AD VISION Vs. COMMISSIONER OF SERVICE TAX, AHMEDABAD

JUDGEMENT

(1.) DEMAND of service tax of Rs. 4,90,487/ - has been confirmed against the appellant, who has provided advertising services during the period October 2004 to September 2005. Penalties under Sections 76, 77 and 78 of Finance Act, 1994 have also been imposed.

(2.) LEARNED Chartered Accountant on behalf of the appellant submitted that in reality, there is no service tax payable and the demand has been confirmed because of the fact that while filing ST -3 return, mistakes were committed by the appellants clerk, who was not well conversant with the provisions relating to service tax and discharge of liability of service tax. For the period from October 2004 to March 2005, the CENVAT Credit of Rs. 1,47,475/ - was shown under Column 4 of ST -3 return, which relates to adjustment in terms of sub -rule 3 of Rule 6 of Service Tax Rules, 1997. In fact, this being CENVAT Credit amount available, should have been shown in Column 8b of Service Tax return and debit should have been made in CENVAT Credit account. Similarly, for the period April 2005 to September 2005, the CENVAT Credit taken was not at all shown in Column 8b and the value of taxable services realized, was wrongly shown and instead of showing CENVAT Credit amount, value of input taxable services was shown as value of break -up of taxable service realized. Because of this error, duty demand has been confirmed on the ground that the appellant had not discharged service tax liability by making debits in CENVAT Credit account. He submits that because of clerical error, the service tax cannot be demanded twice and the benefit of CENVAT Credit should have been allowed after examining the records maintained by the appellant and finding whether he is eligible or not. As regards demand of service tax of Rs. 28,373/ - he submits that this service was rendered as a sub -contractor and prior to September 2007, a sub -contractor was not leviable to Service tax.

(3.) LEARNED SDR, on the other hand, submits that there is no evidence to show that actually the CENVAT Credit available has been debited by the appellant towards payment of Service Tax during the relevant month. Therefore, it cannot be said that what has happened is an error in preparation of return. Therefore, the demand for service tax and imposition of penalty is justified. He further submits that once the services have been rendered even in the capacity of sub -contractor, the services provider is required to pay the tax. The contractor who receives the services can avail the benefit of service tax credit. But, this in no way, would exempt the sub -contractor from payment of service tax.