2011 (2) TMI 1139 - AT - Service Tax

Advertising Agency services - demand of service tax - Held that - It is an admitted fact that the applicants are not involved in design, visualizing or conceptualizing, the main part of the Advertising agency services & involved only in the activity of display or exhibition of Sign Boards/Signage on specific direction of their client, who provides design and layout which are elaborated on the application - Circular dated 19-6-06 which clarifies that mere publishing of prepared advertisement in a paper or magazine or broadcast of prepared advertisement on electronic media by TV are not functions of an Advertisement Agency - Decided in favor of the assessee

Summary

Issues:
Service tax liability for non-payment under Advertising Agency category.

Analysis:
The case involved a dispute regarding the service tax liability of the appellant under the category of Advertising Agency. The appellant, engaged in making Sign Boards and Signage, also undertook Government contracts for various works. The Revenue alleged that the appellant's activities fell under the service of Advertising Agencies, leading to the confirmation of service tax, interest, and penalties. The appellant contended that they were not involved in designing, visualizing, or conceptualizing, crucial elements of Advertising Agency services. They relied on judicial decisions to support their argument that their activities did not fall under the Advertising Agency category.

The Tribunal considered the submissions and found that the appellant was primarily engaged in the display or exhibition of Sign Boards/Signage based on the client's specific directions. Referring to Section 65(3) of the Finance Act, 1994, the Tribunal defined an 'advertising agency' as a person engaged in services related to the making, preparation, display, or exhibition of advertisements. The Tribunal also highlighted a circular clarifying that mere publishing or broadcasting of prepared advertisements did not constitute functions of an Advertising Agency. Citing a precedent where a similar activity was not considered as Advertising Agency services, the Tribunal concluded that the appellant had a strong prima facie case for the waiver of the service tax, interest, and penalties. Consequently, the Tribunal granted a waiver and stayed the demands during the appeal's pendency.