Tiara Advertising Vs Union of India (Telangana High Court)
The writ petition challenged the Order-in-Original dated 30.01.2017 passed by the Commissioner of Service Tax, Hyderabad, imposing tax and penalties on the petitioner for alleged irregular availment of CENVAT Credit. The petitioner, an advertisement booking agency engaged in booking advertising space in print and electronic media, was issued a show-cause notice on 19.04.2016 for the period from 01.10.2010 to 31.03.2015 alleging irregular availment of CENVAT Credit on certain input services. The petitioner replied to the notice, but the Commissioner confirmed the demand, leading to the present writ petition.
The petitioner had availed total CENVAT Credit of ₹1,41,51,903 during the relevant period. However, the disputed credit amounted only to ₹17,15,489. Since the petitioner provided both taxable and exempt output services, including exempt services relating to advertisement space in print media, Rule 6 of the CENVAT Credit Rules, 2004 governed its obligations. The petitioner admittedly did not maintain separate accounts for inputs and input services used for taxable and exempt services, nor did it opt for any of the alternatives prescribed under Rule 6(3).
The show-cause notice proposed to apply Rule 6(3)(i) on behalf of the petitioner and demanded payment of 5% of the value of exempt services up to 31.03.2012 and 6% thereafter, resulting in a demand of ₹3,52,65,241. The petitioner argued that such a demand was unreasonable when the total CENVAT Credit availed was less than ₹1.50 crore and the actual disputed credit was only ₹17,15,489. It also relied on judicial precedents supporting its stand. However, the Commissioner did not consider or discuss any of the decisions cited by the petitioner.
