Ddb Mudra Pvt Ltd vs Service Tax - Ahmedabad

Services Tax Appeal No. 11702 of 2016-DB (Arising out of OIO-AHM-SVTAX-000-COM-015-15-16 Dated-22/01/2016 passed by Commissioner of Service Tax-SERVICE TAX - AHMEDABAD)

Ddb Mudra Pvt Ltd ........Appellant Mudra Tower Shantisadan Society Opp Parimal Garden Ellisbridge Ahmedabad, Gujarat

VERSUS

C.S.T.-Service Tax - Ahmedabad ........Respondent

First floor, Central excise bhavan, central excise bhavan, a Ambawadi, Ahmedabad, Gujarat-380015

APPEARANCE:

Shri. A R Krishnan, Consultant, Consultant for the Appellant Shri. A R Kanani, Superintendent (AR) for the Respondent

CORAM: HON'BLE MR. SOMESH ARORA, MEMBER (JUDICIAL) HON'BLE MR. C.L MAHAR, MEMBER (TECHNICAL)

Final Order No. A/ 10076 /2024

DATE OF HEARING:30.10.2023 DATE OF DECISION:09.01.2024

SOMESH ARORA

Briefly stated the facts of the case are that M/s. Mudro

Communications Pvt. Ltd., having registered business premises located of

"Mudra House". Shantisadan Society, Near Parimal Gardensbridge.

Ahmedabad-380 006, (hereinafter referred to as "M/s Mudra") were

functioning as an Advertising Agency as defined under Section 65(3) of the

Finance Act 1994 were providing taxable service under the category of

"Advertising Services and holding Service Tax Registration No.

"AACM5763HST012". M/s. Mudra offered their clients entire range of

advertising and communications services, which, inter alia, included getting

space booked in the print media or time slots in the electronic media and

later selling the same to their various clients for which they received

payments from the clients.

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2. Vide letters dated 19.10.2010 and 27.04.2012. jurisdictional officers

called for certain information relating to their books of account including

value and service tax collected by M/s. Mudra from their clients on

Broadcasting Service during the period April-2011 to March-2012, which was

supplied by them vide letter dated 11.05.2012. Scrutiny of these records

revealed that M/s. Mudra purchased time-slots from the electronic media for

which they got agency commission and sold such time slots to their clients

who, in turn, used the slot for screening the advertisements: that the

electronic media raised bills to M / s Mudra on the time slots sold by them,

and charged them service tax under the category of "Broadcasting services"

M/s Mudra further issued bills to their clients for rendering advertising

services; and the bills raised by M/s. Mudra included the gross value of

broadcasting services and the service tax charged by the electronic media.

Thus, it appeared that M/s. Mudra collected full transaction value of

advertising service fees including broadcasting agency charges as well as

service tax on the said charges from their clients.

2.1 For example, M / s UTV Entertainment Television Ltd., Mumbai-issued

invoice no. UTM/0910/0885 dated 3.10.2009 to M/s. Mudra, which read as

under:-

Gross Total 2,70,000 (-)Agency Commission 15% 40,500 Net Amount 2,29,500 (+) Service Tax 10% 22,950 (+) Education Cess 2% 459

(+) Secondary Higher Education Cess 1% 230 Total Amount 2,53,139

2.2 It appeared from the above table that M/s. UTV Entertainment

Television Ltd., Mumbal is the Broadcaster who issued invoice no. UTM / O *

9 10/O885 dated 31.10.2009 to M/s. Mudra for amount of Rs. 2 ,70.000/-.

They gave agency Commission to M/s Mudra @ 15% for Rs.40,500/. , and

charged service tax @ 10.30% on the balance amount of Rs. 2.29.500/-

which worked out to be Rs. 23.639/-. Thereafter, M / s . Mudra issued a

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corresponding invoice No. 20090011030155 dated 30.11.2009 to their

clients, M / s Nilons Enterprises Private Limited, Jalgaon details of which are

tabulated as follows:-

Bill Amount 2,70,000 (-) Commission 40,500 Net Amount 2,29,500 (+) Agent Commission 33,750 (+) Service 10% on Taxable Service Rs. 3375 33750 (+) Education Cess 67.50 (+) Secondary and Higher Education Cess 33.75 (+) Broadcaster Service Tax on Rs. 229500 23,639 Total Amount 2,90,365

2.3 It appeared to the department from the above table that the bill raised

by M / s Mudra to their clients Included service tax amount of Rs. 23639/-

which was charged to them by the broadcaster, M / s UTV Entertainment

Television Ltd, despite the fact that M/s. Mudra is neither a broadcasting

agency nor has provided broadcasting services to their clients. Thus, they

had collected service tax on the broadcasting charges from their clients

under the category of Broadcasting Services as is evident from the Invoices

raised by them.

2.4 For another example, M/s. TV9 Associated Broadcasting Company

Private Limited, Ahmedabad Issued Invoice no. TV9G/1112/00764 dated

31.10.2011 10 M/s Mudra as under:

Gross Amount 24000 (-) Discount 3600 Net Amount 20400 (+) Service Tax 10% 2040 (+) Education Cess 2% 40.80

(+) Secondary and Higher Education Cess 20.40 Total Amount 22501.20 4|Page ST/11702/2016-DB

2.5. Thereafter, M/s. Mudra issued Invoice No. 20110011030028 dated

01.11.2011 to their clients, M/s. Ramdev Food Products Pvt. Ltd.,

Ahmedabad the details of which are tabulated as follows:-

Bill Amount 2400 (-) Commission 3600 Net Amount 20400 (+) Agent Commission 600 (+) Service 10% on Taxable Service Rs. 600 60

(+) Education Cess 1.20 (+) Secondary and Higher Education Cess 0.60 (+) Broadcaster Service Tax on Rs. 20400 2101.20 Total Amount 23163

2.6 It appeared to the department from the above table that the bill raised

by M/s. Mudra to their clients included service tax amount of Rs. 2101.2 /

which was charged to them by the broadcaster, M/s. TV9 Associated

Broadcasting Company Private Limited, although M/s. Mudra is neither a

broadcasting agency nor has provided broadcasting services to their clients.

Thus, they had collected service tax on the broadcasting charges from their

clients under the category of Broadcasting Services as is evident from the

invoices raised by them.

3. As per Section 65 [15] of Finance Act 1994, 'Broadcasting' means:

"broadcasting" has the meaning assigned to it in clause (c) of section 2 of the Prasar Bharti (Broadcasting Corporation of India) Act, 1990 (25 of 1990)+and also includes programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intended for public listening or viewing, as the case may be; and in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or (collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal. writing, picture, image and sounds of all kinds by transmission of electro-

magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency) or organization. by Its branch office or subsidiary or representative In India, or any agent appointed in India or by any person who acts on its behalf in any manner."

