2014 (11) TMI 876 - AT - Service Tax

Classification of service - activity of shooting the programme prepared by the advertising agency - Advertising Agency Service or Video Tape Production Services - Held that - Revenue wants to classify the activity undertaken by the Respondent under Advertising Agency Service. As per the provisions of Section 65 (53) of the Finance Act, 1994, advertising agency means any person engaged in providing any service connected with the making preparation, display or exhibition of advertisement and includes an advertising consultant. In the present case, the Respondents are registered with the Revenue authorities as provider of Video Tape Production Service with effect from 7.8.2001 and paying appropriate service tax. The activity undertaken by the Respondent is not connected with the preparation, display or exhibition of advertisement. The respondents are only shooting the programme prepared by the advertising agency. Hence the activity does not fall under the category of advertising agency service. In respect of limitation also we find that the Respondents are registered with the Revenue as provider of Video Tape Production Service since beginning and paying appropriate service tax by filing statutory returns. Therefore the allegation of suppression with intent to evade payment of service tax is also not sustainable - Decided against Revenue.

Summary

Issues:
Classification of service tax activity as 'Advertising Agency' service, time bar for demand of service tax, interpretation of taxable service for Video Tape Production activity.

Analysis:
1. Classification of Service Tax Activity:
The appeal was filed by the Revenue against the order of the Commissioner (Adjudication) setting aside the demand of service tax by classifying the activity undertaken by the respondent under 'Advertising Agency' service. The Revenue contended that the respondent was engaged in the production of commercials/advertisements TV video tapes, making them an advertisement film producer. However, the respondent argued that they were registered as providers of Video Tape Production Services and were only recording the shooting of programs prepared by advertising agencies, not involved in the preparation, display, or exhibition of advertisements. The Tribunal found that the activity did not fall under the category of advertising agency service as defined under Section 65(53) of the Finance Act, 1994.

2. Time Bar for Demand of Service Tax:
The Revenue issued a Show Cause Notice demanding service tax for the period from 16.7.2001 to 30.9.2004, alleging that the respondent provided Advertising Agency Service. The respondent pointed out that a previous Show Cause Notice on the same issue was set aside by the Tribunal as time-barred. The Revenue invoked the extended period of limitation in the present case, which the respondent argued was not sustainable. The Tribunal noted that the respondent had been registered with the Revenue authorities as a provider of Video Tape Production Service since the beginning, paying appropriate service tax by filing statutory returns. Therefore, the allegation of suppression to evade payment of service tax was deemed unsustainable.

3. Interpretation of Taxable Service for Video Tape Production Activity:
The respondent argued that the activity of recording the shooting of programs did not fall under the scope of Advertising Agency Service. They referenced a Board Circular clarifying that taxable service covers recording of any program, event, or function, including videotape production in any manner. The Tribunal agreed with the respondent, stating that the activity of recording the shooting of programs did not constitute Advertising Agency Service. The Tribunal dismissed the appeal, finding no merit in the Revenue's contentions.

In conclusion, the Tribunal upheld the order of the Commissioner (Adjudication), ruling in favor of the respondent and dismissing the Revenue's appeal regarding the classification of the service tax activity, time bar for demand of service tax, and interpretation of taxable service for Video Tape Production activity.