2006 (10) TMI 1 - AT - Service Tax

Service Tax Advertising services Appellant rendered services of making of hoardings, sign boards and signages and design of signages, their colour schemes etc. provided by Uttaranchal Tourism Authority Such activities not covered within ambit of advertising agency and not attracted to service tax

Summary

Issues:
Interpretation of taxable service as advertising service for preparation and installation of signages.

Analysis:
1. The appellant was engaged in making hoardings, sign boards, and signages for Uttaranchal Tourism. The service tax authorities contended that the services provided by the appellant fell under the category of advertising service and were liable to service tax. A show cause notice was issued demanding service tax, which the appellant resisted by claiming that they were not an advertising agency but merely painters/writers of signage boards, falling under the category of manufacture.

2. The orders held that the preparation and installation of signages by the appellant fell within the definition of taxable service as per Section 65 of the Finance Act 1994. The appellant's contentions were rejected, citing Circular No. 341-43/96-TRU and a previous Tribunal decision. The appellant argued that the service of an advertising agency involves designing and conceptualizing advertisements, not physical activities like painting or writing, supported by relevant case law.

3. The Tribunal considered both sides' submissions and examined the definition of advertising service and advertising agency under the Finance Act. The appellant contended that they were not engaged in designing or visualizing advertisements but in physical activities like painting and manufacturing. The Tribunal referenced a previous case where it was held that manufacturing sign boards did not constitute an advertising agency's services.

4. The Tribunal also discussed the effect of an extended definition and held that activities unrelated to those of an advertising agency should not fall under the scope of the levy. It was established that the appellant's services did not align with those typically provided by an advertising agency, and the extended definition should not encompass entirely different services or manufacturing activities.

5. Based on the factual and legal analysis, the Tribunal concluded that the appellant was not an advertising agency and the service provided did not amount to advertising service for attracting service tax. The impugned order was set aside, and the appeal was allowed in favor of the appellant, providing consequential relief.

Judgment:
The Tribunal ruled in favor of the appellant, determining that their services did not constitute advertising service as per the definition under the Finance Act. The appellant's activities of manufacturing signages were distinct from the services provided by an advertising agency, and therefore, they were not liable to pay service tax for the same.