2018 (7) TMI 95 - AT - Service Tax

Liability of Service Tax - advertisement agency service - whether the activities undertaken by the appellants such as conceptualization, visualization and creating an advertisement or they are simply complying with the directions of their clients? - Held that - The claim of the appellant to evaluate the evidence in the form of purchase bills, sale invoices and purchase orders with the records of the case is acceptable. Therefore, the matter requires to go back to the original adjudicating authority for proper analysis of the same and to re-determine the service tax liability of the appellants - appeal allowed by way of remand.

Summary

Issues:
1. Liability of service tax on activities of M/s. Yespi Arts and M/s. Yespi Advertisers.
2. Determination of whether the appellants fall under the definition of an "advertisement agency."
3. Evaluation of penalties under Sections 76 and 78 of the Finance Act, 1994.

Analysis:

Issue 1: Liability of service tax
The Department issued show-cause notices to M/s. Yespi Arts and M/s. Yespi Advertisers for non-payment of service tax. The Assistant Collector and the Commissioner (A) confirmed the demands raised. The appellants argued that they were not liable for service tax as they were only involved in painting work, not advertisement agency services. They cited relevant judgments supporting their stance. However, the Tribunal remanded the matter to the adjudicating authority for a detailed examination of the evidence, purchase bills, and invoices to determine the correct service tax liability.

Issue 2: Definition of "advertisement agency"
The appellants contended that their activities did not fall under the definition of an "advertisement agency." They argued that they were not involved in conceptualizing or designing advertisements, but rather in trading goods like painting on walls and making banners. The Department, citing a judgment of the Hon'ble High Court of Kerala, argued that the definition of an "advertisement agency" had a wider connotation. The Supreme Court remitted the matter back to the Tribunal to ascertain whether the appellants were involved in conceptualizing advertisements or merely following client instructions.

Issue 3: Penalties under Sections 76 and 78
The appellants challenged the penalties imposed under Sections 76 and 78, claiming they had a bona fide belief in not being liable for service tax. They cited various case laws to support their argument. The Tribunal agreed to set aside the penalties but directed a reevaluation of the evidence by the adjudicating authority to determine the correct service tax liability. The appellants were instructed to submit all relevant materials for computation within three months.

In conclusion, the Tribunal remanded the matter back to the adjudicating authority for a detailed examination of evidence to determine the correct service tax liability of the appellants. The penalties under Sections 76 and 78 were set aside, and the appellants were directed to submit all necessary materials for proper computation of service tax within a specified timeframe.