2015 (10) TMI 56 - AT - Service Tax

Advertising agency services - Valuation - Inclusion of media costs - Held that - adjudicating authority has incorrectly appreciated the fact that the service tax liability sought to be recovered from the appellant is in respect of outdoor campaign. It was not in dispute that the hoardings/bill boards and media costs and the advertisement published in print and electronic media were abroad i.e. London, New York and Paris. If that be so, the advertisement campaign has to be looked into as to who is the service recipient and service provider. In the case in hand it is not in dispute is that the media costs were incurred by the appellant beyond the territorial waters of India and the ratio of judgement of Cox and Kings (2013 (12) TMI 1024 - CESTAT NEW DELHI) would be directly applicable. - media costs incurred by the appellant were in respect of bill boards, hoardings and conveyance abroad - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Discharge of service tax liability on media costs for an advertising campaign.
2. Interpretation of "sale of space or time for advertisement" for service tax.
3. Taxability of services provided outside India.
4. Limitation period for service tax payment.

Analysis:
1. The appellant, an advertising agency, undertook an advertisement campaign for the Ministry of Tourism, Govt. of India, including print, electronic media, and outdoor hoardings in London, New York, and Paris. The Revenue contended that the appellant should discharge service tax liability on rent and other expenses for hoardings under "Advertising Agency Services." The adjudicating authority confirmed demands with interest and penalties under the Finance Act, 1994.

2. The appellant argued that the media costs from the Ministry of Tourism were not related to advertisements but expenses for hoardings, which became taxable from 01.05.2006 under "sale of space or time for advertisement." Citing precedents, the appellant claimed that services provided outside India are not liable for service tax, supported by Circular No. 36/4/2001/-ST and relevant case laws.

3. The Revenue contended that the entire advertising activity was in India for the Ministry of Tourism, and service tax liability applied to advertisements on billboards and hoardings abroad. They invoked the extended period due to the appellant's incorrect value declaration.

4. The Tribunal found that the appellant's service tax liability was incorrectly sought for outdoor campaigns beyond India. Relying on a precedent involving Cox and Kings, the Tribunal held that services provided beyond India's territorial waters are not taxable. As the media costs were incurred abroad, the appeal was allowed, setting aside the impugned order without addressing other points raised.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order, as the media costs for the advertising campaign were incurred abroad and not subject to service tax. The decision was based on the principle that services provided beyond India's territorial waters are not taxable, as established in relevant case laws.