2023 (6) TMI 466 - AT - Service Tax

Levy of Service tax - Classification of services - Business Exhibition Service or not - providing services to Govt of Andhra Pradesh under a program called Integrated Mobile Publicity in Assembly Constituencies (IMPACT) - time limitation - HELD THAT - After going through the facts of the case, it emerges that in July 2009 CAG Audit has taken a view that service would fall under the category of Public Relation Services . Keeping faith on this interpretation of the CAG, the Service Tax Department has raised the demand for more than Rs 4 crores wide their letter dated 15.07.2009. They have also raised the issue vide letter dated 01.07.2009 based on the CAG Audit and called for all the documents to be submitted. Appellants have replied on 02.07.2009 making their stand clear. The Show- Cause Notice fails to clarify as to what took them more than 1.5 years to issue the Show-Cause notice on 04.03.2011. In the Show-Cause Notice there is absolutely no mention of any earlier demand raised by the Department on 15.07.2009. The Show-Cause notice also does not specify as to what made the Department change its mind from classifying the service as Advertisement Services when CAG Audit has pointed out that the service would fall under the category of Public Relations Management Services . On an identical issue in the case of another party CST, DELHI VERSUS M/S WALIA CO. 2017 (3) TMI 936 - CESTAT NEW DELHI who was also awarded the contract by Govt of A.P. in respect of the same program, the Department has proceeded against them at Delhi on the ground that they were rendering the service of Public Relations Management service which in fact has been confirmed by the Delhi Tribunal. Time Limitation - HELD THAT - From the factual matrix cited, it is clear that the matter of classification of the service is purely a matter of interpretation. In such a case demand for extended period does not sustain. The confirmed demand for the extended period is liable to be set aside. The appeal is allowed to this extent.

Summary

Issues:
The issues involved in the judgment are the classification of services provided by the appellant to the Government of Andhra Pradesh under the program Integrated Mobile Publicity in Assembly Constituencies (IMPACT) and the liability to pay service tax on these services.

Classification of Services:
The appellant contended that the services provided by them should be categorized as 'Business Exhibition Service' and argued that since the services were rendered to the Government of Andhra Pradesh, which is not engaged in business activities, no service tax is due. They highlighted that the Department itself had previously classified the services as 'Public Relation Management Service' based on an AG's Audit, leading to a demand for service tax. The appellant also pointed out a similar case involving another party where the Department had classified the services as 'Public Relation Service,' which was upheld by the CESTAT Delhi. Given the differing interpretations by the Department, the appellant argued against any intent to evade service tax payment.

Limitation and Allegations of Suppression:
The Department argued that the services provided by the appellant should be classified as 'Advertising' based on the definition in the Finance Act 1994. They contended that the appellant had intentionally suppressed facts regarding service tax payment, as evidenced by the inclusion of a clause in the agreement stating that the amount payable by the Government of Andhra Pradesh was inclusive of service tax. The Department claimed that the delayed issuance of the show-cause notice in 2011 was due to the need for detailed investigation and the appellant's piecemeal submission of documents. However, the Tribunal noted that the Department's change in classification from 'Public Relation Services' to 'Advertising Services' without clear justification raised doubts about any suppression by the appellant. The Tribunal found that the matter of service classification was subject to interpretation and ruled in favor of the appellant, setting aside the demand for the extended period.

Conclusion:
The Tribunal concluded that the confirmed demand for the extended period was not sustainable, considering the differing interpretations by the Department and the lack of clarity in the show-cause notice. The appeal was allowed, and the demand for the extended period was set aside.