2015 (11) TMI 560 - AT - Service Tax

Waiver of pre deposit - Advertisement Agency service or Sale of Space or Time for Advertisement service - Held that - 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; Prima facie, the appellant was not engaged in providing any service connected with making, preparation, display or exhibition of advertisement and it was not an advertisement consultant either. Indeed, the service seems to be more appropriately covered under the scope of Sale of Space or Time for Advertisement Service - prima facie find that the appellant is not covered under the scope of advertising agency service and therefore has a good case warranting complete waiver of pre-deposit. Accordingly, we waive the requirement of pre-deposit and stay recovery of the impugned liability during pendency of the appeal - Stay granted.

Summary

Issues:
1. Whether the appellant is liable to pay service tax under Advertising Agency Service for the period 2006-07 to 2008-09.
2. Interpretation of the definition of Advertising Agency Service under Section 65 (03) of the Finance Act, 1994.
3. Clarification on the scope of Sale of Space or Time for Advertisement Service.
4. Consideration of CBEC instruction regarding the computation of service tax for advertising agencies.

Analysis:
1. The appellant filed a stay application and appeal against the Order-in-Original confirming a service tax demand of Rs. 56,12,124 under Advertising Agency Service. The appellant leased hoarding sites to advertisers/agencies for displaying advertisements and contended that it paid service tax on consideration received directly from advertisers but not for advertisements displayed through agencies. It argued that it was not providing advertising agency service and thus not liable for service tax.

2. The Tribunal examined the definition of Advertising Agency Service under Section 65 (03) of the Finance Act, 1994, which includes any person engaged in services related to advertisement making, preparation, display, or exhibition. The Tribunal found that the appellant was not engaged in these services and was not an advertising consultant. The service provided seemed to fall under Sale of Space or Time for Advertisement Service, as defined in Section 65 (105) (zzzm).

3. Referring to a CBEC instruction, the Tribunal clarified that service tax for advertising agencies should be computed on the gross amount charged for advertisement services, including making or preparing advertisement material. However, amounts paid for space and time in print or electronic media would not be included in the taxable service value. The commission received by the agency would be included in the taxable service value.

4. Based on the analysis, the Tribunal found that the appellant was not covered under the scope of advertising agency service. Consequently, the Tribunal granted a complete waiver of pre-deposit and stayed the recovery of the tax liability during the appeal's pendency.