2013 (3) TMI 382 - Commissioner - Service Tax

Classification of Services - activity of canvassing for advertisements in the publications - Service tax on retainership fee - Held that - appellant s activity is not taxable and classified under business auxiliary service and the appellant is not liable to pay Service tax on the retainer fee paid by the publications during the disputed period. It is pertinent to mention here that Board vide its Circular No. 64/13/2003-S.T., dated 28-10-2003 clarified that canvassing for advertisements not liable to service tax when limited to space selling. a specific exclusion has been made to this effect. Sale of space or time for Advertisement Services was brought into the Service tax net w.e.f. 1-5-2006 only. The disputed period in the instant case is prior to that. Thus, the activity of the appellant during the disputed period is not taxable under Advertising Agency Service and Sale of Space or time for Advertisement Services too. - Demand set aside - decided in favor of assessee.

Summary

Issues:
1. Classification of appellant's activity as taxable under 'Business Auxiliary Service'.
2. Determination of liability to pay service tax on retainer fee for canvassing advertisements.
3. Interpretation of Circulars and Board's clarifications regarding service tax applicability on space selling and advertising agency services.
4. Assessment of whether appellant's activity falls under Advertising Agency Service.

Analysis:
1. The main issue in this case was the classification of the appellant's activity of canvassing for advertisements as taxable under 'Business Auxiliary Service'. The Department alleged that the appellant's services fell under this category based on Circulars and Board clarifications. However, the appellant argued that their activity was merely space selling in print media and thus should not be subject to service tax.

2. The appellant contended that they were paid a fixed retainer fee for their services and not on a commission basis, which, according to Circulars, would exempt them from being classified under 'Business Auxiliary Service'. The records showed that the appellant's services were limited to space selling in the publications, and they did not undertake activities that would fall under the definition of an advertising agency.

3. The Board's Circulars, particularly No. 64/13/2003-S.T., dated 28-10-2003, clarified that space selling activities not involving additional services like preparing or displaying advertisements would not be liable for service tax. The appellant's agreement with the publications supported their claim that they were engaged in space selling and not providing advertising agency services.

4. The judgment highlighted that the appellant's activity was not taxable under 'Business Auxiliary Service' or 'Advertising Agency Service' during the disputed period. The Tribunal's decision in a similar case involving Malar Publications further supported the appellant's argument, leading to the appeal being allowed and the impugned Order-in-Original set aside.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the tax liability of the appellant based on the nature of their services and the relevant Circulars and Board clarifications.