2005 (12) TMI 1 - AAR - Service Tax

Advertising Services providing / selling space for display or exhibition of an advertisement classifiable as advertising services (ii) It can not be termed as business exhibition service

Summary

Issues Involved:
1. Classification of the service provided by the applicant.
2. Whether the service is taxable under the Finance Act, 1994.
3. Determination of the specific category under which the service falls: Advertisement Services, Computer Network Service, Business Auxiliary Service, or any other taxable service.

Issue-wise Detailed Analysis:

1. Classification of the Service Provided by the Applicant:
The applicant, a subsidiary of Google International LLC, proposes to provide internet-based search services free of charge and sell advertisement space slots on the Google search site. The applicant will manage direct sales, syndication partnerships, and reseller deals locally, with contracts being with the applicant. The applicant seeks an advance ruling on whether their activity of selling advertisement space on the Google website falls under any of the specified heads of taxable services.

2. Whether the Service is Taxable Under the Finance Act, 1994:
The applicant contends that the service proposed does not attract service tax under the specified categories. The Commissioner of Service Tax, however, argues that the service falls under advertisement service provided by an advertising agency, as it involves value-added services to clients, such as helping design advertisements and providing a platform for displaying advertisements. The Authority notes that classification of taxable service is within its jurisdiction, but determining whether a service is taxable is not.

3. Determination of the Specific Category Under Which the Service Falls:
- Advertisement Services (Section 65(105)(e)): Defined as any service provided by an advertising agency in relation to advertisement. An advertising agency is any commercial concern engaged in providing any service connected with the making, preparation, display, or exhibition of advertisements. The applicant's activities, including selling space for advertisements and providing value-added services like designing ads, fall within this definition.

- Business Exhibition Service (Section 65(105)(zzo)): Defined as service provided to an exhibitor by the organizer of a business exhibition in relation to business exhibition. The Authority concludes that business exhibition service does not apply to the applicant's activities, as it does not involve organizing events like trade fairs or road shows.

Conclusion:
The Authority rules that the service of providing/selling space for advertisement on the Google website by the applicant is classifiable under Section 65(105)(e) of the Finance Act, 1994, as it constitutes advertisement service provided by an advertising agency. The applicant's activities of selling advertisement space and providing associated services like designing ads and displaying them on the website meet the criteria for advertisement service.

Pronouncement:
The ruling was pronounced in the open Court of the Authority on December 13, 2005.