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3.1 As per Section 65[16] of Finance Act 1994, Broadcasting

Agency/Organization means:

"any agency or organization engaged in providing service in relation to broadcasting in any manner and, in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electromagnetic waves through space or through cables, direct to home signals or by any other means to cable operator, Including multisystem operator or any other person on behalf of the said agency or organization".

3.2 Section 65(105) (zk) defines the term 'taxable service' as:

"any service provided or to be provided to any person by a broadcasting agency or organization in relation to broadcasting in any manner and, in the case of a broadcasting agency or organization, having its head office. situated in any place outside India, Includes services provided by its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner. engaged in the activity of selling of time slots, for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electromagnetic waves through space or through cables, direct to home signals or by any other means to cable operator, including multisystem operator or any other person on behalf of the said agency or organization".

3.3 Section 67 provides that taxable value for the purpose of

Broadcasting Services as: "The Gross Amount received by broadcasting

agency or organization is liable to Service Tax at the rate specified in section

66 of the Finance Act 1994".

4. In the light of the aforesaid legal provisions, it appeared to the

department that the activities carried out by M/s. Mudra do not qualify as a

broadcasting agency nor the same could be classified under Broadcasting

Services. Thus, M/s Mudra is neither a broadcasting agency nor has provided

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broadcasting services, but collected service tax on the broadcasting charges

from their clients under the category of "Broadcasting Service". Therefore, it

appeared that M/s Mudra have contravened the provisions of Section 73A(2)

of the Finance Act, 1994 in as much as they have collected service tax,

which is not required to be collected by them from their clients, and have

failed to pay the amount so collected to the credit of the Central Government

and hence the amount of service tax so recovered by M/s Mudra from their

clients is required to be recovered from them under Section 73 A(3) of the

Finance Act, 1994.

5. It appeared to the department that the total amount of Service Tax on

"Broadcasting Charges" collected by M/s. Mudra in the aforesaid manner is

as follows:

Year Value Service Tax on Broadcasting charge collected but not deposited to Govt. 2009-10 5,59.49,211 57,62,769 2010-11 5,47,29,746 56,37,164 2011-12 4,76,89,343 49,12,014 Total 15,83,68,300 1,63.11,947

6. Thus, it appeared to the department that M/s Mudra had collected

broadcasting charges amounting to Rs. 15,83,68,300/- along with service

tax amounting to Rs. 1,63,11,947/- leviable thereon, but had not credited

the same to the central government account as required under Section 73A.

As per Section 68(1) every person providing taxable service to any person

shall pay service tax at the rate specified in Section 66 in such manner and

within such period as may be prescribed. Since, M/s. Mudra has contravened

the provisions of Section 68 of the finance Act. 1994 and rules made there

under, they are liable to pay penalty under Section 76. Further, as per

Section 70 every person liable to pay the service tax shall himself assess the

tax due on the services provided by him and shall furnish a return in such

form and in such manner as may be prescribed. However, M / s Mudra failed

to include the taxable value in the relevant ST-3 returns with the

department and thereby rendered themselves also liable for penalty action

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under Section 77. It also appeared that M/s. Mudra willfully suppressed the

facts from the department by not declaring the material facts and the correct

value of taxable services, and thus found guilty of willful suppression of

actual liability of service tax with intent to evade payment of service tax.

They also have failed to deposit the service tax collected by them from the

clients to the credit of Central Government, and hence they are also liable

for penalty under Section 78.

7. Therefore, a show-cause-notice No.STC/4-95/0&A/11-12 dated

26.09.20145 was issued to M / s Mudra calling upon to show cause to the

Commissioner of Service Tax, Ahmedabad as to why:

1. Service tax on "Broadcasting charges" amounting to Rs. 1,63,11,947/-

as detailed above, collected by them from their clients but not credited

to the central government account as required under Section 73A(2) of

the Finance Act, 1994 should not be demanded/recovered from them

under Section 73A(3) read with proviso to Section 73(1) of the Finance

Act, 1994:

2. Interest as applicable on the above amount of Service tax of Rs. 1,

63.11, 9471 should not be recovered from them under Section 738 of

the Finance Act, 1994;

3. Penalty should not be imposed upon them under Section 76 of the

Finance Act, 1994 for failure to make the payment of service tax

payable by them, in stipulated time period;

4. Penalty should not be imposed upon them under Section 77 of the

Finance Act, 1994 for the failure to file correct prescribed ST-3 return

showing the correct value of taxable service; and

5. Penalty should not be imposed upon them under Section 78 of the

Finance Act, 1994 for suppressing the value of taxable services

provided by them before the Department with intent to evade payment

of service tax.

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Matter was heard and decided by the Commissioner Vide Order No.AHM-

SVTAX-000-COM-015-15-16 dated-22.01.2016 confirming show cause notice

and imposing penalties. Aggrieved by the order, party has preferred the

present appeal.

Case for the appellant:

8. Appellant is a company engaged in the business of acting as an

advertising agency for their clients who are advertisers. It acts as an

advertising agent on behalf of its client i.e., the advertiser for media buying,

planning, and releasing advertisements on behalf of the advertisers in

various media including Broadcasting agencies. Its privity of contract is with

the advertiser who is its client. The Appellant is remunerated by way of an

'agency commission' from the client i.e., the advertiser to whom the

Appellant has provided its advertising agency services. It pays service tax on

the commission charged and received from the client under the category of

'Advertising agency services'.

9. The present issue arises in the context of the Appellant, acting as an

agent of its client-advertiser, have facilitated provision of broadcasting

services to its client-advertiser. Relevant Extract of sample Broadcaster's

[UTV Entertainment Television Ltd.'s] invoice on client / advertiser [M/s.

