2017 (1) TMI 804 - AT - Service Tax

Advertising agency service - work of fabrication, erection, installation, transportation, site civil work, supplying and fixing, repairing, fixing with pipes, painting and installing with iron structure, signages, sign boards, glow sign boards, flex board, flex sheets, sticker etc. - whether the activity of appellant covered in the definition of advertising agency service? - it is the appellant s claim that there was no involvement of designing, visualizing and conceptualizing their activity did not get covered by the definition of advertising agency service. Held that - the appellant is not engaged in the activity of designing, visualizing or conceptualising the material which is present in the work provided by them - Since the activity undertaken by the present appellant does not involved designing, visualising and conceptualising, the services provided by appellant in the present appeals do not get covered by advertising agency service - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the appellants' activities fall under the category of advertising agency services as per Section 65(105)(e) of the Finance Act, 1944.
- Whether the appellants' services involve designing, visualizing, and conceptualizing, thus making them liable for service tax.

Analysis:
1. The appellants were engaged in various activities such as fabrication, erection, installation, transportation, civil work, and supplying items with customers' names and logos for advertising purposes. The Revenue contended that these activities fell under advertising agency services, leading to the issuance of multiple show cause notices for service tax demands.

2. The appellants argued that their primary engagement was in repairing and installing signboards based on designs provided by government standards. They emphasized that they were not involved in designing, visualizing, or conceptualizing the materials, and their activities did not meet the criteria for advertising agency services. The Original Authority, however, upheld the demands through several Orders-in-Original.

3. During the hearing, the appellants presented their case, highlighting that their work involved marking roads, supplying signboards as per specified designs, and manufacturing products based on customers' requirements without discretion for design variations. They also pointed out that they paid VAT on the full transaction value, indicating a manufacturing and sale activity rather than a service.

4. After considering the arguments, the Tribunal noted that the appellants did not engage in designing, visualizing, or conceptualizing the materials used in their work. Referring to a previous final order, the Tribunal concluded that if the services provided did not include such activities, they could not be classified as advertising agency services. As a result, the Tribunal set aside the Orders-in-Original, ruling in favor of the appellants and granting them consequential relief.

5. The Tribunal's decision, delivered on 08/12/2016, clarified that since the appellants' activities did not involve designing, visualizing, or conceptualizing, their services did not fall under the definition of advertising agency services. The appellants were deemed not liable for service tax, and their appeals were allowed, entitling them to appropriate relief as per the law.