2018 (7) TMI 431 - AT - Service Tax

Advertising Agency Services - non-payment of service tax - Board s Circular dated 01.11.1996 - Held that - These services cannot be made exigible to service tax - The matter is well settled in favor of the appellants in the case of Zee Telefilms Ltd. 2006 (2) TMI 50 - CESTAT, MUMBAI - demand do not sustain. Business Auxiliary services - door to door sales - Held that - From the facts on record we are not convinced that ingredients of Section 65 (19) (1a) of the Finance Act, 1994 are satisfied and that the appellants have provided BAS to their clients - demand do not sustain. Valuation - printing of materials - inclusion of reimbursable expenses - Held that - The matter remanded to the adjudicating authority to provide who shall provide an opportunity to the appellant to produce necessary evidence in the form of purchase bills, sales invoice and purchase orders etc., to justify the nature of the work undertaken by them and take a decision accordingly - matter on remand. Valuation - painting of van & vinyl software etc. - inclusion of reimbursable expenses - Held that - The matter is fully covered by the law laid down by the Apex Court in Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (3) TMI 357 - SUPREME COURT OF INDIA , where it was held that such expenses cannot be brought within the fold of taxability - demand do not sustain. Penalty - Held that - The matter was interpretational in nature, and some of the issues were also mired in litigation - penalties do not sustain. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Liability to discharge service tax on various activities.
2. Dispute over service tax liability on services provided to other advertising agencies.
3. Tax liability on door-to-door sales activity.
4. Taxability of printing materials.
5. Tax demand on reimbursement expenses.
6. Controversy regarding painting of van and vinyl software.
7. Imposition of penalties under Section 76 & 78 of the Finance Act, 1994.

Analysis:

1. The appellants were providing Advertising Agency Services and were found to have failed to discharge service tax liability on various activities. A show cause notice (SCN) was issued proposing a demand of service tax along with interest and penalties. The original authority confirmed a tax liability of a lesser amount than proposed. On appeal, the Commissioner set aside one penalty but upheld the rest, leading to this appeal.

2. Regarding services provided to other advertising agencies, the Tribunal found in favor of the appellants, setting aside the proposed tax liability due to settled precedents and decisions supporting the non-taxability of such services.

3. Concerning door-to-door sales, the Tribunal ruled that the activities did not satisfy the criteria for Business Auxiliary Services (BAS) under the Finance Act, 1994. As a result, the tax liability proposed on this count was set aside.

4. The tax demand on printing materials was remanded to the adjudicating authority for further consideration based on evidence to be produced by the appellants, in line with relevant court judgments and Tribunal decisions.

5. The Tribunal also set aside the tax demand on reimbursement expenses, citing legal precedent from the Supreme Court that such expenses are not taxable.

6. The controversy surrounding the painting of van and vinyl software was remanded for reevaluation by the adjudicating authority, considering the reimbursement nature of the charges received by the appellants.

7. Lastly, the Tribunal found the imposition of penalties to be unsustainable due to interpretational nature of the issues and ongoing litigation, thus setting them aside.

In conclusion, the appeal was partly allowed, partly remanded, and penalties were set aside based on the detailed analysis and legal interpretations provided by the Tribunal.