2014 (3) TMI 508 - AT - Service Tax

Valuation - Advertisement Agency Service - applicant is paying service tax on the 15% of the commission retained by him. The present dispute is about 85% of the amount paid to the print media and on which Revenue is demanding service tax. - Held that - In the case of commission earned for selling advertisement space in print media, the Tribunal has already decided that service tax is payable only on the service rendered by the intermediary, which the applicant has already paid. Taxing the activity of the print media in the hands of the intermediary is not consistent with provisions of section 67 of the Finance Act 1994 and the charging section which does not provide for taxing services provided by print media - In the matter of materials prepared as per orders of the clients it is fairly clear that goods were sold for which, he has already paid VAT and in such case the applicant was not involved in conceptualizing and designing the advertisement. So it is not be proper to order any pre-deposit on this count at this stage. In the case of hoardings, the applicant explained as to how in some cases service tax was paid and in some cases service tax was not paid as it appears from the Bills. The situation appears to be that where only sale was involved service tax was not paid and where the applicant provided space, either space belonging him to him or taken on lease by him, for display, service tax was paid, though such details has not been furnished before the adjudicating authority - Stay granted.

Summary

Issues:
Demand for service tax not paid during a specific period, categorization of demands, time-barred demand, liability for service tax on various transactions, classification of activities related to hoardings, waiver of pre-deposit for appeal admission.

Analysis:
1. Demand for Service Tax: The applicant faced a demand for service tax not paid between 01.07.2006 to 31.03.2009, totaling Rs.99,64,532/- as tax and Rs.2,34,067/- towards denial of Cenvat credit. The demands were categorized into three main components: commission retained on advertisements, sale of advertisement materials, and displaying hoardings. The applicant argued that service tax was paid on the commission retained, while disputes arose regarding the remaining amounts paid to print media and the sale of advertisement materials.

2. Time-Barred Demand: The applicant contended that the entire demand was time-barred as the Show Cause Notice was issued in November 2011. Citing legal precedents, the applicant argued for the admission of the appeal without any pre-deposit based on the limitation period.

3. Liability for Service Tax: The Revenue argued that service tax was payable on transactions treated as 'sale of goods' by the applicant. The definition of 'advertisement' under Section 65(2) of the Finance Act, 1994, was highlighted to assert that the applicant's activities fell under 'Advertising Agency Service,' making them liable for service tax.

4. Classification of Hoarding Activities: The Revenue pointed out inconsistencies in the applicant's classification of hoarding activities as either 'service' or sale of materials. The adjudicating authority considered the entire consideration as value for 'service' and confirmed the demand, emphasizing the lack of a reasonable basis for the different classifications.

5. Judgment and Conclusion: The Tribunal analyzed the submissions from both sides and made specific determinations. Regarding commission earned for selling advertisement space, it was established that service tax was payable only on the intermediary's service, not on the print media activity. For materials sold as per client orders, where the applicant did not conceptualize or design the advertisements, no pre-deposit was deemed necessary. In the case of hoardings, the Tribunal acknowledged the applicant's explanation on the differential payment of service tax based on the nature of the transaction. Ultimately, considering the circumstances, the Tribunal waived the pre-deposit for tax admission pending the appeal's disposal.