2009 (9) TMI 10 - AT - Service Tax

Advertising Service - . The demand and penalty were set aside by the Commissioner (Appeals) who accepted the contention of the assessees that they were only engaged in sale of publicity materials and were collecting scanning charges which was also not done by them and, therefore, the activity carried out by them could not be construed as carrying out of advertising agency service Held that - Revenue has not successfully rebutted or controverted this claim of the assessees. Since the activity carried out by the assessees is one of sale of materials and carrying out of scanning which can in no way be construed as rendering of advertising agency service order of commissioner (appeals) maintained.

Summary

Issues:
Interpretation of 'Advertising Agency Services' for service tax liability on scanning and publicity material charges collected from customers during 1999-01. Application of extended period of limitation and penalties under Section 76 and Section 78 of the Finance Act, 1994.

Analysis:
The judgment revolves around the interpretation of 'Advertising Agency Services' for the imposition of service tax on scanning charges and publicity material charges collected from customers during the period 1999-01. The show-cause notice issued to the assessees proposing recovery of service tax was adjudicated by the Asst. Commissioner, who confirmed the demand by applying the extended period of limitation and imposing penalties under Section 76 and Section 78 of the Finance Act, 1994. However, the Commissioner (Appeals) set aside the demand and penalties, accepting the contention of the assessees that they were solely engaged in the sale of publicity materials and were collecting scanning charges, which did not fall under the definition of 'Advertising Agency Services'. This led to an appeal by the Revenue.

During the proceedings, both sides presented their arguments. The assessees consistently maintained that they were not involved in preparing, visualizing, or conceptualizing the publicity materials, but rather purchased and sold them, paying sales tax on such materials. They also argued that scanning did not fall within the definition of 'advertising agency service' as per the relevant provisions. The definition of 'advertising agency' was cited, emphasizing that it includes commercial concerns engaged in providing services related to the making, preparation, display, or exhibition of advertisements. The Revenue failed to rebut or challenge the assessees' claim effectively.

The Tribunal upheld the impugned order that set aside the demand for service tax, citing that the activity carried out by the assessees primarily involved the sale of materials and scanning, which did not amount to the rendering of 'advertising agency service'. Consequently, the appeal by the Revenue was rejected. Additionally, the cross objection presented by the assessees was dismissed as it was deemed to be a response to the Revenue's appeal rather than an independent objection. The judgment was dictated and pronounced in open court, providing a clear resolution to the issues raised in the case.