Nilons Enterprises Pvt. Ltd.] with a reference of the Appellant (Ad- agency)

and the Appellant's invoice on the client / Advertiser [M/s. Nilons Enterprises

Pvt. Ltd.] relied upon in the SCN is summarized below -

Contents of Broadcaster's (ITV Entertainment Television Ltd.'s) invoice

Broadcasting Charges 2,70,000 (-) Agency Discount / Commission 15% (please see Note below) 40,500 Net Amount 2,29,500 (+) Service Tax 12% 22,950 (+) Education Cess 2% 459 (+) Secondary Higher Education Cess 1% 230 23,639 Total Amount 2,53,139

Service Tax Registration Number : AACCV4782DST002

Nature of service : Broadcasting Services

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PAN Number : AACCV4782D

Contents of Appellant's invoice on Client (M/s. Nilons Enterprises Pvt. Ltd)

SI Particulars Total For For the Invoice Onwards Appellant's Payment to Services Broadcaste r (1) (2) (3)=(4)+(5) (4) (5)

(a) Broadcasting Cost 2,70,000

(b) (-) Commission @ 15% (please see 40,500 Note below) (c ) Net Ammount 2,29,500 2,29,500 33,750

(d) (+)Agency Commission 33,750 33,750

(e) (+) Service Tax 12% 3,375.00 3,476 3,476 (F) (+) Education Cess 2% 67.50

(g) (+) Sec. Higher Education Cess 1% 33.75

(h) (+) Broadcaster Service Tax on Rs. 23,639 23,639 2,29,500

(i) Total Amount received from client 2,90,365 2,53,139 37,226 advertiser

Nature of Service: Advertising Services

Service Tax Registration Number: AAACM5763HS

Note: The term commission is a general term used in the trade. The term merely means a rebate or discount from the gross amount and is generally given for advertisements which the media gets from accredited advertising agencies.

9.1 The Appellant pays service tax (Rs, 3, 476) on the agency commission

being the value of its taxable service (Rs. 33, 750) which it has rendered to

the advertiser under the category of 'Advertising agency services. A regards

the broadcasting charges (Rs. 2,29,500/-) and the service tax thereon (Rs.

23,639/- hereinafter called "broadcaster's service tax"] shown in the

Appellant's invoice, since the Appellant has only acted as an agent/

mediator/facilitator of the advertiser, it shall be the advertiser's

responsibility for paying the broadcaster for orders placed on the advertiser's

behalf and therefore the advertiser pays the broadcasting charges and

broadcaster's service tax to the Appellant for onward payment to the

broadcaster. The Appellant duly pays the broadcasting charges and

'broadcaster's service tax' to the television media (broadcaster) who pays

the broadcaster's service tax to the Government. Thus qua the broadcasting

charges and 'broadcaster's service, the Appellant has only acted as a 10 | P a g e ST/11702/2016-DB

payment conduit between the advertiser and the broadcasting agency for

the broadcasting service provided by the broadcasting agency to the

advertiser.

10. The O-I-O confirmed the demand of Rs.1,63,11,947/- for the period

1.4.2009-31.3.2012 u/s 73A(2) based on the following reasoning -

(i) the Appellant is not a broadcasting agency/organization and has

not provided any broadcasting services to its clients and hence

they are not required to charge/collect 'broadcaster's service tax'

from their customers.

(ii) However, they have charged and collected 'broadcaster's service

tax from their customers and hence u/s 73A(2) the Appellant is

required to deposit the 'broadcaster's service tax' to the

Government.

11. The appellants have taken, inter alia, following grounds against the

impugned order:-

11(a) Notwithstanding the demand under section 73A, the O-I-O has also

observed that broadcasting the advertisement through the broadcaster is

part of the Appellant's activity. Hence the broadcaster's services are input

services of the Appellant and its input cost is to be included in the taxable

value of the Appellant's services which has not been done. In this regard,

the O-I-O invokes Rule 5 of the Service Tax (Determination of Value) Rules,

2006

11(b) Broadcaster's service tax recovered by the appellant from advertiser

for onward payment to 'broadcasting agency' is not liable to be deposited

with government under Section 73A. section 73A is not attracted to the

'broadcaster's service tax' collected by the appellant. Hence demand of

Rs.1,63,11,947/- based on section 73A not payable.

11 | P a g e ST/11702/2016-DB

11(c) Section 73A of the Act prohibits a person from collecting an amount

as representing service tax from another and retaining it. The Appellant has

not retained any such sum Hence section 73A not applicable

11(d) Section 73A prohibits a person from unjustly enriching himself by

collecting an amount from another person by representing the amount

'collected' as service tax payable by him under the Act 'and retaining it'. The

Appellant has not retained any such sum Hence section 73A not applicable.

11(e) Reliance was placed on Triton Communications Pvt. Ltd. vs. CST

2022-TIOL- 1090-CESTAT-AHM followed in Triton Communications Pvt. Ltd.

vs. CST 2023-TIOL-258-CESTAT-AHM wherein the Tribunal has in an

identical issue held that the provisions of section 73A are not attracted since

it is not a case where the advertising agency has collected any amount as

service tax and retained the same for itself. Relevant extracts are

reproduced below-

".....Provisions of Section 73A of the Act are applicable where the

amount of service tax has been collected and retained by the assessee.

"....the present one is not a case where the appellant (advertising agency) had collected any amount as service tax and retained the same by not depositing the same with the Government exchequer. We find that the Appellant (advertising agency) has collected the service tax from the clients on behalf of the broadcasters in relation to service of 'broadcasting services' and transferred the said service tax amount to Broadcaster for discharging service tax liability on "Broadcasting services"

"....When there is no dispute at all on the facts that the appellant (advertising agency) has not retained the amount collected from the client as service tax and when there is no dispute at all on the facts that the appellant has passed on such amounts entirely to the broadcasters who have paid such amount to the Government and since no amount retained by the Appellant in the present case, demand of service tax by applying the provisions of Section 73A of the Finance Act is not correct."

12 | P a g e ST/11702/2016-DB

11(f) The above Tribunal decisions are squarely applicable to the facts of

the present case and accordingly no demands would be payable.

11(g) 'Broadcaster's service tax' not collected 'as representing service tax'

but as an agent of the advertiser for onward payment to the broadcaster.

Hence Section 73A not applicable to 'broadcaster's service tax'.

The Appellant has only acted as a payment conduit.

11(h) The 'Appellant's service tax' is the amount collected by the Appellant

'as representing service tax' on its agency commission / consideration

charged to advertiser but the 'broadcaster's service tax' is not collected 'as

representing service tax', but is collected by the Appellant as an agent of the

advertiser for onward payment to the broadcaster. The Appellant has only

acted as a payment conduit. Reliance on-

(i) Para 12 of the OIO wherein the OIO has mentioned that "the

Appellant has acted as a conduit between their client and the

broadcasting agency";

(ii) Zapak Digital Entertainment Ltd. v. C.S.T. (2017) 49 S.T.R. 455

(Tri.-Mumbai) affirmed by the Bombay High Court in CST vs. Zapak

Digital Entertainment Ltd. (2018) 18 GSTL 583 (Bom.)

