2014 (3) TMI 189 - AT - Service Tax

Demand of service tax - Advertisement Agency Service - Held that - applicant was carrying out the work for the advertising agency. The Commissioner (Appeals) observed that the invoices and the payment receipts are not related to each other. It is also observed that the applicant had not produced the invoices and payments receipts for it. Hence, prima facie, we are of the view that the Board s circular is not applicable in this case. In any event, if they are not producing the documents of payment receipt and other necessary documents then it cannot be shifted to the advertising agency - Conditional stay granted.

Summary

Issues: Alleged non-payment of service tax by the applicant, liability for tax on advertising agency services, sustainability of tax demand on Business Auxiliary Service, time bar issue.

Analysis:
1. The case involves the applicant being registered under Advertisement Agency Service and facing allegations of earning income without paying taxes from 2002-2007, resulting in a demand of Rs. 47 lakhs initially. The original authority confirmed a tax demand of Rs. 21,78,730 along with interest and penalty, upheld by the Commissioner (Appeals).

2. The applicant's counsel argued that a significant portion of the tax demand, around Rs. 16 lakhs, pertains to advertising agency services provided to other agencies before September 2004. Citing Board's Circular No. 341/43/96-TRU dated 1.11.1996, the counsel contended that if the advertising agency fails to collect service tax, the responsibility for payment lies with the advertising agency, not the applicant. Similarly, for door-to-door sales and reimbursement expenses of approximately Rs. 5 lakhs, the counsel argued that the tax demand under Business Auxiliary Service is not sustainable as they only deliver goods to clients, and prior to 2006, tax on reimbursement is not applicable. The counsel also raised the time bar issue.

3. The Assistant Commissioner reiterated the findings of the Commissioner (Appeals) and presented the worksheet of the tax demand to the Bench for consideration.

4. Upon reviewing the submissions from both sides, the Tribunal noted that the applicant indeed worked for the advertising agency, but the invoices and payment receipts were not correlated. As the applicant failed to produce these essential documents, the Tribunal opined that the Board's circular regarding tax liability on the advertising agency does not apply in this case. The issue of tax demand on Business Auxiliary Service was deferred for examination during the final hearing of the appeal.

5. Considering the circumstances, the Tribunal directed the applicant to deposit Rs. 3,25,000 within four weeks, with compliance to be reported by a specified date. Upon this deposit, predeposit of the remaining dues would be waived, and recovery stayed until the appeal's disposal.

This comprehensive analysis covers the key issues raised in the legal judgment, providing a detailed overview of the arguments presented and the Tribunal's decision on each matter.