2021 (2) TMI 7 - AT - Service Tax

Service tax Liability - selling/renting of bare spaces to their clients and also providing additional services to its customers for displaying their advertisements on the hoardings and kiosks - inclusion of the service in the expression of selling of space of time slots for advertisement other than advertisements broadcast by Radio or Television as placed in the negative list of service provided under Section 66D of the Finance Act 1994 with effect from 01.07.2012 or not - extended period of limitation. HELD THAT - The making of advertisement includes basic planning of advertisement For eg How to advertise where to advertise mode of advertisement etc. which are decided on the basis of the requirement of the client. Preparation of advertisement includes preparing the detailed execution program for advertisement on the basis of planning printing of the material for display or exhibition. Display/exhibition includes displaying the advertisement through various mode such as hoardings kiosk etc. - as regard the disputed amount on which the Service Tax was demanded does not relate to making of advertisement or preparation of advertisement. The appellant s activity is covered under the display of the advertisement through various modes such as hoardings display board kiosk etc. this can be further get cleared from the invoices of the service raised by the appellant. The appellant is charging fixed amount on monthly basis towards display charges and the description provided in the invoice is media space. In the invoice there is no charges for the services such as making of advertisement or preparation of advertisement example for visualizing conceptualizing designing etc. of the advertisement therefore it is clear that the invoices raised by the appellant is not for making or preparation of advertisement but only for the display charges for the space used for display of such advertisement. The appellant has submitted that the printed material/flex is provided by the client therefore there is no question of including the cost thereof in the media space invoice of the appellant. The appellant s service is confined to display of advertisement on the hoardings boards kiosk etc. and charge for the same is as per the space provided - As per the advertising service display of advertising (in this case sale of space for advertisement) is one of the various advertising service but by virtue of entry provided in the negative list selling of space for advertisement is not taxable. If providing space for advertisement is taxed then the entry provided in the negative list under Section 66D (g) will become redundant. The appellant can be charged service tax only in case where they themselves developed printed vinyl/flex and display the same on their hoardings board kiosk etc. - Whereas as per the facts available on record the concept of visualization conceptualization preparation of advertisement were done by some other persons and the appellant only provided the space for displaying such advertise therefore the appellant s activity is clearly limited to Selling of space or time slots for advertisements other than advertisements broadcast by radio or television . As per the facts we find that in the present case Customers who intend to advertise their product/service do approach to the advertising agency to advertise their product by providing duration and the time during which their advertisement should be displayed. If the advertising agency designs visualizes of conceptualizes advertisement to be displayed or exhibited then he will be covered under the scope of taxable service. The appellant have categorically asked for the cross examination of the witnesses who have given the statements but the adjudicating authority giving a lame excuse rejected the request for the cross-examination. Section 9D mandatorily put obligation on the adjudicating authority to examine the witness before relying on the statements recorded during investigation - even if the appellant does not ask for the cross-examination the adjudicating authority is duty bound that he must examine each and every witness whose statement he is going to rely upon for adjudication of the case. Since witnesses were not cross examined their statement cannot be used as evidence. In that case only other documents available on record can be used for deciding the case. As per the documents as discussed above we do not find that the appellant are engaged in visualizing conceptualizing creating making preparing the advertisement these activities are done by advertising agencies who in turn provide the readymade advertising material to the appellant only for displaying on their hoardings. Therefore firstly the statements particularly in the nature of the present case is not very relevant secondly the same cannot be relied upon as the same has not passed the test of examination as mandatorily required under section 9D of the Central Excise Act 1994 which is applicable in the case of Service Tax as per Section 83 of the Finance Act 1994. The appellant has provided service of sale of space for advertisement on their hoardings/bill boards kiosk etc. and it is clearly covered under Negative List during the period 01.07.2012 to 30.9.2014 accordingly demand for this period is set aside. Demand for the period 01.10.2014 to March 2016 - HELD THAT - The appellant has repeatedly submitted that from 01.10.2014 they have been paying Service tax regularly and there is no short payment of Service Tax rather there may be excess payment. It is observed that from the submission made by the appellant before the learned adjudicating authority and the finding in the impugned order that some service of sale of space was provided during the period 01.07.2012 to 30.09.2014 but the invoices were raised on or after 01.10.2014. The Adjudicating Authority since decided the matter on merit that service of the appellant is taxable he has not gone into the issue that in case service was provided prior to 30.09.2014 and invoices were raised after 01.10.2014 Whether the service tax should be chargeable considering the date of service or the date of the invoices. The bona fide belief with regard to non taxability of sale of space for advertisement gets clearly established. The appellant were regularly filing their ST-3 returns. It was known to the department that the appellant was paying Service tax prior to 01.07.2012 and also started paying Service Tax from 01.10.2014 and interregnum period the entry of space for advertisement was under Negative List. Therefore we do not see any suppression of fact or the mala fide intention on the part of the appellant for non-payment of service tax. Therefore the demand for extended period is not sustainable not only on merit but also on limitation. Having held so no penalty is imposable on the appellant for the same reason. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the service rendered by the appellant falls under the expression “selling of space or time slots for advertisement other than advertisements broadcast by Radio or Television” in the negative list under Section 66D of the Finance Act, 1994.
2. Whether the appellant's activities constitute "advertising agency services" and are thus liable for Service Tax.
3. Whether the extended period of limitation for demand is applicable.
4. Whether interest and penalties under Sections 75 and 78 of the Finance Act, 1994, are applicable.
5. Whether the benefit of cum tax price should be granted to the appellant.

