The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the CENVAT Credit cannot be denied to exporters of cricket match broadcasting services on minor procedural infraction.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has held that substantive benefit cannot be denied for procedural infractions. The procedure has been prescribed to facilitate verification of substantive requirements. As long as a fundamental requirement is met, other procedural deviations can be condoned.
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Background – Cricket Match Broadcasting Services
The appellant/assessee was engaged in the business of live broadcasting of cricket matches on DTH and other digital media exclusively in the territory of USA and Canada, for which the appellant had entered into an agreement with its foreign buyers.
The assessee had to acquire digital media broadcasting rights for cricket matches from different cricket boards/ licensers outside India. The appellant executed one deal in the last quarter of F.Y.2015-16, wherein this business was conducted for the entire year. As such sports rights were for live broadcast of matches in the territories outside India i.e., for USA and Canada etc.
Thus, the place of provision of service was outside India in terms of Rule 3 of Place of Provision of Service Rules, 2012 read with Rule 6A of Service Tax Rules, 1994. Hence, the appellant is exclusively engaged in export of services.
As the appellant was exclusively engaged in export of services outside India, he filed a refund claim of CENVAT Credit for the period in dispute i.e. April 2016 to June 2016 totalling to Rs. 3,99,12,617/- in terms of Rule 5 of Cenvat Credit Rules, 2004 read with Notification no. 27/2012-CE (NT) dated 18.06.2012.
On scrutiny of the refund claim filed by the appellant for the abovementioned period, the Department issued a show cause notice dated 08.04.2019 as to why the claim should not be rejected. The Adjudicating Authority, rejected the refund claim under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012- CE (NT) dated 18.06.2012.
The appellant preferred an appeal before Commissioner (Appeals) who in turn, rejected their appeal by upholding the order of the lower authority.
Arguments On Behalf Of Assessee – Cricket Match Broadcasting Services
The issuance of an Addendum/Corrigendum to the Show Cause Notice (SCN) after a six-month gap, and only after considering the appellant’s response to the SCN, constitutes an afterthought.
As such, it cannot be relied upon as a valid basis for rejecting the refund claim. He contended that the concept of Addendum/corrigendum is not statutorily provided under the law.
However, references have been made in circulars where it is clarified that the scope of Addendum/corrigendum is very limited. The Addendum/corrigendum is normally issued by the Department when there is a change in adjudicating authority or there is some arithmetical error.
It is a well-established legal principle that the Show Cause Notice (SCN) cannot be retroactively enhanced or modified after its initial issuance. Consequently, the issuance of an Addendum/Corrigendum to the SCN cannot introduce new allegations that were not originally part of the SCN.
The Department’s issuance of an Addendum/Corrigendum on October 14, 2019, six months after the initial Show Cause Notice (SCN), and only after considering the appellant’s response to the SCN, is illegal.
The assessee argued that even if the export turnover is calculated to be nil under Rule 5(1)(D) of the CENVAT Credit Rules, 2004, the appellant was still entitled to a refund for the subsequent quarter (July-September 2016).
The entitlement arises from the provisions of Rule 5 of the CENVAT Credit Rules, 2004 read in conjunction with Notification No. 27/2012- CE (NT) dated June 18, 2012. The premature filing of the refund claim cannot be the sole reason for rejection by the department.
Arguments On Behalf Of Dept. – Cricket Match Broadcasting Services
The department argued that for arriving at the export turnover, the adjudicating authority had not considered such invoices whose export proceeds were not realised in that particular quarter.
The appellant contended that their entire turnover is export turnover, and no other services are provided in the domestic tariff area, hence, export turnover should be considered for invoices issued for computing and allowing refund.
The appellant has misunderstood that there is no difference between export and total turnover and the whole of the input value is an eligible amount for refund. Even if the total turnover of the appellant relates to export, it does not mean that there is no difference between export and total turnover, and the Appellant was required to file refund claim under Form- A appended to the Notification No. 27/2012 CE-NT dated 18.06.2012 by calculating the Export turnover of services as determined in accordance with clause (D) of sub-rule (1) of rule 5 of the Cenvat Credit Rules, 2004.
Even if whole of the turnover of the appellant is export turnover, it cannot substitute ‘Export Turnover’ with the billed amount, as the Export Turnover for a particular quarter depends upon the realisation of export proceeds of exported services only as per Rule 5(1) (D) of Cenvat Credit Rules, 2004.
Conclusion – Cricket Match Broadcasting Services
The CESTAT has held that broadcast services were exported. Thus, there is no reason for denying the refund on minor procedural infractions. However as the relevant documents were not submitted before the original authority, the matter needs to be remanded, giving an opportunity to the appellant to produce all the relevant and supporting documents before the original adjudicating authority to satisfy the remaining condition of the notification.
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Case Details
Case Title: Times Content Limited Versus Commissioner of Central Excise And CGST, New Delhi
Case No.: Service Tax Appeal No. 51033 Of 2020
Date: 04.11.2024
Counsel For Appellant: A. K. Batra
Counsel For Respondent: S. K. Meena
