2009 (1) TMI 55 - AT - Service Tax

Amount received by the respondent for preparing Tableau for Gujarat Government for its display on Republic Day - respondents have done is only preparation of the tableau - exhibition of tableau is done by the State Government and after the tableau is prepared, the respondents have no role to play tableau cannot be considered as medium of advertisement tableau is not prepared to promote any good - appeal filed by the Revenue to cover above services as advertising services is rejected

Summary

Issues: Appeal against dropping service tax demand for preparing Tableau for government display on Republic Day.

Analysis:
1. Issue of Service Tax Liability: The Revenue contended that the preparation of Tableau falls under advertising services as per Section 65 of the Finance Act, 1994. They argued that Tableau is a form of advertisement covered by the broad definition of advertisement, citing dictionary meanings and a previous Tribunal decision (Prithvi Associates). The Revenue emphasized that service tax is leviable when services are rendered to the government.

2. Counter-Argument by Respondent: The Respondent, represented by a Chartered Accountant, argued that for an activity to qualify as advertisement under Section 65, it must be related to a product or service with a commercial purpose. They cited the judgment in ICICI Bank v. Municipal Corporation of Greater Bombay, stating that advertisement must have a connection to business, trade, or commerce. Referencing the Star Neon Sign case, the Respondent highlighted that preparing a tableau without any commercial intent does not constitute a service by an advertisement agency.

3. Commissioner (Appeals) Decision: The Commissioner (Appeals) analyzed the issue and concluded that the Tableau prepared for a one-time display on Republic Day did not serve a commercial purpose or fall under the category of advertisement. Referring to the Star Neon Sign case, the Commissioner held that preparing a sign board without a commercial relationship does not qualify as an advertisement agency service. Consequently, the Commissioner set aside the service tax demand on the Tableau works.

4. Tribunal's Decision: Upholding the Commissioner's decision, the Tribunal found that the facts in this case were akin to the Star Neon Sign case. Since the respondents only prepared the tableau for display by the State Government without involvement in its exhibition, the Tribunal rejected the Revenue's appeal, affirming that the service tax liability did not apply.

In conclusion, the Tribunal dismissed the Revenue's appeal, aligning with the Commissioner's ruling that the preparation of Tableau for a government display on Republic Day did not attract service tax liability as it did not constitute an advertisement service with a commercial purpose.