2022 (4) TMI 425 - AT - Service Tax

Extended period of limitation - Classification of services - processing and printing photograph from the negative supplied by their client - Photography Services or otherwise? - HELD THAT - The case can be decided on the ground of time bar itself without going into the merit of the case. In this regard, it is found that the demand was raised on the basis of the AG s audit on scrutiny of the appellant s records such as Profit and Loss Account and Balance Sheet, which revealed that they have received some income in respect of service in question. It is also found that the issue involved is interpretation of the definition of service viz., Photography Service . There are various judgments on this issue and the appellant s stand is also that their activity of processing and printing out of photographs from native supplied by their client is in the category of advertisement films, for this reason also, the issue involved is interpretation of law. The suppression of fact cannot be alleged against the appellant. In the present case, the demand pertains to the period 2002-03 and 2003-04 whereas the show-cause notice was issued on 17.7.2007 which is much after the normal period - the entire demand is time barred - appeal allowed - decided in favor of appellant.

Summary

Issues: Determination of liability for service tax on 'Photography Service' provided by appellant during 2002-03 to 2003-04; Interpretation of whether appellant's activity of processing and printing photographs amounts to 'Photography Service'; Time-barred demand for service tax.

Analysis:

1. Liability for Service Tax: The case involved the determination of liability for service tax on the 'Photography Service' provided by the appellant during the period 2002-03 to 2003-04. The appellant had not obtained registration or discharged service tax for the said service during this period. A show-cause notice was issued proposing a demand for service tax along with interest and penalty. The appellant contended that their activity was in the nature of advertisement films and not photographs as defined under the relevant Act, hence they were not liable to obtain registration as a service provider. The issue revolved around whether the appellant's activities fell under the definition of 'Photography Service' for the purpose of service tax liability.

2. Interpretation of 'Photography Service': The appellant argued that their activity of processing and printing photographs from negatives supplied by clients should be categorized as advertisement films, not falling under the definition of 'Photography Service' as per the Act. They presented various judgments to support their claim, emphasizing the distinction between motion picture photography and advertisement films. The issue of interpretation of the law regarding 'Photography Service' was central to the case, with the appellant's position relying on the differentiation between the two types of services.

3. Time-Barred Demand: The appellant alternatively contended that the demand for service tax was time-barred as they had not suppressed any facts, and the case was based on AG audit findings and financial records. They argued that the demand raised for the period 2002-03 to 2003-04, through a show-cause notice issued in 2007, exceeded the normal period for raising such demands. The Tribunal agreed with the appellant, ruling that the demand was time-barred due to the absence of any suppression of facts, and set aside the demand solely on this ground without delving into the merits of the case. The decision highlighted the importance of adherence to the statutory limitation period for raising tax demands.

In conclusion, the Appellate Tribunal CESTAT Bangalore decided in favor of the appellant, setting aside the demand for service tax on the grounds of being time-barred, without delving into the merits of the case regarding the interpretation of 'Photography Service'. The judgment underscored the significance of statutory time limits in tax matters and the necessity for proper interpretation of legal definitions in determining tax liabilities.