2015 (12) TMI 22 - AT - Service Tax

Demand of differential service tax - activity of painting, pasting, displaying and/or maintaining the same on side panel of buses on behalf of the client namely M/s. LIC and M/s. New India Insurance Co. Ltd - Held that - Appellant has not discharged the differential service tax liability on an amount received from M/s LIC and M/s New India Insurance Co. Ltd. towards painting charges and display charges. Appellant had never disputed the fact that they have received the amount towards painting charges and display charges from their clients. On perusal of the agreement/work order issued to the appellant we find that M/s. LIC has categorically stated that service tax liability arises on both the amounts. When the allegation in the show cause notice is for undervaluation and question of re-classification was never charged, we find that both the lower authorities have misdirected their findings and tried to classify the services under advertisement agency services. We find that these service are not at all disputed by appellant nor there is any allegation in the show cause notice to that extent. - impugned order of confirming the demand of differential service tax liability along with interest and the penalties imposed is confirmed - Decided against assessee.

Summary

Issues involved: Service tax liability on activities related to painting, pasting, displaying on buses for clients, classification under "Advertising Agency" service, reclassification under "Sale of Space or Time for Advertisement," under-valuation allegations, misdirection in defense, non-discharge of service tax liability, demand for differential tax.

Analysis:
The appeal was against an Order-in-Appeal regarding the service tax liability on activities like painting, pasting, and displaying on buses for clients such as M/s. LIC and M/s. New India Insurance Co. Ltd. The appellant charged "display charges" but did not discharge the service tax liability as an "Advertising Agency" service. The lower authorities confirmed the demand raised, penalties, and interest. The appellant argued that the services fell under "Sale of Space or Time for Advertisement" and were taxable from 01.05.2006, not under "Advertising Agency" services. They referenced a tribunal case to support their position. The Department argued that the appellant was registered under "advertising agency" services and now sought reclassification due to under-valuation allegations in the show-cause notice.

The Tribunal noted that the appellant misdirected their defense by claiming reclassification post-01.05.2006, while the show-cause notice focused on recovering the differential tax for under-valuation. The notice alleged non-discharge of service tax liability on amounts received for painting and display charges from clients. The appellant did not dispute receiving these amounts or the service tax liability. The agreement/work order from M/s. LIC explicitly mentioned the service tax liability on these amounts. The lower authorities erred in trying to classify the services under advertising agency services when the show-cause notice did not charge reclassification. The appellant's appeal was rejected as they collected amounts but did not discharge the service tax liability by not reflecting them in their returns. The impugned order confirming the demand, interest, and penalties was upheld, and the appeal was deemed meritless.