Customs, Excise and Service Tax Appellate Tribunal: The coram of Ramesh Nair (Judicial Member) and Raju (Technical Member) set aside the order of the Commissioner confirming imposition of service tax and interest thereon along with penalties for ‘Broadcasting Services’ on an ‘Advertising Services’ agency. The Tribunal has directed Prasar Bharti to return the amount of Rs. 36,92,874 collected by it, under the garb of its liability to pay service tax when actually it was not liable, to all those customers from whom it was collected that too within a period of two months.
Facts of the Case
The appellant provided services falling under the category of ‘Advertising Agency Service’. After the scrutiny of the appellant’s records, it was revealed that they purchased the time slots from electronic media for which they got agency commission and sold the same slot of time to their clients who in turn used the slot for screening the advertisements. It was also revealed that the electronic media raised bills to Appellant on the time slots sold to them and charged them service tax under the category of ‘Broadcasting Service’. It was stated that appellant further issued bills to their clients included the gross value of broadcasting service and the service tax charged by the electronic media.
It was contended that as per the definitions and provisions of Section 65 of the Finance Act, 1994 (hereinafter “the Act”), the activities of the appellant do not qualify as broadcasting agency nor can be classified under ‘Broadcasting Services’ but have collected the service tax on broadcasting charges from their clients under the category of ‘Broadcasting Service’, thereby, contravening the provisions of Section 73-A(2) of Act. Therefore, the amount of service tax recovered by appellant from their clients was required to be recovered from them under Section 73A(3) of the Act.
Accordingly, a show cause notice was issued demanding service tax amounting to Rs. 5,74,98,622 under Sections 73A(2), 73A(3) and 73(1) of the Act. The show cause notice also demanded interest on the said amount and imposed penalties under the provisions of the Act. The Commissioner passed the order confirming the demand of service tax along with interest and imposed penalties under Sections 76, 77 and 78 of the Act. Hence, the present appeal was filed.
Question for Consideration
Whether the amount of service tax collected by the appellant related to the broadcasting service from their clients was required to be deposited with the department in terms of the provisions of Section 73A of the Act?
Analysis, Law and Decision
The Tribunal noted that the adjudicating authority had misconceived the provisions of Section 73A of the Act. The Tribunal opined that the provisions of Section 73A of the Act are applicable where the amount of service tax has been collected and retained by the assessee. The order of the Commissioner confirming the demand of service tax without discussing the activity of the appellant and without going into the facts of the case, was not legally correct. The Tribunal went through the activity of the appellant and found that in addition to the service of advertising agency, the appellant had been acting as a mediator/ facilitator between the broadcasting companies and the clients, by collecting money from the clients on behalf of the broadcasting company.
The Tribunal also found that the appellant has collected the service tax from the clients on behalf of the Broadcasters in relations to service of ‘Broadcasting Services’ and transferred the said service tax amount to Broadcasters for discharging service tax liability on ‘Broadcasting Services’. Moreover, the Broadcasters have already deposited the service tax amount to the Government. Therefore, the Tribunal held that the demand of service tax under Section 73A is improper when the appellant has not retained the amount collected as service tax and the same had already been paid to the Government. Lastly, the Tribunal held that the order confirming the demand for service tax under Section 73A of the Act was not sustainable and needed to be set aside.
[Triton Communication Pvt Ltd v. CST – Service Tax, Ahmedabad, 2022 SCC OnLine CESTAT 730, decided on 1-11-2022]
Advocates who appeared in this case :
Shri Rishi Murarka and Shri Raj Thakkar, Advocates for the Applicant;
Shri J.A. Patel, Superintendent (AR) for the Respondent.