Detailed Analysis:

1. Service Classification under Negative List:
The primary issue is whether the appellant's activities fall under the negative list of services as per Section 66D of the Finance Act, 1994. The appellant contended that their services were restricted to selling space for advertisements and ancillary services, which should fall under the negative list effective from 01.07.2012. They argued that they did not engage in creating or conceptualizing advertisements, which would classify them as an advertising agency. The Tribunal agreed with the appellant, noting that the services provided included selling space for advertisements on hoardings, billboards, and kiosks, and maintaining these structures. The Tribunal concluded that the appellant's activities fell under the negative list during the period from 01.07.2012 to 30.09.2014, as they were merely selling space for advertisements.

2. Classification as Advertising Agency Services:
The appellant argued that their activities did not include making, preparing, or conceptualizing advertisements, which are essential components of advertising agency services. The Tribunal examined the definition of an advertising agency and found that the appellant's activities were limited to displaying advertisements provided by clients on their hoardings. The Tribunal noted that the invoices raised by the appellant did not include charges for creating or preparing advertisements but were solely for display charges. Consequently, the Tribunal held that the appellant's activities did not constitute advertising agency services and thus were not taxable under this category.

3. Extended Period of Limitation:
The appellant argued that the extended period of limitation should not be invoked as there was no deliberate intention to evade tax. They contended that they were under a bona fide belief that their services fell under the negative list and had disclosed all relevant information in their Service Tax returns. The Tribunal agreed, noting that the issue was interpretational and the appellant had a bona fide belief regarding the non-taxability of their services. The Tribunal concluded that there was no suppression of facts or mala fide intention, and thus, the extended period of limitation was not applicable.

4. Interest and Penalties:
Since the Tribunal held that the demand for the extended period was not sustainable, it also concluded that interest and penalties under Sections 75 and 78 of the Finance Act, 1994, were not imposable. The Tribunal emphasized that the appellant's actions were based on a bona fide belief and there was no contumacious conduct.

5. Cum Tax Price Benefit:
The appellant argued that the benefit of cum tax price should be granted as per Section 67 of the Finance Act, 1994, which provides that the gross amount charged for services is inclusive of Service Tax when no tax has been separately collected. The Tribunal agreed, citing relevant judgments, and held that the money recovered from the service receiver should be considered as cum tax price.

Conclusion:
The Tribunal allowed the appeal, setting aside the demand for the period from 01.07.2012 to 30.09.2014, and directed the adjudicating authority to verify the calculations for the period from 01.10.2014 to March 2016. The Tribunal also ruled that the extended period of limitation was not applicable, and no penalties or interest were imposable. The appeal was allowed in the above terms.