2018 (8) TMI 1110 - AT - Service Tax

Advertising Agency Service - renting of hoardings - Held that - It is evident that the appellant was only renting out the hoardings which were either owned by them or leased to them, to various advertising agencies. There is no allegation that appellant had themselves made prepared displayed or exhibited any advertisings on their own. There is no dispute that the advisements which may have appeared on the hoardings are those that were prepared by the concerned advertising agencies and certainly not by the appellants. The appellants have only rented out these hoardings to the concerned advertising agency. The definition of Advertising Agencies in Section 65 (3) ibid does include the phrase any service connected with . Discernably, this phrase has to be read in keeping with the principle of ejusdem generis. Where a law lists specific class of persons or things and then refers to that in general, the general statements only apply to the same kind of persons or things specifically listed out - When the category of service concerns and involves creativity and even specifically seeks to include advertising consultant , it would be too farfetched to bring in renting of hoardings within the scope of such service. The activities of the appellant cannot be brought within the fold of Advertising Agency Services for the purpose of Section 65 (3) ibid - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of service tax liability under "Advertising Agency Service" for renting hoardings.

Analysis:
The case involved the appellants registered under the service tax department as an "Advertising Agency Service" for renting hoardings. The department issued a show-cause notice proposing service tax liability under Section 65(3) of the Finance Act, 1994. The original authority held that the appellants only rented out hoardings and collected rental charges from advertising agencies. A revision notice was issued, culminating in an order demanding service tax liability and imposing penalties. The appellants appealed, arguing that they were merely renting out hoardings and not providing advertising services directly. The tribunal examined various tribunal decisions and legal principles to determine the scope of "Advertising Agency Service" under Section 65(3) of the Act.

The appellant's advocate referred to tribunal decisions supporting the view that renting hoardings does not fall under the purview of "Advertising Agency Service." The respondent supported the impugned order, citing tribunal decisions and the importance of including connected services related to advertisement display. The tribunal heard both sides and analyzed the facts presented.

The tribunal analyzed the definition of "Advertising Agencies" under Section 65(3) and applied the principle of ejusdem generis to interpret the phrase "any service connected with." Referring to landmark judgments, the tribunal concluded that services related to the making, preparation, display, or exhibition of advertisements must be of the same nature or generis. The tribunal highlighted that expert services involving creativity and consultancy are integral to advertising agency services, which renting hoardings does not entail.

The tribunal referenced past decisions, including a recent one where renting space for advertisements was distinguished from "Advertising Agency Service." It emphasized that the expertise and planning involved in advertisement creation are crucial aspects of the service, which renting hoardings does not encompass. The tribunal also discussed the creation of a separate category for the sale of space or time for advertisements, indicating a legislative intent to differentiate such activities from traditional advertising agency services.

The tribunal further cited board circulars clarifying the distinction between activities related to advertisement preparation and space selling. It noted that single-member bench orders and advance ruling decisions cited by the respondent do not hold precedential value over division bench decisions. Based on the analysis and legal principles discussed, the tribunal held that the appellant's activities did not fall under "Advertising Agency Services" as per Section 65(3) of the Act. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential benefits as per law.