Prasar Bharti directed to return Service Tax amount collected from its Customers within a period of 2 months

As per the order of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Prasar Bharti, the Broadcasting Corporation of India (The Appellant), has been directed to return the amount of Rs. 36,92,874 collected by it, under the garb of its liability to pay service tax when actually it was not liable, to all those customers from whom it was collected that too within a period of two months.

If the corporation is unable to return the amount to any of its customers for any reason during the said period, such amounts, still remaining with him, shall be deposited by the appellant in the Consumer Welfare Fund immediately after the expiry of the said period of two months.

The appellant had no authority under the Service tax law or any law for that matter, or on the principles of equity, to collect from its customers an amount representing it as service tax and retain it when no tax was It is possible that the amount was collected under the mistaken belief that tax was payable. If so, the appellant should have deposited ‘the tax’ so collected with the Government as tax.

Another possibility is that the appellant had not believed that tax is payable but had collected it from its customers by mistake. If so, it should have returned the amount to its customers. A third possibility is that the appellant knew that no tax was payable but since the SCNs were pending, as a matter of abundant precaution to save itself from a tax liability at a later stage, collected the amounts as Service tax from its customers. If so, once the decision is made that no service tax is payable, the appellant should have returned the amounts so collected as tax to its customers. It is clear that the appellant has done none of these but has retained the amounts collected from its customers as service tax.

Thus the CESTAT team of Mr. P V Subba Rao Member (Technical) and Miss Rachna Gupta Member (Judicial) ordered the cooperation to return the tax collected and a compliance report must be furnished by the appellant with the registry of this Tribunal within 15 days thereafter.