2011 (1) TMI 238 - AT - Service Tax

Demand - The period involved in this case is from May, 2001 to June, 2002 and undisputedly the appellant was doing the job of conceptualization and writing contents of the advertising material such as advertising films, radio and print Ads which were used by Ambience to produce final advertising material - The circular dated 23-8-2007 clarified that given taxable service intended to be used as input service by any service provider the liability to pay service tax is on the service provider - The appellant submitted that they produced a certificate before the Commissioner (Appeals) to the effect that Ambience has paid the service tax. However, the learned Commissioner (Appeals) has not taken the certificate on record nor gave any finding on this aspect. - matter remanded back.

Summary

Issues:
Appeal against demand of service tax and penalties upheld by lower adjudicating authority.

Analysis:
The appellant appealed against the Order-in-Appeal confirming the demand of service tax and penalties imposed by the lower adjudicating authority. The appellant, engaged in conceptualization and writing advertisement content, applied for service tax registration in July 2002. The department initiated proceedings for recovering service tax related to advertising consultancy. The lower authority confirmed the demand and penalties under various sections of the Finance Act, 1994. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

The appellant argued that she was not an employee but provided independent conceptualization and content writing services. Referring to circulars and case laws, the appellant contended that even if considered a sub-contractor, liability to pay service tax would apply only from a specific date. The appellant also highlighted that the service tax had been paid by the main service provider. The Revenue, however, viewed the relationship as principal-to-principal and asserted that the appellant was not an employee but worked on a retainership basis, receiving fixed monthly remuneration. The Revenue supported the lower authorities' decisions.

Upon reviewing the submissions and records, the Tribunal noted the appellant's role in creating advertising materials used by the main service provider. Referring to the circular clarifying tax liability for services intended as input, the Tribunal indicated that if the appellant was liable, it would be effective from the circular's issuance date. Citing relevant case laws, the Tribunal emphasized that the liability rested with the main service provider, not the sub-contractor. The Tribunal directed a reconsideration regarding a certificate indicating payment of service tax by the main service provider, as it was not considered by the lower authorities. The case was remanded for verification of the certificate and a fresh decision, ensuring a fair hearing for the appellant.

In conclusion, the appeal was allowed by way of remand for further examination of the certificate regarding service tax payment, emphasizing the importance of due process and proper consideration of evidence in tax matters.