2008 (2) TMI 88 - AT - Service Tax

Activity of preparation erection of banners, traffic sign boards, centre median grills barricades as required by traffic police fabrication erection of hoardings for display of advertisements of their private clients In view of TN 345/4/97, impugned services are not taxable under Advertising Agency because conceptualisation, visualization designing of advertisements are not undertaken explanation given by appellants with regard to statement of proprietor is cogent appeal allowed

Summary

Issues:
Demand of service tax on activities of preparation and erection of banners, sign boards, hoardings, and barricades; Interpretation of the definition of "advertising agency" under Section 65(3) of the Finance Act, 1994.

Analysis:
The lower authorities demanded service tax from the appellants for activities including preparation and erection of banners, sign boards, hoardings, and barricades. The Revenue contended that these activities amounted to a taxable service under Section 65(105)(e) of the Finance Act, as they were considered an "advertising agency" under Section 65(3) of the Act. The definition of "advertising agency" includes any commercial concern engaged in providing services connected with the making, preparation, display, or exhibition of advertisements.

The appellants argued that they did not design or conceptualize any advertisements for display on the structures, therefore not falling within the definition of an advertising agency. They relied on previous decisions and a trade notice emphasizing the need for conceptualization, visualization, and designing of advertisements to qualify as an advertising agency. The appellants' position was supported by documentary evidence, including bills raised on clients during the disputed period.

The Tribunal found that the appellants did not meet the criteria of an "advertising agency" as defined under the Act, as they did not engage in the making or preparation of advertisements. The Tribunal noted that the decisions cited by the appellants supported their case, emphasizing the importance of conceptualization and design in advertisement preparation. As the Revenue did not challenge the validity of these decisions, the Tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal held that the appellants were not liable for service tax as they did not meet the requirements of an "advertising agency" under the Act. The decision was based on the lack of involvement in designing or preparing advertisements, as clarified by previous case law and a trade notice. The documentary evidence provided by the appellants further supported their claim, leading to the setting aside of the demand for service tax and the allowance of the appeal.