2016 (10) TMI 683 - AT - Service Tax

Advertising agency services - manufacture and trading of advertisement material including preparation of flex printed, backlit banners, flex board and unlit etc - making of advertisements - preparation of advertisements - whether the appellant was an advertising agency and the services rendered by the appellant part take of or include the services in the nature of designing, conceptualizing, visualizing, normally rendered by the Advertising Agency and is appellant liable to service tax? - Held that - neither appellant is having receipt for the activity namely display or exhibition nor the appellant have provided such service of display or exhibition under the facts and circumstances. The appellant is not liable to Service Tax under the classification Advertising Agency and/or providing a taxable service as an Advertising Agency in relation to advertisement in any manner. The decision in the case of Ajanta Fabrication Vs. CCE 2006 (10) TMI 1 - CESTAT, NEW DELHI where it was held that the appellant is not equipped for functioning as an advertising agency and thus, the services rendered by the appellant did not part take of or include the services in the nature of designing, conceptualizing, visualizing, normally rendered by the Advertising Agency. The extended definition, cannot bring an entirely alien and unconnected services or a manufacturing activity within scheme of levy of service. And accordingly held that Ajanta Fabrication was not covered within the ambit of Service Tax under the classification Advertising Agency. Appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against Service Tax demand, whether the appellant is liable for Service Tax under the classification of an Advertising Agency.

Analysis:
1. Service Tax Demand: The appellant, engaged in manufacturing advertisement material, appealed against a Service Tax demand of ?85,13,113 along with interest and penalties. The Commissioner observed that the appellant's activities primarily involved re-production or printing of material as per client design, not designing or conceptualizing. The installation and display of advertisements were considered essential for completing work orders, leading to the confirmation of duty with interest and penalty. The appellant contested the invocation of the extended period of limitation, citing a bona fide belief that no Service Tax was payable. The Tribunal noted the absence of evidence supporting charges for display or exhibition by the appellant.

2. Appellant's Activities: The appellant's business focused on manufacturing and trading advertisement material, including flex banners and boards. The Tribunal examined sample purchase orders and invoices, revealing that the appellant invoiced for printing and supplying materials but not for designing or display services. The absence of charges for display or exhibition was highlighted, and the Revenue failed to provide evidence of such charges being collected by the appellant.

3. Legal Precedents: The Tribunal referred to a ruling involving a similar activity of making hoardings and signage, where it was held that the appellant was not functioning as an Advertising Agency. The Tribunal emphasized that the appellant's services did not align with the activities typically undertaken by an Advertising Agency, such as designing and conceptualizing. Consequently, the appellant was found not liable for Service Tax under the classification of an Advertising Agency.

4. Decision: After considering the facts and arguments presented, the Tribunal concluded that the appellant was not liable for Service Tax under the classification of an Advertising Agency. The impugned order was set aside, allowing the appellant to claim consequential benefits. Additionally, the Tribunal permitted the substitution of the deceased proprietor with his wife as the legal heir, as she had succeeded him as the present proprietor.

In conclusion, the Tribunal ruled in favor of the appellant, determining that they were not liable for Service Tax under the classification of an Advertising Agency due to the nature of their activities and the absence of evidence supporting the charges for display or exhibition services.