Broadcaster's service tax' cannot be said to be an amount 'collected' within

the meaning of Section 73A since it is not 'collected and kept as his'.

11(i) 'Broadcaster's service tax' not collected not as the Appellant's service

tax - only collected tax that was required to be paid and was eventually paid

to the Government. Hence Section 73A not applicable to 'broadcaster's

service tax'. 'Broadcaster's service tax' cannot be said to be an amount

'collected within the meaning of Section 73A since it is not 'collected and

kept as his'. Reliance was placed on Supreme Court judgment in R.S.Joshi 13 | P a g e ST/11702/2016-DB

vs. Ajit Mills Ltd. and others (1977) 4 SCC 98 Broadcaster's service tax

already paid to the Government Exchequer by the Broadcaster - recovery of

the same by the department again from the Appellant u/s.73A is not

permissible.

11(j) Notwithstanding the submission made above that section 73A(2) is not

attracted to the present case, the Appellant has recovered the 'broadcaster's

service tax' along with broadcasting charges from its client i.e. the advertiser

for onward payment to the broadcaster who is liable to pay the

'broadcaster's service tax' to the Government. It is submitted that the

broadcaster having charged and paid the 'Broadcaster's service tax' to the

Government, recovery of the same by the department again from the

appellant u/s.73A is not permissible.

Reliance was further placed on the following Tribunal decisions

(i) Ahmedabad Tribunal decision in Triton Communications Pvt. Ltd.

vs. CST 2022-TIOL-1090-CESTAT-AHM a decision of this Hon'ble

Tribunal which is squarely applicable to the facts of the present case

and accordingly no demands would be payable. Relevant extracts of

the Tribunal order are reproduced below :-

"In the present matter Broadcasters already deposited the service tax amount to government as allegedly collected by the appellant from clients against the Broadcasting services and demand of service tax again from the appellant would amount to double payment. However, the Broadcasters having already paid such collected amount to the government, the appellant cannot be asked to deposit the same again with the Government Exchequer. It is our considered view, that once tax has already been paid on the services, it was not open to the department to confirm the same against the appellant, in respect of the same services."

(iii) Jaipuria Infrastructure Developers Pvt. Ltd. v. CST (2014) 36

STR 696 (Tri.-Del.) 14 | P a g e ST/11702/2016-DB

Hence demand of Rs. 1,63,11,947/- is not payable since Broadcaster's

service tax has already been paid to the Government Exchequer by the

Broadcaster - recovery of the same by the department again from the

Appellant u/s.73A is not permissible.

11(k) Notwithstanding that the demand under section 73a(2) is not payable,

the appellant submits that the observation in para 17 of the 0-1-0 that the

broadcasting cost has to be included in the taxable value of the appellant's

advertising agency services is incorrect.

11(l) The Order-In-Original in para 17 has observed that notwithstanding

the demand under section 73A (2), broadcasting the advertisement through

the broadcaster is part of the Appellant's activity. Hence the broadcaster's

services are input services of the Appellant and its input cost is to be

included in the taxable value of the Appellant which has not been done. In

this regard, the O-I-O invokes Rule 5 of the Service Tax (Determination of

Value) Rules, 2006 ("Valuation Rules").

11(m) Thus O-I-O seeks to contend that the Appellant has to pay service

tax on the Broadcasting charges under the category of advertising agency

services on the sole basis that the broadcasting charges are includible in the

value of Appellant's advertising agency services provided to the client-

advertiser. The observations made in para 17 of the O-I-O tantamount to

making out a new case not made out in the SCN which is impermissible.

11(n) The O-I-O has taken a new ground of valuation of the Appellant's

advertising agency services which was not at all taken in the Show Cause

Notice, which is not permissible. On this ground alone the contention of the

O-I-O needs to be set aside. Reliance on -

 CCE v. Ballarpur Industries Ltd. 2007 (215) ELT 489 (S.C.)  Warner Hindustan Ltd. vs. CCE (1999) 113 ELT 24 (SC) 15 | P a g e ST/11702/2016-DB

Observations totally extraneous to the demand u/s. 73A(2) and also

contradictory.

12. The issue raised in SCN and O-I-O is that the broadcaster' service tax

is payable to the Government u/s 73A(2). But the observation of the O-I-O

in Para 17 is that the broadcasting cost is includible in the taxable value of

Appellant's advertising agency services. This contention is totally extraneous

to the demand u / s 73A (2) and also contradicts the demand raised u/s.

73A(2)

Notwithstanding the above, even on merits, broadcasting charges are

not includible in the value of Appellant's taxable services viz. advertising

agency services.

The Appellant's receipts from the advertiser is towards two items-

i) Agency Commission (Rs.33,750/- in the illustration) (Consideration

for Appellant's services as an advertising agent to provide

advertisement agency services [to the client-advertiser] on which

Appellant pays service tax.

(ii) Media Costs (Rs. 2,29,500/- in the illustration) - the amount to be

paid to the electronic media for broadcasting client's (i.e., Advertiser)

advertisements which is pass through payment where Appellant has

just acted as a payment conduit.

Amount recovered from client advertiser as 'broadcasting cost' / 'Media Cost'

is not towards advertising agency services. Also such media costs is

excludible from the Appellant's value of taxable services ie., advertising

agency services.

13. The media cost i.e., the amount paid to electronic media for

broadcasting of advertisements on behalf of advertiser and recovered from 16 | P a g e ST/11702/2016-DB

advertiser, is not towards a 'service in relation to advertisement. It is not a

consideration for a service rendered by an advertising agency but is simply a

consideration paid to the media for its services of flashing the

advertisement. Such media costs would not be includible in the value of

taxable services.

14. Reliance was further placed on the following:-

(i) Board Circular No. 341/43/96-TRU dated 31.10.1996 is very clear that

value of advertising agency services to exclude the media costs (Para 4 of

the Circular) binding on departmental authorities

(ii) Advise Advertising Pvt. Ltd. v. Union of India (2001) 131 ELT 529

(Mad.) Amount paid for flashing an advertisement in a particular print or

electronic media cannot be said to have been paid towards services rendered

by the advertising agency.

(iii) Everest Brand Solution Pvt. Ltd. vs. CST 2018-TIOL-1215- CESTAT-

CHD advertising agency is not liable to pay service tax on the gross amount

charged by it from the advertiser i.e., including the broadcasting cost. It

would be liable to pay service tax only on the agency commission received

by it excluding media cost - based on above Board Circular and judgments of

Adwise Advertising Pvt. Ltd. and Dabur India Ltd.

