COMMR. OF SERVICE TAX Vs. KRISHNA COMMUNICATION

JUDGEMENT

(1.) THIS appeal is directed against Order -in -Appeal No. 159/2011 (STC)/K. Anpazakan/Commr(A)/Ahd, dated 30 -6 -2011. The facts of the case, in brief, are that the appellants are engaged in providing taxable services in the category of Advertising Services. The said appellants are duly registered with the Department and are holding a valid Service Tax Registration No. AADHR2726RST001.

(2.) DURING the course of audit conducted by CERA, it was noticed that Service Tax would be paid to the credit of Central Government on prescribed due date in which the payment are received towards the value of taxable services. Further, the amounts billed by the appellants against customers but not realized are not liable to Service Tax as the event of payment of Service Tax is on the basis of actual realization of amounts towards the cost of service. Where the cost of service billed become irrecoverable for any reason and the same is written off fully in the in the books of accounts of the assessee, the element of input service credit attributable to such write off was required to be reversed or paid by the appellants as no Service Tax was realized on the output service in which such input service has been used. The CENVAT Credit scheme envisages availment of credit towards payment of Service Tax on output services. Where no Service Tax is payable on any output service either because such service itself is exempt or because the service charges billed for in respect of such services becomes irrecoverable, the Service Tax credit was not available to the appellants and the credit cannot be used as set off against output service in such cases. In view of the above, the CENVAT Credit to be reversed by the appellants was calculated to be Rs. 1,45,808/ - and the appellants, vide letter dated 12 -11 -2009, were requested to pay up the said amount.

(3.) THE assessee preferred an appeal before such impugned order before Commissioner (Appeals). The first appellate authority, after considering the submissions made in the appeal memoranda as well as during the personal hearing, held in favour of the assessee and set aside the Order -in -Original.