2005 (5) TMI 649 - AT - Service Tax

Summary

Issues Involved:
Whether the services provided by M/s. Bhavya Enterprises are chargeable to service tax as advertising agency services.

Analysis:
The appeal filed by M/s. Bhavya Enterprises questioned whether the services they provided, acting as Booking Agents for a newspaper, constituted services of advertisement subject to service tax. The appellant contended that they were not providing services to advertisers but were merely selling printed space on behalf of the newspaper, receiving commission in return. They argued that they were not involved in preparing advertising material and thus should not be liable for service tax under the category of Advertising Agency Services.

The Department, however, maintained that the activities of the appellants fell within the definition of an advertising agency as per the Finance Act, 1994. They argued that since the appellants were involved in canvassing for advertisements, receiving advertisement text, estimating space in print media, etc., they qualified as an advertising agency and were subject to service tax.

Upon considering the arguments from both sides, the tribunal found merit in the appellant's submission that they were acting on behalf of the newspaper for selling printed space and were not engaged in the actual preparation of advertisements. Referring to Circular No. 64/13/2003-ST dated 28-10-2003 issued by the Board, the tribunal clarified that an agency solely involved in bringing orders for advertisements without further activities did not fall under the definition of an advertising agency for service tax purposes. Therefore, the tribunal concluded that the services provided by M/s. Bhavya Enterprises did not qualify as advertising agency services liable for service tax, and accordingly allowed the appeal.