Whether credit admissible on the services like printing of calendar, greeting cards, diaries, etc.?

PJ/CASE LAW/2015-16/2918

Case:- ULTRATECH CEMENT LTD. VERSUSCOMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

Citation:-2015 (40) S.T.R. 523 (Tri. - Del.)

Brief facts:-The appellant is in appeals against the impugned orders denying credit of Service Tax paid on various services, i.e., on printing of calendar, greeting cards, diaries and for organizing award function for students and booklets for contest and water harvesting systems during the period April, 2007 to March, 2011 and non-payment of Service Tax on space renting for commercial purposes.
As both the appeals are arising out of common issue, therefore, they are being disposed of by a common order.

Appellant’s contention:- The contention of the learned consultant for the appellant is that printing of calendars, greeting cards, diaries, etc., are for the sales promotion activity of their business. Further awards function organized by them is also part of their sale promotion as the students to whom the awards have been given, they give innovative idea for usage of their products in the construction activity. These two services are integral part of the sale promotion activity of the appellant. He submits that the appellants are entitled to take credit on these services. For demand of Service Tax, it is the submission of the appellant that they are falling within the SSI exemption limit and their turnover during the impugned period remained below the threshold taxable limit during the period. Therefore, the impugned orders are to be set aside.

Respondent’s contention:- On the other hand, learned AR opposed the contention of the consultant and submits that the activity of printing of calendar, greeting cards, diaries, etc., and distribution thereof are not an activity of their business but are welfare or facilities provided to the employees. To support this contention, he relied on the decision of this Tribunal in the cases of CCE, Nagpurv. Manikgarh Cement - 2010 (20)S.T.R.456 (Tri. - Bom.) and Oudh Sugar Mills Ltd.v. CCE, Lucknow - 2012 (282)E.L.T.541 (Tri. - Del.) = 2014 (34)S.T.R.309 (Tri.).For demand of Service Tax, he submits that the appellant is big organization and have multifarious business activities and it is not possible that the value of taxable service of whole organization is less than the threshold limit. Therefore, the appellant is liable to pay service tax on this service.

Reasoning of judgment:- In this case, the two issues are involved - (a) whether the appellant is entitled to take credit on the services namely, printing of calendar, greeting cards, diaries, etc., and organization award functions or not? (b) whether the appellant is liable to pay Service Tax under the category of renting of immovable property having turnover of less than the threshold limit of SSI exemption or not?
For availing credit on printing of calendar, greeting cards, diaries, etc., the appellant used these services for advertisement purposes of their products, therefore, these are integral part of their sale promotion. They accordingly, hold that the appellant is entitled to take credit on printing of calendar, greeting cards, diaries, etc. Further they hold that for organizing award functions, these activities are parts of their sale promotion as the students to whom the awards have been given, they give innovative idea for marketing their products in the public. Therefore, the said activities are also the activities for sale promotion. Accordingly, the appellant is entitled to take credit on printing of calendar, greeting cards, diaries, etc., and organizing award functions which are integral part of the sale promotion.
For demand of Service Tax under the category of renting of immovable property for the period 2007-08 to 2010-11, the total demand of Rs. 44,030/- which is below the threshold limit and the Revenue has not produced any contrary evidence that the appellant has crossed the threshold limit. In the absence of evidence, they hold that the appellant’s turnover is below the threshold limit of SSI exemption. Therefore, the appellant is not liable to pay Service Tax on these services. In these circumstances, they do not find any merit in the impugned orders of the Commissioner (Appeals) and the same are set aside. The appeals are allowed with consequential relief, if any.

Decision:- Appeal allowed.

Comment:- The analogy of the case is that credit can be availed for printing for distribution of calendars, greeting cards, diaries, as the same being an activity of sales promotion, is integral part of business activity. Organizing functions for giving rewards to persons providing innovative marketing ideas also a part of business activity. Hence, both services were held as input service. Hence Credit of Service Tax is available on them.
Second issue was regarding leviability of Service Tax under the category of renting of immovable property which was below the threshold limit. As Revenue could not produce any contrary evidence to show that the appellant has crossed the threshold limit, the appellant was entitled for small scale industries exemption. In the absence of evidence, they hold that the appellant’s turnover is below the threshold limit of SSI exemption. Therefore, the appellant is not liable to pay Service Tax on these services.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2918

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