2012 (8) TMI 132 - AT - Service Tax

Waiver of pre-deposit whether activities undertaken by the applicants in respect of arranging outdoor advertising in the foreign countries are liable to service tax under the category of advertising agency - contention is that the activities are undertaken in respect of services provided outside India. The applicants had only arranged space for advertisement and with effect from 1.5.2006 providing space or time as the case me for display, advertising also comes under the scope of advertising agency service. The period of demand is prior to 1.5.2006 Held that - Providing of such space comes under the purview of service tax with effect from 1.5.2006 by introducing a separate entry in respect of providing space for display of advertising. Pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal. Stay petition allowed

Summary

Issues:
Waiver of pre-deposit of Service Tax, interest, and penalties under Sections 76 and 77 of the Finance Act, 1994 for providing advertising agency service outside India.

Analysis:

The applicants sought waiver of pre-deposit of Service Tax, interest, and penalties amounting to Rs.43,46,618/- under Sections 76 and 77 of the Finance Act, 1994. The demand was confirmed on the basis that the applicants provided advertising agency service. However, the applicants contended that they were engaged by the Ministry of Tourism, Government of India, to organize media plans for advertising "India as Tourist Destination" outside India. The Revenue argued that the activities of arranging outdoor advertising in foreign countries are liable to service tax under the category of advertising agency service.

The applicants maintained that they were primarily engaged in preparing advertising material and had paid service tax for that. They further clarified that the outdoor advertising activities in foreign countries, involving arranging space on billboards and buses, were not covered under advertising agency services as the services were provided outside India. The Revenue's reliance on the definition under Section 65 of the Finance Act, 1994 was countered by the applicants, emphasizing that the activities were not within the scope of advertising agency service.

The Tribunal noted that providing space for advertising through billboards or buses outside India became taxable under a separate entry effective from 1.5.2006. Considering this, the Tribunal found that the applicants had a strong prima facie case in their favor. Consequently, the pre-deposit of dues was waived, and recovery stayed during the appeal's pendency. The Tribunal allowed the stay petition, granting relief to the applicants.

In conclusion, the Tribunal granted the waiver of pre-deposit of Service Tax, interest, and penalties under Sections 76 and 77 of the Finance Act, 1994 for the outdoor advertising services provided outside India, finding merit in the applicants' contention that the activities were not covered under the advertising agency service.