2013 (5) TMI 258 - AT - Service Tax

Sale of space or time for advertisement - allegation of suppression of value of the advertising services provided - appellate Commissioner relying on the judgment of Euro RSCG Advertising Ltd. (2006 (12) TMI 61 - CESTAT, BANGALORE) and the CBEC Circular No. 64/13/2003-ST dated 28.10.2003 concluded that the amounts received by the appellant are not exigible to service tax as advertising service agency - Held that - Interpretation of provisions of Section 65(105) (zzzm) as elucidated in Board s Circular dated 28.10.2003 clearly enacts that any service provided to any person by any other person in relation to sale of space or time for advertisement as defined in explanation (1) to clause (zzzm) , would constitute the taxable service. The clarification issued by the Board which facially conveys an implication that mere sale of space or time would not constitute the service provided an advertising agency service fails to bring out the true import of the taxing provision. On the above analysis, as the grammatical meaning of the taxing provision is in conformity with its legal meaning, the activity of the petitioner as delineated in the adjudication order, would fall within the net of service tax as spelt out in Section 65(105)(zzzm). The contrary conclusion by the appellate authority, founded on to the decision of this Tribunal in Euro RSCG Advertising Ltd. which is distinguishable on its distinct facts and the Board s circular dated 28.10.2003 (which as founded does not really clarify the position), is therefore unsustainable. Invocation of the extended period of limitation - Held that - The adjudication authority clearly recorded a finding that failure of the assessee to disclose the position inconformity with the position in its balance sheet, in the ST-3 returns filed amounts to suppression of the correct taxable value from the department; that this position is fortified by the figures in the balance sheet of the assessee admitted by Ms. Shaifali Singh, in her statement recorded on 23.8.2006. Since there is a suppression by the assessee, rationally concluded by the adjudication authority, invocation of the extended period of limitation is legitimate. The adjudication order is thus impeccable and warrants no interference. The appellate authority erred in reversing the adjudication order. Against assessee.

Summary

Issues:
Appeal against Order-in-Appeal reversing Order-in-Original on service tax demand, penalties, and interest. Interpretation of legislative provisions on taxable service of advertising agency. Applicability of Tribunal judgment and Board Circular on service tax liability. Legitimacy of invoking extended period of limitation.

Analysis:
The case involved an appeal by the Revenue against an Order-in-Appeal that reversed an Order-in-Original related to service tax demand, penalties, and interest. The dispute arose from the assessment of an assessee engaged in providing advertising services. The Revenue alleged suppression of value and partial payment of service tax, leading to a Show Cause Notice and subsequent adjudication confirming the demand. However, penalties were dropped based on a bona fide mis-construction assumption. The appellate authority later allowed the appeal, citing a Tribunal judgment and a CBEC Circular, which the Revenue contested.

The key issue revolved around the interpretation of legislative provisions defining taxable service of an advertising agency. Section 65 of the Finance Act, 1994, outlined the scope of advertising agency services, including activities related to advertisement display or exhibition. The Tribunal analyzed the activities of the assessee, concluding that they fell within the taxable service category. The adjudication authority also invoked the extended period of limitation due to the assessee's failure to disclose complete information in ST-3 returns, constituting suppression of facts.

Regarding the relevance of the Tribunal judgment and the Board Circular, the Tribunal distinguished a previous case where the service provider's income was taxed based on amounts received directly from clients, not intermediaries like broadcasting agencies. The Board Circular clarified that mere space selling without additional services did not constitute advertising agency services. However, the Tribunal disagreed with the technical interpretation and upheld the statutory provision's clear mandate on taxable services related to space or time for advertisement.

Ultimately, the Tribunal allowed the Revenue's appeal, setting aside the Order-in-Appeal and reinstating the original adjudication order. The decision emphasized the legitimacy of invoking the extended period of limitation due to the assessee's suppression of taxable value, rejecting the appellate authority's reversal of the adjudication order.