2010 (11) TMI 211 - AT - Service Tax

Section 76, 77, 78 - Appellant is engaged in the purchase and sale of time slots from electronic media channels to various advertising agencies on commission basis - The show-cause notice for the period 1-4-2001 to 30-9-2005 was raised on 24-4-2006 and, as such, major period involved in the notice is beyond the normal period of limitation - The adjudicating authority while upholding invocation of longer time has admitted that the appellant was earlier registered with the service tax department but, subsequently, surrendered its registration. The above act of the appellant has been interpreted by the adjudicating authority as reflecting upon its deliberate intention not to pay service tax - It is well settled law that extended period would get invoked only when there is deliberate suppression of facts and mis-statements on the part of the assessee with an intent to evade payment of duty - When the registration was surrendered, it has to be on the belief that it was not required by the assessee - Thus the demand may be covered within the normal period of limitation but having held in favour of the assessee on merits, the impugned order confirming demand and imposing penalties is required to be set-aside - Allow the appeal of the assessee.

Issues:
1. Confirmation of demand of duty under the Finance Act, 1994.
2. Imposition of interest and penalty under sections 76, 77, and 78 of the Finance Act, 1994.
3. Classification of services provided by the appellant as "Advertising Agency" services.
4. Interpretation of the definitions of "Advertisement" and "Advertising Agency" under the Finance Act, 1994.
5. Applicability of service tax on the purchase and sale of time slots for advertising.
6. Invocation of longer period of limitation for raising the demand.

Analysis:
1. The Commissioner confirmed the demand of duty amounting to Rs. 2,22,58,779 along with interest and penalty of Rs. 4.45 Crores under sections 76, 77, and 78 of the Finance Act, 1994, based on the appellant's activities related to the purchase and sale of time slots for advertising services.

2. The appellant, engaged in buying time slots on commission basis and selling them to advertising agencies, was found to be providing "advertising services." The definitions of "Advertisement" and "Advertising Agency" were crucial in determining the tax liability of the appellant under the Finance Act, 1994.

3. The Tribunal analyzed the scope of "Advertising Service" under section 65(105)(e) and the definitions of "Advertisement" and "Advertising Agency." The Commissioner concluded that the appellant's activities fell under the category of "Advertising" due to their involvement in selling time slots for advertising purposes.

4. The appellant argued that the service of purchasing and selling time slots was introduced after 1-5-2006 and should not be covered under prior services. However, the Commissioner upheld the demand, relying on precedents and the broader interpretation of advertising services.

5. The Tribunal referenced a Circular stating that selling time slots to electronic media did not qualify as advertising services. Citing case law and legislative intent, the Tribunal held that the appellant was not liable to pay service tax for the sale and purchase of time slots for advertisements.

6. The demand raised for the period 1-4-2001 to 30-9-2005 was contested on limitation grounds. The Tribunal found the invocation of the longer period unjustified, as the appellant's surrender of registration did not indicate deliberate intent to evade tax. Consequently, the demand and penalties were set aside in favor of the appellant.

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