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2023 (10) TMI 1156 - AT - Service TaxLevy of service tax - Advertisement Agency Service or not - providing the space for the advertisement to other advertisement agencies - HELD THAT - In the instant case, it is observed that the Appellant was only providing space for advertisements on collection of rental charges. The impugned order did not disclose any evidence to the effect that the Appellant themselves had conceptualized, visualized and designed the advertisements. In the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI VERSUS TEAM UPD LTD. 2004 (10) TMI 9 - CESTAT (CHENNAI) , it has been held that unless it is established that the person concerned had conceptualized, visualized and designed the advertisement, merely allowing its site to be used for display of advertisement by another party against payment of charges are not covered under the definition of Advertisement Agency in Section 65(3) of Finance Act, 1994. In the instant case, the Appellant has not performed conceptualization, visualization and designing of the advertisement. Thus, they have not fulfilled the condition precedent required to satisfy the service under the category of Advertisement Agency Service. It is not disputed that the Appellant has rented out the space obtained by them from organizations like Calcutta State Transport Corporation and Metro Railway to other Advertisement Agencies like M/s Sampark (Kolkata), Bells Advertising (Kolkata), Dilip Kumar Bhattacharya (Kolkata) and M/s M.A. Publicity (Kolkata) on fixed monthly charges. These Advertisement Agencies who has taken these space on rent from the Appellant actually conceptualize and design the advertisements and they are liable to pay service tax under the category of Advertisement Agency Service and not the Appellant. Accordingly, letting out space for advertisement on hoarding sites, on collection of rental charges, as done by the Appellant are not liable to service tax under the category of Advertisement Agency Service as defined under Section 65(105)(e) of the Finance Act, 1994. The demand of service tax confirmed in the impugned order is not sustainable. Since the demand itself is not sustainable, the demand of interest and imposition of penalties under Sections 76, 77 and 78 of the Finance Act, 1994 is also not sustainable - Appeal allowed.
Issues involved:
The issue involved in this case is whether the Appellant has rendered Advertisement Agency Service liable to service tax as defined in Section 65(105)(e) of the Finance Act, 1994 or they were merely providing the space for the advertisement to other advertisement agencies. Comprehensive Details: Issue 1: Advertisement Agency Service Liability The Appellant, a proprietorship firm, was issued a Show Cause Notice for not paying service tax on Advertisement Agency service. The Appellant argued that they only rented out hoardings to advertising agencies, who designed and displayed the advertisements. The Tribunal observed that the Appellant did not conceptualize, design, or prepare the advertisements themselves, which are essential elements for classifying as an Advertisement Agency Service provider. Issue 2: Legal Precedent Referring to the case of Commissioner of Central Excise Vs. Team UPD Ltd., it was established that merely allowing a site to be used for displaying advertisements by another party does not fall under the definition of an "Advertisement Agency" unless the entity itself conceptualizes, visualizes, and designs the advertisement. In this case, the Appellant did not fulfill these criteria, as the advertising agencies they rented space to were responsible for designing the advertisements. Issue 3: Service Tax Liability The Tribunal concluded that the Appellant's activities of letting out space for advertisements on hoarding sites, without involvement in conceptualizing or designing the advertisements, do not attract service tax under the Advertisement Agency Service category. The responsibility for service tax lies with the advertising agencies renting the space, not the Appellant. Therefore, the demand for service tax, interest, and penalties imposed on the Appellant were deemed unsustainable. Conclusion The Tribunal allowed the appeal filed by the Appellant, stating that the demand for service tax confirmed in the impugned order was not sustainable due to the Appellant's role solely as a space provider for advertisements, without engaging in Advertisement Agency services.
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