(iv) M/s. Dabur India Ltd. vs. CCE 2017-TIOL-2954-CESTAT-CHD the

amount charged by the broadcasters does not form part of the taxable value

of the services provided by the advertising agency. The Service Tax charged

by the advertising agency is on the commission it charges.

(v) M/s. Adbur Pvt. Ltd. v. CST (2017) TIOL 2409 CESTAT (DEL) (pages

S65-S68) Service tax is payable only on the commission received by

advertising agency under the category of 'advertising agency services' -

based on above Board Circular and judgments of Adwise Advertising Pvt.

Ltd.

17 | P a g e ST/11702/2016-DB

(vi) Board Circular M.F. (D.R.) letter F. No. 341/43/2001-TRU dated 18-10-

2001 [See page 265] issued by 'Central Board of Excise and Customs'

(CBEC) clarifying that

a. Broadcasting / Media Cost (Rs. 2,29,500/- in the illustration in para

1.2) is liable under broadcasting services

b. Agency Commission (Rs. 33,750/- in the illustration in para 1.2) is

liable under advertising agency services

15. As regards the money received by the Appellant towards media cost

the advertising agency is only acting as a pass through payment conduit

[M/s. Zapak Digital Entertainment Ltd. v. CST (2017) 49 S.T.R. 455 (Tri. -

Mumbai)] affirmed by Bombay in CST vs. Zapak Digital Entertainment Ltd.

(2018) 18 GSTL 583 (Bom.)

20.1 Notwithstanding the above, the main contention of 0-1-0 to include

the broadcasting cost in the value of the Appellant's services by invoking

rule 5 of the Service Tax (Determination of Value) Rules, 2006 fails

inasmuch as -

(i) Rule 5 of the Valuation Rules has been held to be unconstitutional in

Intercontinental Consultants & Technocrats Pvt. Ltd. v. Union of India (2013)

29 STR 9 (Del.) affirmed by the Supreme Court in Union of India v.

Intercontinental Consultants & Technocrats Pvt. Ltd. (2018) 10 GSTL 401

(SC). Hence question of invoking Rule 5 to include the value of broadcasting

cost in the taxable value of the Appellant's service does not arise.

(ii) Even if Rule 5 of the Valuation Rules is invoked, considering the fact

that the Appellant has acted as agent of the advertiser for procuring services

from the broadcaster and invoiced the advertiser at actual, all the conditions

of Rule 5 would be met.

18 | P a g e ST/11702/2016-DB

16. The main part of observation in para 17 on basis of which O-I-O seeks

to contend that broadcaster services are to be included in value of Appellant

Advertising agency services is "broadcasting the advertisement through the

broadcaster is part of the appellant's activity". This is totally incorrect. The

Appellant is an Advertising agency whose role is not to broadcast the

advertisement but to act as agent/mediator/facilitator to enable the client-

advertiser to put his advertisement in any media.

17. The demand is for the period 1.4.2009 - 31.3.2012 and the SCN has

been issued on 26.9.2014. Ordinarily u/s. 73 the SCN has to be issued

within 18 months. The SCN has invoked the proviso to section 73(1) i.e. the

extended period of limitation of 5 years to confirm the demand. It is

submitted that the extended period of limitation is not invokable for the

following reasons.

17.1 SCN issued on same facts for earlier period also Department is thus

aware of facts and it cannot invoke extended period of limitation. SCN dated

16th October 2009 for the previous period 1.4.2004 - 31.3.2009 demanding

broadcaster's service tax collected by the Appellant u/s. 73A(2) had already

been issued by the department to the Appellant. Hence present SCN

contending suppression of facts to invoke extended period of limitation is not

tenable since department was fully aware of all the facts. Reliance on-

(a) Nizam Sugar Factory v. CCE (2006) 197 ELT 465 (SC) (Page

S99 to S102 at page S101(para 9)]

(b) ECE Industries Ltd. v. CCE (2004) 164 ELT 236(SC);

(c) P& B Pharmaceuticals Pvt. Ltd. v. CCE (2003) 153 ELT 14 (SC)

Inaction on part of the department cannot be a ground to invoke extended

period of limitation. The Appellant furnished details of broadcaster's service

tax through its various letters dated 1.11.2010 (F.Y. 2009-10), 26.8.2011 19 | P a g e ST/11702/2016-DB

(F.Y. 2010-11) and 11.5.2012 (F.Y. 2011-12). Thus, where the department

was made aware about the assessee's activity during the course of

investigation conducted by the departmental authorities almost 4 years prior

to the date of issuance of the show cause notice invocation of extended

period of limitation for issuance of show cause notice is not justified. Reliance on Supreme Court decision in Orissa Bridge & Construction

Corporation Ltd v. CCE (2011) 264 ELT 14 (SC), entire demand Revenue

Neutral.

17.2 Hence extended period not invokable. Notwithstanding and without

prejudice to the above arguments, the O-1-O in para 17 contends that the

broadcasting cost is includible in the taxable value of Appellant's services

and broadcasting services hired by the assessee is an input service to the

assessee. In that case the demand would be revenue neutral since the

'broadcaster's service tax' would be available as Cenvat credit to the

Appellant and hence there would be no additional demand. Since the entire

exercise would be revenue neutral the Appellant would have no cause to

evade tax/duty. Hence extended period is not invokable. Reliance on Nirlon

Ltd. vs. CCE (2015) 320 ELT 22 (SC)

17.3 Appellant's Activity is in accordance with Industry practice which is

known to the department. The broadcasting charges and the 'broadcaster's

service tax' collected by the Appellant are shown in the invoice raised by it

only for the purpose of intimating the advertiser about the broadcasting

charges and the 'broadcaster's service tax' payable by the advertiser to the

broadcaster. The same was not collected by the Appellant with an intention

to retain the same with itself but only for onward payment to the

broadcaster to pay it to the Government. This is the practice that is being

followed by the entire industry which is coming out from the following Board

Circulars-

(i) Circular No.F.No.341/43/96-TRU dated 31.10.1996 issued by the

Board in the context of advertising agency services; and 20 | P a g e ST/11702/2016-DB

(ii) M.F.(D.R.) letter F. No. 341/43/2001-TRU dated 18-10- 2001

issued by the CBEC in the context of broadcasting services when

broadcasting services were subject to levy of service tax in 2001

When the Appellant has acted in accordance with the entire industry practice

which is already known to the department there cannot a question of any

intent to evade payment of service tax. It also inter alia, pleaded that

penalties were not sustainable.

