of positive act of suppression of fact with intent to evade payment of service tax on the part of appellant. All the allegations stems out of the main alleg
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