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2020 (2) TMI 1683 - AT - Service TaxLevy of service tax - Photography Services - digital offset printing - the activity was undertaken by the appellant, for which necessary soft copies of pictures, photographs and print material was provided by the clients - time limitation - HELD THAT - In case of M/S. VENUS ALBUMS CO. PVT. LTD. VERSUS CCE, CHANDIGARH/LUDHIANA/AMRITSAR 2018 (11) TMI 754 - CESTAT CHANDIGARH Chandigarh Bench has on the identical facts held that the activity undertaken by the appellant amounts to manufacture and classifiable the Chapter 4911, therefore, no service tax is payable by the appellant. In alternate, we hold that the activity undertaken by the appellant is exempted from payment of service tax. Therefore, no service tax is payable by the appellant. Time Limitation - HELD THAT - There are no reasons to differ with the decision of the Chandigarh Bench. Since we hold that the demand cannot be sustained on the merits, we are not going into the issue of limitation. Since the demand of Service Tax itself cannot be sustained, demand of interest under Section 75 of Finance Act, 1994 and penalties imposed under Section 77 and 78 ibid to cannot be sustained and are set aside - appeal allowed.
Issues Involved:
1. Classification of "digital offset printing" under Service Tax. 2. Applicability of Service Tax on "digital offset printing." 3. Invocation of the extended period for demand under Section 73 of the Finance Act, 1994. 4. Imposition of interest and penalties under Sections 75, 77, and 78 of the Finance Act, 1994. Issue-wise Detailed Analysis: 1. Classification of "digital offset printing" under Service Tax: The primary issue was whether the activity of "digital offset printing" falls under the category of "Photography Services" as per the Finance Act, 1994. The Commissioner held that "digital offset printing" is covered under the definition of "photography services" as defined under Section 65(78) of the Finance Act, 1994, and taxable under Section 65(105)(zb) of the Finance Act, 1994. The Tribunal, however, referred to the case of Venus Albums [2019 (22) GSTL 386 (T-Chandigarh)], where it was held that the activity of digital printing of photo books and photo albums amounts to the manufacture of goods classifiable under Chapter 4911 of the Central Excise Tariff Act, 1994. The Tribunal agreed with this classification, stating that the transformation of soft copy photographs into printed photo books constitutes a manufacturing activity, thus not liable to Service Tax. 2. Applicability of Service Tax on "digital offset printing": The Tribunal examined whether the activity of "digital offset printing" should attract Service Tax. The Commissioner relied on the decision in Global Digital Colour Lab [2016 (42) STR 746 (T-Del)], where the Tribunal held that services provided in relation to photography, including digital services, are taxable. However, the Tribunal found that the facts of the present case differed from Global Digital Colour Lab, as the latter involved providing soft copies, whereas the present case involved physical printing. The Tribunal concluded that the activity of digital offset printing amounts to manufacturing and is not a service as per the Finance Act, 1994, thus not liable to Service Tax. 3. Invocation of the extended period for demand under Section 73 of the Finance Act, 1994: The appellant argued that the extended period for demand under Section 73 was not invokable as they had been filing their ST-3 returns and paying due Service Tax, without any suppression of facts. The Tribunal did not delve into the issue of limitation since it held that the demand itself was unsustainable on merits. 4. Imposition of interest and penalties under Sections 75, 77, and 78 of the Finance Act, 1994: Given the Tribunal's decision that the demand for Service Tax was unsustainable, it also set aside the consequential demands for interest under Section 75 and penalties under Sections 77 and 78 of the Finance Act, 1994. The Tribunal held that since the primary demand was invalid, the associated interest and penalties could not be upheld. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order. It concluded that the activity of digital offset printing constitutes manufacturing, classifiable under Chapter 4911, and is not a taxable service under the Finance Act, 1994. Consequently, the demands for Service Tax, interest, and penalties were annulled.
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