Case for the department

18. The undisputed facts of the case are that M/s. Mudra was holding a

valid Service Tax registration and has provided taxable services (Advertising

Services) in their capacity as an Advertisement Agency to their clients; that

they have provided advertising consultancy services to their clients for which

they were receiving commission/fees from such clients, whereupon they

were paying service tax and that after finalization of the advertisement

schedule and slots. etc. with their clients, M/s. Mudra was placing orders

with the concerned Broadcasting Agency to book time slots on various

channels/electronic media as required. The SCN specifically mentions that

M/s. Mudra was not providing taxable services of the nature as specified

under Section 65(105) (zk) l.e. broadcasting services, nor they are qualified

as a broadcasting agency as provided under Section 65(15) and Section

65(16) of the Finance Act, 1994. The only allegation contained in the present

case is that M/s. Mudra have collected broadcasting charges along with its

service tax component from their clients even when they are not

qualified/required to do so, yet not deposited the same to the credit of the

Central Government as required under Section 73A(2). To this aspect, I find

no dispute from M/s. Mudra.

19. M/s. Mudra has, in fact, admitted that they have charged/collected the

broadcasting charges from their clients, though in a mediatory capacity on 21 | P a g e ST/11702/2016-DB

behalf of the broadcasting agency. They claim to have done no wrong as the

amount so collected was passed on to the broadcasting agency, whereupon

the broadcasting agency has paid service tax. There is no substance in the

arguments put forth by M/s. Mudra in this regard, as the issue of taxability

of the services; or their eligibility of being a broadcaster; or payment of

service tax by the broadcasting agency, etc. are all independent of the

provisions of Section 73A. The provisions of section 73A of the Finance Act

are enumerated below:-

"Section 73A: Service tax collected from any person to be deposited with Central Government.

(1) Any person who is liable to pay service tax under the provisions of this Chapter or the rules made thereunder, and has collected any amount in excess of the service tax assessed or determined and paid on any taxable service under the provisions of this Chapter or the rules made thereunder from the recipient of taxable service in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government.

(2) Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person sl.all forthwith pay the amount so collected to the credit of the Central Government.

(3) Where any amount is required to be paid to the credit of the Central Government under sub-section (1) or sub-section (2) and the same has not been so paid, the Central Excise Officer shall serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified In the notice, should not be paid by him to the credit of the Central Government." [emphasis provided]

20. M / s Mudra was not a broadcasting agency/organization and they

have not provided any broadcasting services to their clients, and hence they

are not required to charge/collect service tax from their customers.

However, they have charged and collected the service tax on the

broadcasting charges from their clients. Therefore, in the light of the

provisions of section 73A (2), service fax so collected has to be deposited by

M/s. Mudra to the credit of Central Government which they have admittedly

not done. Therefore, the demand has been correctly made under Section

73A (3) of the Act ibid.

20.1 Further, the provisions of section 738 of the Finance Act, 1994 is as

under-

22 | P a g e ST/11702/2016-DB

"Section 73B. Interest on amount collected in excess. - Where an amount has been collected in excess of the tax assessed or determined and paid for any taxable service under this Chapter or the rules made thereunder from the recipient of such service, the person who is liable to pay such amount as determined under sub- section (4) of section 73A, shall, in addition to the amount, be liable to pay interest at such rate not below ten per cent and not exceeding twenty-four per cent. per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first day of the month succeeding the month in which the amount ought to have been paid under this Chapter, but for the provisions contained in sub-section (4) of section 73A, fill the date of payment of such amount."

20.2 M / s Mudra therefore is also liable to pay interest at the appropriate

rates on the amount of service tax so collected from their clients but not

deposited to the credit of Central Government under the provisions of

section 73B of the Finance Act, 1994.

21. That the case laws cited by M / s Mudra in support of their defence are

related to non-payment of service tax on broadcasting charges collected by

the concerned assessee. Since the present case involves Section 73A which

is totally independent of any other provisions of the statute, including

taxability or short-payment/non- payment of Service Tax, these case laws

have no relevance in the present case. I find that the ratio of cited case laws

is not applicable in the instant case. Accordingly, I hold that M / s Mudra

have collected an amount representing service tax and they have failed to

deposit such amount to the credit of Central Government as required under

Section 73A(2) , hence the same is liable to be recovered from them under

Section 73A(3) along with interest at the appropriate rates under Section

73B.

22. Notwithstanding the above provisions of Section 73A, M/s. Mudra

have collected broadcasting charges and service tax leviable thereon on

behalf of the broadcasting agencies and paid the said amount to the

respective broadcasters who had displayed/ broadcasted the advertisement

procured by them on behalf of their customer. In other words, payment has

been only routed through them wherein no service portion is involved and 23 | P a g e ST/11702/2016-DB

hence the same is not liable to service tax. In this regard, when the

payment is routed through the assessee the same is forming cost of

displaying advertisement on behalf of the client. Therefore, In view of Rule 5

of Service Tax (Determination of Value) Rules, 2006 the said cost should

have been included in the taxable value of service. M/s. Mudra should have

paid service tax on the total taxable value they have charged/collected from

their clients, which they have failed to do. M/s. Mudra being an agent on

behalf of their clients had to ensure that whatever advertisements given by

their customers has to be displayed by broadcaster with whom they have

booked time slots. Therefore, the activities of M/s. Mudra to receive

advertisements from the customers book the time slot with the broadcaster

and ensure that the said advertisement had displayed by the broadcaster,

they become mediator to arrange payment from customer to broadcaster

through his books of accounts. The payment to the broadcaster from the

customer of the assessee has not directly gone to the broadcaster. All these

facts clearly suggest that the broadcasting of the advertisement through the

broadcaster is a part of their activities. The assessee have hired the service

of broadcaster for broadcasting the advertisements supplied by their

customer. Therefore, if entire transaction is looked from receiving

advertisement from customers till the broadcasting of the same at specific

time slot of the broadcaster, broadcasting service hired by the assessee is

definitely their input service. Meaning thereby the cost of input service hired

is incurred by the assessee and its cost has to be included in the taxable

value of the service rendered by the assessee which has not been done.

23. It is the claim of the assessee that they have received invoices from

the broadcaster in their name on behalf of their clients whose behalf the

advertisement were displayed. In the said invoice broadcaster has charged

service tax on the broadcasting charges. They were entitled to have availed

Cenvat credit of the same and as they had raised Invoice of the same

amount along with same service tax to their customer, the issue is revenue

neutral. In this regard, their claim cannot be accepted. There is mechanism 24 | P a g e ST/11702/2016-DB

in the Cenvat credit Rules, 2004 to avail credit of service tax suffered in the

input service, but the assessee have not complied with the same. Therefore,

there is substantial lapse on the part of assessee. All the procedures

prescribed under the Cenvat Credit Rules, 2004 need to be complied if

anybody intend to avail Cenvat credit of service tax suffered in their input

service otherwise the mechanism devised by the Government to avoid

double taxation will collapse. Therefore, their claim for revenue neutrality is

not acceptable.

