Telecast fees qualify as input services for CENVAT credit on advertisement-space services.

The appellant, engaged in producing television programmes and providing taxable services under “TV or Radio Programme Production Service” and “Sale of Space or Time for Advertisement Service,” paid telecast fees to television channels.

In consideration, it received Free Commercial Time (“FCT”), which it sold to advertisers and on the resulting taxable receipts discharged service tax.

The appellant availed CENVAT credit of the service tax paid on telecast fees and utilised the credit towards its output-service tax liability.

The Department alleged that telecast fees related to the appellant’s own programme production, which was not a taxable service, and therefore denied the credit.

Three Statements of Demand covering October 2012–December 2015 proposed recovery of CENVAT credit, interest and penalties.

The Commissioner confirmed the demands through a common Order-in-Original dated 24 March 2017.

The appellant appealed to the CESTAT, relying on earlier decisions in its own case holding that telecast fees were eligible input services.

Whether the appellant was entitled to CENVAT credit of the service tax paid on telecast fees used in providing the taxable output service of Sale of Space or Time for Advertisement

Whether the common Order-in-Original confirming the three Statements of Demand, along with interest and penalties, was legally sustainable

The Tribunal applied Rule 2(l) of the CENVAT Credit Rules, 2004, under which an input service includes a service used directly or indirectly in relation to providing an output service.

It relied on its earlier decisions in the appellant’s own case—Final Order No. 40341/2018 dated 6 February 2018, reported at 2018 (2) TMI 331 (CESTAT Chennai); Final Orders Nos. 41705–41707/2018 dated 1 June 2018, reported at 2018 (6) TMI 201; and 2024 (2) TMI 88 (CESTAT Chennai)—which held that telecast fees were eligible input services for the taxable service of Sale of Space or Time for Advertisement.

The Tribunal also applied the principle of judicial discipline and consistency, holding that coordinate-Bench decisions on the identical issue should be followed in the absence of any contrary decision of the Supreme Court, a High Court or a Larger Bench.

The Tribunal found a direct nexus between the telecast fees and the appellant’s taxable advertising service.

Telecasting the programmes enabled the appellant to obtain FCT from the television channels; the FCT was then sold to advertisers, generating consideration on which service tax was paid.

Consequently, the telecast fees were used for providing the taxable output service, irrespective of the Department’s contention that telecasting occurred after programme production.

The Tribunal followed its consistent earlier rulings in the appellant’s own case, noting that the present demands were based on the same facts, allegations and legal issue and covered only subsequent periods.

Since the earlier demands on the identical issue had been set aside and no contrary binding precedent was shown, the present denial of credit had no independent basis.

Interest and penalties, being consequential to the disallowance of credit, also could not survive.

The common Order-in-Original was set aside, the demands of CENVAT credit, interest and penalties were quashed, and all three appeals were allowed with consequential relief in accordance with law.