Can Service tax be denied on the basis of variation in original and revised return?

PJ/Case Law/2019-2020/3604

M/s Creative Cable Network Pvt. Ltd. Final Order No. A/60879/2019-CU(DB) dated 09.06.2020
Issue: Can Service tax be denied on the basis of variation in original and revised return?
Brief Facts: M/s Creative Cable Network Pvt. Ltd. is engaged in providing service of carriage to broadcasters i.e. facilitating broadcasting of those channels which make payment for transmission of their respective channels. They don’t own any infrastructure for such transmission but get these channels transmitted through other broadcasters. An audit was conducted for the period April, 2014 to March, 2015 during the period August, 2015 to November, 2015 and it was observed that revised returns were filed. It was observed that there was variation between the original and revised return. The department has alleged that the appellant has merely substituted Cenvat credit invoices without actual receipt of input services. Moreover, no supporting invoices have been furnished by the appellant despite visit by the audit party to the premises. They have also availed the Cenvat credit without receipt of documents as required under Rule 9 of Cenvat Credit Rules as well as without actual receipt of input services. Further ‘placement income account’ has been reduced by passing debit entries and leading to evasion of tax. It was also observed that they have taken credit of invoices where the registration was in the proprietor’s name and of another invoice where the address mentioned in the registration certificate was different from the address of provision of Service.

Appellant’s Contention: Appellant has contended that they are engaged in the business of collection of subscription and carriage income from broadcaster and channels. They are managing the staff for the collection of subscription on behalf of the broadcaster and carriage on behalf of channels. They have deputed various distributors for the collection of the same and they used to pay the distributors the commission for the collection. In order to save the duplicity of efforts, it has been mutually decided by the parties that instead of intermediaries raise the bill on Fastway and Fastway on the appellant it has been proposed that direct billing by intermediaries to appellant company is better option. So, to execute the above arrangement billing/invoices raised by M/s. Fastway on appellant company was reversed in respective books of both the companies and direct billing by intermediaries in the name of appellant companies were arranged.
Coming to the allegation of difference in name in the registration certificates, it is being contended by the appellant that registration certificate is in the name of Shri Sarabjit Singh, Proprietor of M/s. Surya Cable, therefore, Cenvat credit sought to be denied alleging that the supplier of service is not registered with the department.

Further with regard to the provision of service from a different address not mentioned in the certificate, it is evident that they have received the service and the service provider too has paid the service tax. So the credit cannot be denied.

Reasoning of Judgement: Tribunal has decided on the basis of the fact that the appellant was having a tripartite agreement wherein the intermediary services provided to the appellant used to issue invoices to M/s. Fastway and the appellant has taken Cenvat credit thereof. Later on, the said trade practice was abolished and the intermediary broadcaster has issued direct invoices and the appellant took Cenvat credit. As due to this reason the appellant had to file revised ST-3 returns and take Cenvat credit on the invoices issued by intermediary broadcasters, in this circumstances, the availment of Cenvat credit of services are not in dispute. CESTAT has held that the reliance placed by the adjudicating authority on the original returns is misplaced as once the revised returns are filed, original returns become null and void.
It was further held that Cenvat credit cannot be denied on the ground that the certificate does not have the name of the service provider. In fact, the service provider is M/s. Surya Cables through its proprietor and availment of services and payment thereof is not in dispute, therefore, the Cenvat credit cannot be denied.
Further, denial of Cenvat credit on the ground that M/s. North India Distribution is having these addresses in the invoices other than the address given in the registration certificate is not a reason as it is a fact on record that the appellant has received the services and paid the Service Tax, therefore, the Cenvat credit cannot be denied.

Comment:-Tribunal has passed the decision in favour of the appellant stating that the original return shall stand null and void once the revised return is filed. This issue of revised return shall not be a point of litigation in GST regime as the council has not provided the taxpayers with the facility to file revised returns.

Prepared by- CA Akanksha Bohra

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PJ/Case Law/2019-2020/3604

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