24. As far as their submission regarding non-existence of suppression of

facts etc., The assessee was found to be issuing Invoices charging

broadcasting charges and service tax thereon, however the same were never

declared in their ST-3 returns filed from time to time. The aforesaid facts

came to notice only during the course of audit. Nor they had approached the

department in this regard. The assessee was in knowledge that they were

not rendering broadcasting service, however they were raising Invoices to

their client Indicating therein broadcasting charges and service tax thereon.

Therefore, there exists sufficient ground for existence of suppression of

material facts with intent to evade non-payment of amount collected by

them as service tax. That demand for extended period is justified and find

that decision cited by the assessee in this regard are of no relevance.

25. Reg: penalty under Section 76 and 77 of the Act. Though this is a

case of demand under section 73(A) of the Finance Act, 1944, penalties

under section 76, 77 and 78 are liable to be imposed in view of CESTAT,

Mumbai's decision in the case of Pandurang Travels vs Commissioner of

Central Excise, Pune, reported in 2009(15) STR 567 (Trib.- Mumbai) holding

that charging service tax and not depositing is clear evasion of tax liability.

Hind that That the assessee failed to deposit an amount of Rs. 1, 63

,11,947/ -collected as service tax which they are otherwise not required to

collect, but failed to deposit to the credit of Central Government in

contravention of Section 73A(2). For their acts of omission and commission

which amounted to suppression of material facts from the department as 25 | P a g e ST/11702/2016-DB

stated in para supra, they have rendered themselves liable for penalty under

section 78.

26. We have considered the adversarial submissions and also the case law

as has been brought on record before us. We find that in the matter of trite

on Triton Communications Pvt. Ltd. Vs. CST as reported in 2022-TIOL-1090-

CESTAT-AHMEDABAD, under the similar set of circumstances it has been

decided as follows:

"4.1 The adjudicating authority has totally misconceived the provisions of Section 73A of the Finance Act, 1994 which reads as under :-

"73A. Service Tax collected from any person to be deposited with Central Government. - (1) Any person who is liable to pay service tax under the provisions of this Chapter or the rules made thereunder, and has collected any amount in excess of the service tax assessed or determined and paid on any taxable service under the provisions of this Chapter or the rules made there under from the recipient of taxable service in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government.

(2) Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government."

It can be seen from the above reproduced provisions that the said provisions of Section73A of the Act are applicable where the amount of service tax has been collected and retained by the assessee. In the present case, it is admitted facts that that no service tax was chargeable on the activity of the appellant, since the activity of Appellant do not qualify them as a broadcasting agency nor can be classified under Broadcasting Services. It is also true that Section73A (2) which mandated that any person who collects any amount as representing service tax to deposit it with the Government also. In the present case demand of service tax under the provisions of section 73A of the finance Act confirmed by the Ld. Commissioner without discussing the activity of appellant and without going into the facts of the case legally not correct. We have gone through the activity of appellant and bills of the appellant and find that in addition to the service of advertising agency, the appellant has been acting as a mediator/ facilitator between, the broadcasting companies and the clients. In this activity, the clients/customers approaches the appellant for marketing of their products/ services in various medium like Electronics media, Print Media, etc. The Broadcasters sell time slot in the Electronics Media to the clients/ customers, but the payment of such time slot is routed through the appellant i.e. advertising agency. The Broadcaster issues an invoices to the appellant with the details of the clients whose products/ services were advertised in the electronic media, and in turn, the appellant issues a reimbursement bill to the client which is always corresponding the bills of the broadcasting company. In the said bills also the details of program and the product/ service of the clients/ customers and service tax amount are shown. The clients/customers pays the billed amount to the appellant including the service tax amount and the same amount without any deduction or retention is passed on the broadcasting company. The Broadcasting companies deposited such amount of service tax with the Government for discharging their liabilities of service tax under the category of broadcasting service. Clearly, the role in the entire transaction of appellant is just like an mediator 26 | P a g e ST/11702/2016-DB

who collects money from the clients on behalf of the broadcasting company. It is also admitted fact in the present case that the retainership fees or commission income separately charged and collected from the clients, appellant paid the service tax under the advertising services. The said undisputed facts clearly established that the present one is not a case where the appellant had collected any amount as service tax and retained the same by not depositing the same with the Government exchequer. We find that the Appellant has collected the service tax from the clients on behalf of Broadcasters in relations to service of "Broadcasting services" and transferred the said service tax amount to Broadcaster for discharging service tax liability on "Broadcasting services". In the present matter revenue nowhere disputed the facts that Broadcaster had paid the said disputed service tax to Government.

4.2 When there is no dispute at all on the facts that the appellant has not retained the amount collected from the client as service tax and when there is no dispute at all on the facts that the appellant has passed on such amount entirely to the broadcasters who have paid such amount to the Government and since no amount retained by the Appellant in the present case, demand of service tax by applying the provisions of Section 73A of the Finance Act is not correct. The transaction of appellant not covered under the provisions of Section 73A of the Finance Act. Therefore, we find that the impugned order confirming demand under Section 73A of the Finance Act are not sustainable and needs to be set aside.

4.3 Without prejudice, It is also seen that the amount received from the clients/customers have been subjected to Service Tax at the hands of the Broadcasters. The revenue also admitted that appellant do not qualify as Broadcasting agency. Hence, on the Broadcasting Service actual liability of payment of services tax is on the Broadcasting company who provide the said services to the clients. In the present matter Broadcasters already deposited the service tax amount to government as allegedly collected by the appellant from clients against the Broadcasting Services and demand of service tax again from the appellant would amount to double payment. However, the Broadcasters having already paid such collected amount to the government, the appellant cannot be asked to deposit the same again with the Government exchequer. It is our considered view, that once tax has already been paid on the services, it was not open to the Department to confirm the same against the appellant, in respect of the same services. Accordingly, the impugned order liable to be set aside. Since the entire case is being decided on merit, we do not go into limitation and time bar issues raised by the Ld. Counsel."

