2017 (5) TMI 1256 - AT - Service Tax

Taxability - advertisements published in foreign news paper/magazines - Held that - CBEC Circular dt 28.10.2003 clarifies that giving advertisement to a particular newspaper/magazines may involve by the advertiser only Space selling where no any further activity is undertaken; therefore, it would not fall under the definition of Advertisement Agency Service and will not be liable to Service Tax. An agent merely procuring an order for advertisement for a principal namely print media is not an advertising agency. The appellants activity being only this and nothing more, therefore, cannot bring them & classify them to be an Advertising Agency. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Liability to pay Service Tax for advertisements published in foreign newspapers/magazines.

Detailed Analysis:
The appellant filed five appeals against Orders in Appeal confirming demands of Service Tax for advertisements in foreign newspapers/magazines. The Department contended that since the foreign agency providing the advertisement service had no office in India, the appellant, as the recipient, was liable to pay Service Tax under Rule 2(1)(d)(iv) of Service Tax Rules 1994 and Section 66A of Finance Act, 1994. The Revenue confirmed the demands along with interest and penalty, leading to the appeals before the Tribunal.

Both sides were represented by their respective counsels. The Tribunal noted that the matter involved the publication of advertisements in foreign newspapers/magazines without any payment for designing or preparing the advertisements. The Tribunal referred to a previous decision in the case of Zee Telefilms Ltd Vs CCE, Mumbai, where it was clarified that mere publication of advertisements, without further activities like designing or conceptualizing, falls under "space selling" and does not constitute "Advertisement Agency Service" liable for Service Tax. The Tribunal's decision emphasized that if an agency only procures orders for advertisements without additional activities, it does not qualify as an Advertising Agency and is not subject to Service Tax.

Based on the Tribunal's previous decision and the nature of the appellant's activities, the Tribunal concluded that publishing advertisements for the appellant's products by a foreign agency fell under "selling of space for advertisement" in newspapers/magazines, which is excluded from Service Tax liability under Sec 66A of Finance Act, 1994. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal's detailed analysis and application of relevant legal principles led to the setting aside of the demands for Service Tax on advertisements published in foreign newspapers/magazines, based on the distinction between "space selling" and Advertising Agency Services as clarified in previous decisions.