2013 (10) TMI 131 - AT - Service Tax

Advertising Agency - Waiver of Pre-deposit Both the lower authorities have held that the appellant was liable to discharge Service Tax liability under the category of advertising agency as they have published an advertisement in journals/magazines abroad - Held that - The appellant places advisement for sale of products in foreign journals/magazines, through an agency, which had no office in India - It transpires from the record that the appellant was placing advertisement which he himself sends it abroad through advertising agencies - There was nothing on record to show that the advertising agency which was situated abroad was visualizing, conceptualizing etc of the said advertisement - the decision of Ajanta Fabrication Vs. CCE Meerut 2006 (10) TMI 1 - CESTAT, NEW DELHI may cover the issue in favour of the assessee - The appellant had made out a prima facie case for complete waiver of pre-deposit of the amounts involved - the application for waiver of pre-deposit of the amounts involved was allowed and recovery thereof stayed till the disposal of appeal.

Summary

Issues:
Waiver of pre-deposit of Service Tax liability under reverse charge mechanism, interest, and penalties under Sections 76, 77 & 78 of Finance Act, 1994.

Analysis:

The appellant filed a Stay Petition seeking waiver of pre-deposit of Rs.7,75,193/- confirmed as Service Tax liability under reverse charge mechanism, along with interest and penalties under Sections 76, 77 & 78 of the Finance Act, 1994. The lower authorities found the appellant liable for Service Tax under the category of advertising agency for publishing advertisements in foreign journals/magazines, as the agencies had no office in India, invoking Section 66A of the Finance Act, 1994. The appellant's counsel cited precedents like Ajanta Fabrication and Dhanshree Publicity to support their case.

The Departmental Representative argued that the appellant's activity of placing advertisements abroad falls under the Advertising Agency category as per Section 65 of the Finance Act, 1994. Referring to the Stay Order in the case of Mukta Arts Ltd., the representative contended that the situation was similar. However, upon examination, it was found that the appellant placed advertisements for product sales in foreign journals/magazines through an agency without an office in India. The Tribunal noted that the appellant sent the advertisements abroad through agencies without evidence of overseas agencies' involvement in conceptualizing the ads. Relying on the decision in the Ajanta Fabrication case, the Tribunal favored the appellant.

Consequently, the Tribunal held that the appellant established a prima facie case for a complete waiver of pre-deposit of the amounts involved. Therefore, the application for waiver was allowed, and the recovery of the amounts stayed pending the appeal's disposal.