27. We find that in this matter also the duty has been collected by the

appellants and has been finally paid to the department either by the

appellants or by the broadcasters, therefore, the department having already

collected its same could not have called upon appellant to make double

payment and thereby to enrich the exchequer. We, therefore, agreeing with

the above legal proposition as laid down in the aforesaid matter in relation to

duty make further observations as follows:

27.1 It is a matter of fiscal prudence that the taxes have not only to be

collected and paid as per levy provisions but it is equally pertinent that the

tax liability has to be discharged as per the machinery provisions of the tax 27 | P a g e ST/11702/2016-DB

levying legislation. As the service tax was levied under Finance Act, 1994, it

had provided for the earliest of the date of invoices, date of provision of

service or date of receipt of services as a point of taxation. While in this

case, taxes duly appear to have been collected paid and but only as per the

contractual obligations of the appellants and the broadcasters, as were cast

upon themselves. The responsibility to pay taxes as per the point of taxation

and not as per any variance with legal provisions is cast upon tax-payers. It

appears that taxes were collected by the appellant much earlier then they

got paid to the exchequer through itself or through broadcasters. Since,

coming into force on interest provisions from 1995 through introduction of

Section 11AA and 11AB in Central Excise Act, 1944 through Finance Act,

1995, the delay entailed, involves interest costs to the exchequer. It is

pertinent to note, the taxes are not only required to be paid but also

required to be paid as per the machinery provisions, including the

designated point of time of taxation. Any variation from the above will have

interest repercussions and assessee cannot take shelter under the old

concept of revenue neutrality which was relevant in central fiscal

legislations, only till the time, interest was not factored in machinery

provisions. Therefore the argument of the appellant of revenue neutrality to

that extent only appears rejectable. In 1995 (77) ELT 511 (S.C) in the

matter of Formica India Division vs. Collector of Central Excise., the Hon'ble

Supreme Court taking note of the machinery provisions allowed mends to be

made by the party by allowing substantive benefit by paying duty on the

intermediary products to made requirement of Rule 66A. Relevant para 2

and 3 are reproduced below:-

"2. The High Court, however, took note of the fact that no contention had been raised before the Tribunal that the appellants should be permitted to meet the requirements of Rule 56A of the Central Excise Rules and, therefore, they cannot be permitted to avail of that benefit in a Writ Petition brought under Article 226 of the Constitution. That indeed was a technical view to take because if the appellants were entitled to the benefit of the Notification No. 71/71-C.E., dated 29th May, 1971, to deny that benefit on the technical ground of non-compliance with Rule 56A would tantamount to permitting recovery of double duty on the intermediary product. The circumstances in which the appellants did not pay the duty on the intermediary product before putting the same to captive consumption for producing that stage, the appellants contested the correctness of the

28 | P a g e ST/11702/2016-DB

classification and had, therefore, not paid the duty on the intermediary product. When it was found that they were liable to pay duty on the intermediary product and had not paid the same, but had paid the duty on the end product, they could not ordinarily have complied with the requirements of Rule 56A. Once the Tribunal took the view that they were liable to pay duty on the intermediary product and they would have been entitled to the benefit of the notification had they met with the requirement of Rule 56A, the proper course was to permit them to do so rather than denying to them the benefit on the technical ground that the point of time when they could have done so had elapsed and they could not be permitted to comply with Rule 56A after that stage had passed. We are, therefore, of the opinion that the appellants should be permitted to avail of the benefit of the notification by complying at this stage with Rule 56A to the satisfaction of the Department.

3. In the result, we allow Civil Appeal No. 1493/88 and remit the matter to the Collector of Central Excise with a direction to permit the appellants to comply at this stage with the requirements of Rule 56A of the Central Excise Rules and claim set off of the duty payable on the intermediary product by satisfying the Collector that the same was used in the manufacture of the end product on which full duty had already been paid. On such satisfaction being recorded, the appropriate consequential orders would be passed."

(Emphasis supplied)

38. Similarly, in 2005 (181) ELT 380 (S.C.) in the matter of Punjab Factory

Ltd. Vs. Commissioner of Central Excise, Chandigarh a three member bench

of the Hon'ble Supreme Court justified penalty even when revenue neutrality

existed on noting violation of excise duty provisions.

39. Again, in the detailed decision as reported in 2000 (119) ELT 718 (Tri-

LB) in the matter of Jay yushin vs. Commissioner of Central Excise, New

Delhi. The following conclusions were arrived at. Relevant para 13 is

reproduced below:-

"13. In the light of the above discussion, we answer the reference as under:

(a) Revenue neutrality being a question of fact, the same is to be established in the facts of each case and not merely by showing the availability of an alternate scheme;

(b) Where the scheme opted for by the assessee is found to have been misused (in contradistinction to mere deviation or failure to observe all the conditions) the existence of an alternate scheme would not be an acceptable defence;

(c) With particular reference to Modvat scheme (which has occasioned this reference) it has to be shown that the Revenue neutral situation comes about in relation to the credit available to the assessee himself and not by way of availability of credit to the buyer of the assessee's manufactured goods;

(d) We express our opinion in favour of the view taken in the case of M/s.

International Auto Products (P) Ltd. (supra) and endorse the proposition that once an assessee has chosen to pay duty, he has to take all the consequences of payment of duty."

In fact, with coming into force of interest provisions, revenue neutrality

concept has undergone a change, so as to consider duty neutrality different 29 | P a g e ST/11702/2016-DB

from revenue (Duty + interest) neutrality. Latter at time may not exist, even

if former is present.

40. It is clear that determination of revenue neutrality is a question of fact

and if machinery provisions by way of scheme adopted by the assessee are

found to have been misused or compromised by allowing improper gain by

way of saving of interest over normal machinery provisions relating to point

of taxation and payment of duty, same can still result in demand of interest

as well as penalties. Matter, therefore, needs to be examined in detail by the

department and while the payment by either of the party including

broadcasters will in substance, absolve them from paying duty all over

again, same cannot be stated about interest payment involved as well as

penalties, if invoked only for breach of machinery provisions by them. These

aspects will need further examination in the light of above stated position by

original adjudicating authority. Matter is therefore, remanded for a relook as

far as the interest and penalties are concerned in accordance with the

provision of Finance Act, 1994 vis-à-vis, the scheme adopted by the

appellant, in accordance with the contract/arrangement entered by them

and broadcasters. Penalties likewise are to be confined for breach of

machinery provisions only, if so found and not for intent to evade

considering the legalities of issue involved.

41. Matter is remanded in the above terms.

(Pronounced in the open court on 09.01.2024)

(SOMESH ARORA) MEMBER (JUDICIAL)

(C.L. MAHAR) MEMBER (TECHNICAL) PRACHI