2008 (12) TMI 100 - AT - Service Tax

Activity of painting messages on boards on rental basis for DAVP - original authority dropped demand raised under head Advertising agency holding that DAVP was not a commercial concern and therefore, no service tax was payable as per Circular no. 341-43/96-TRU Commissioner is not justified in confirming demand rejecting the claim on grounds that review was limited to order passed by original authority based on applicability of Circular and that question of taxability cannot be raised

Summary

Issues:
Appeal against the order of the Commissioner regarding service tax liability for services rendered as an advertising agency. Challenge on grounds of taxability and time limitation under section 84 of the Finance Act, 1994.

Analysis:
The case involved an appeal against the Commissioner's order dated 12-4-2007 regarding service tax liability for services provided as an advertising agency. The appellant rendered services by painting messages on boards on a rental basis for DAVP, with messages provided by DAVP. The original authority held that no service tax was payable due to DAVP not being a commercial concern, based on Board Circulars. However, the Commissioner later held the appellant liable for service tax and interest. The appellant challenged this decision on two main grounds.

Firstly, the appellant argued that the Commissioner did not consider their defense submission that their activities did not fall under the ambit of an advertising agency. The Commissioner refused to consider this defense, stating that the show-cause notice was limited to the original order based on the applicability of the Board's Circular, and the taxability of the services was not disputed during adjudication. The appellant contended that this was unfair as they were not given the opportunity to dispute the taxability during the proceedings.

Secondly, the appellant argued that the Commissioner's order was passed after the expiry of two years from the original order date, violating section 84 of the Finance Act, 1994. Section 84 stipulates that no order for revision shall be passed after two years from the date of the original order. The appellant claimed that this time limitation was breached, rendering the order invalid.

The Tribunal carefully considered the submissions from both sides and found merit in the appellant's arguments. They noted that the Commissioner's order was indeed passed after the two-year limit specified in section 84, making it liable to be set aside. Additionally, the Tribunal found that the appellant was entitled to raise legal grounds in defense of the tax demand, which the Commissioner failed to address. The Tribunal also expressed surprise at the review proceedings initiated for an insignificant disputed amount and the appellant's effort in filing the appeal for such a minor issue.

In conclusion, the Tribunal allowed the appeal on the grounds of time limitation and the appellant's right to defend against the tax demand. The appeal was allowed with consequential relief, setting aside the Commissioner's order.