2017 (3) TMI 866 - AT - Service Tax

Import of services - An advertisement in Fertilizer Focus , a magazine published from U.K. - Whether the amount paid by appellant for advertisement in a foreign magazine is liable to be taxed under the category of sale of space or time for advertisement under reverse charge mechanism or not? Held that - the said magazine Fertilizer Focus gives the information regarding various machineries and the products and also various articles in respect of fertilizers and fertilizer industry. Hence the magazine Fertilizer Focus will be covered under the definition of Book and an advertisement placed by the appellant in the magazine being in print media is excluded from the service tax liability under the category of sale of space or time for advertisement - appeal allowed - decided in favor of appellant.

Summary

Issues: Tax liability on advertisement in a foreign magazine under reverse charge mechanism.

Analysis:
The appeal challenged an order-in-appeal that held the appellant, a manufacturer of machinery for the fertilizer industry, liable to pay service tax for placing an advertisement in a UK magazine, "Fertilizer Focus." The revenue authorities contended that the payment for the advertisement fell under the category of "sale of space or time for advertisement" under the reverse charge mechanism. The adjudicating authority confirmed the demand for service tax, interest, and penalties, a decision upheld by the first appellate authority.

Upon review, the Tribunal found errors in the lower authorities' interpretation. The Tribunal noted that the magazine "Fertilizer Focus" exclusively focused on items and machinery related to the fertilizer industry. The definition of "sale of space or time for advertisement" under Section 65(105) (zzzm) of the Finance Act, 1994, excludes sale of space in print media. The appellant argued that the advertisement in "Fertilizer Focus" qualified as print media, but this argument was dismissed by the lower authorities based on the magazine not being classified as a "Newspaper or book."

The Tribunal, however, analyzed the definition of a book under the Press and Registration of Books Act, 1867, which excludes business directories, yellow pages, and print catalogues for commercial purposes. Considering that "Fertilizer Focus" provided industry-specific information and articles, the Tribunal accepted the appellant's claim that the magazine fell under the definition of a book. As the magazine catered to the fertilizer industry globally, the advertisement placed by the appellant was deemed to be in print media and thus excluded from service tax liability under the category of sale of space or time for advertisement.

Consequently, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant.