2015 (11) TMI 1357 - HC - Service Tax

Demand of service tax - advertising agency - amounts received as cash discount and incentives from media - Invocation of extended period of limitation - Held that - Amounts received as cash discount and incentives were not liable to service tax since no service was provided by the advertising agency to the media, the Commissioner (Appeals) recorded that the incentives or cash discounts shown as commission in the balance sheet of the appellant were not liable to service tax. Aggrieved by the order, the revenue went in appeal before the Tribunal. The Tribunal while reversing the order passed by the Commissioner (Appeals), vide order dated 9.4.2013, Annexure A.9 recorded that the assessee was not assessed to service tax on any transaction involving sale of space for advertisement in print media. It was concluded that the activity of the appellant-assessee fell within the taxable service of advertising agency . - service tax amounting to ₹ 7,11,804.78 and Education cess of ₹ 3692.90 for the period 1.4.2001 to 31.12.2005 had been rightly imposed on the assessee-appellant besides recovery of interest on the confirmed demand - No illegality or perversity in the impugned order so as to call for interference by this Court - Decided against the assessee.

Summary

Issues:
1. Justification of invoking extended period of limitation under section 73(2) of the Finance Act, 1994.
2. Creation of demand of service tax based on turnover figures.
3. Reliance on taxing provision under Section 65(105) (zzzm) of the Act.
4. Legality of the impugned order passed by the learned CESTAT.
5. Demand of service tax against Sundry debtors and credit notes.

Issue 1:
The appellant challenged the justification of invoking the extended period of limitation under section 73(2) of the Finance Act, 1994, despite the adjudicating authority extending the benefit of section 80 of the same Act due to the bonafide nature of the appellant's actions regarding service tax liability. The High Court did not find merit in the appeal, upholding the decision of the Tribunal.

Issue 2:
The demand of service tax based on turnover figures, including amounts related to space selling, sundry debtors, credit notes, cash discounts, and incentives, was contested. The Commissioner (Appeals) initially held that certain amounts like cash discounts and incentives were not liable to service tax. However, the Tribunal reversed this decision, concluding that the appellant's activities fell within the taxable service of an "advertising agency," leading to the imposition of service tax.

Issue 3:
The legality of relying on the taxing provision under Section 65(105) (zzzm) of the Act, which came into existence after the period in question (1.4.2001 to 31.12.2005), was raised. The Tribunal noted that the appellant was not assessed for tax on transactions involving the sale of space for advertisement in print media, emphasizing the definition of "advertisement" and "advertising agency" under the Finance Act, 1994.

Issue 4:
The legality of the impugned order passed by the learned CESTAT was challenged, citing violations of the law under section 65(105)(e) of the Act and a Central Board Circular. The Tribunal's decision to impose service tax on the appellant for space selling in the field of advertisement was upheld, with the High Court finding no illegality or perversity in the order.

Issue 5:
The demand of service tax against Sundry debtors and credit notes, where the amount was not realized, was questioned for violating Rule 6 of the ST Rules and the principles of natural justice. The High Court upheld the imposition of service tax and interest on the confirmed demand, as the appellant admitted to receiving commission from newspapers and collecting service tax on that commission from clients.

In conclusion, the High Court dismissed the appeal, finding no substantial question of law to warrant interference, thereby upholding the decision of the Tribunal regarding the imposition of service tax on the appellant.