Here's a link to you manual for your avr if you need it -
http://www.pioneerelectronics.com/StaticFiles/Manuals/Home/VSX-21TXH_OperatingInstructions0512.pdf.
Reading it I think you are correct.
Page 24 says -
The sound of the TV cannot be heard over the receiver
if the TV is connected using an HDMI cable.
If you want to listen to the sound of the TV over the
receiver, connect the receiver and TV with audio
cables. When making digital connections with a
coaxial cable at this time, the digital input setting
must be made (see The Input Setup menu on
page 43).
And there is a helpful picture that shows the connections along with the flow of signal along the connections.
Here's the quick setup guide for the tv -
http://service.us.panasonic.com/OPERMANPDF/TCP50ST50.PDF
The top of page 13 shows digital optical out going from tv to in on the stereo system.