2019 (3) TMI 1332 - AT - Service Tax

Nature of activity - sale or service - printing of Photographs and Printed photo albums, commonly known as Photobooks/Photo albums and not sold in the open market as these are created for particular persons - Held that - On identical facts, it was held in the case of M/S. VENUS ALBUMS CO. PVT. LTD. VERSUS CCE, CHANDIGARH/LUDHIANA/AMRITSAR 2018 (11) TMI 754 - CESTAT CHANDIGARH that the activity undertaken by the appellant under chapter heading 4911, is very much clear that the appellant has undertaken the activity of printing photograph on plain printing paper and thereafter bind them and selling them as photo books. The said activity amount to manufacture and the appellant is paying VAT and therefore, the said activity merit manufacturing activity and classified under Chapter 4911 and the appellant has classified accordingly. Thus, the activity undertaken by the appellant amounts to manufacture and classifying under Chapter 4911, therefore, no service tax is payable by the appellant - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against service tax demand under "Photography Service" category
- Interpretation of relevant sections of the Finance Act, 1994
- Classification of the activity as manufacturing under Chapter 4911
- Exemption from payment of service tax based on Notifications

Analysis:
The appellant appealed against an order demanding service tax under the "Photography Service" category. The appellant was engaged in printing photographs and photo albums created for specific individuals, not for open market sale. The revenue argued that these services fell under the definition of "Photography Services" and were subject to service tax. The Tribunal referred to a previous case involving similar facts and analyzed the relevant sections of the Finance Act, 1994. Section 65(105)(zb) defined taxable service by a photography studio or agency, while Section 65(78) defined photography broadly. The Tribunal noted that the process of creating photo books involved significant transformation of soft form photos into hard-bound books, qualifying as manufacturing under Chapter 4911. Additionally, Notifications exempted printing activities from service tax, further supporting the appellant's position.

The Tribunal, based on the precedent set by the previous case, concluded that the appellant's activity amounted to manufacturing under Chapter 4911, exempting it from service tax liability. Therefore, the impugned order demanding service tax was set aside, and the appeal was allowed with any consequential relief. The decision emphasized the transformation of photos into photo books as a manufacturing process and highlighted the exemptions provided by relevant Notifications. The judgment provided a detailed analysis of the applicable legal provisions and their interpretation in the context of the appellant's activities, ultimately leading to the favorable outcome for the appellant in terms of service tax liability.