2019 (7) TMI 574 - AT - Service Tax

Non-payment of service tax - Business Exhibition Service - HELD THAT - The appellants have paid ₹ 6,24,414/- towards Business Exhibition Service together with interest before issuance of show cause notice. Demand of service tax - electricity charges - HELD THAT - The electricity charges which were collected by the appellant from the stall owners and directly paid to the electricity department - demand set aside. Demand of service tax on advertising agency - HELD THAT - The appellant does not fall in the definition of Advertising Agency as contained in Section 65(3) of the Finance Act, 1994. The said definition of the term Advertising Agency means any person engaged in providing any service connected with the making, preparation, displaying for exhibition of advertisements and includes advertising consultant - further, the appellants were engaged in not any of the above activity during the relevant period nor fall in the definition of Advertising Agency . Therefore, the demand of service tax on advertising agency is also not sustainable in law. Appeal allowed - decided in favor of appellant.

Issues:
1. Liability to pay service tax on Business Exhibition Service.
2. Liability to pay service tax on advertising agency service.
3. Imposition of penalties under sections 76 & 77 of the Finance Act, 1994.
4. Treatment of electricity charges collected from stall owners.

Analysis:
1. The appellants organized a Business Exhibition at Vijayawada and collected amounts from exhibitors. The issue was whether they were liable to pay service tax on the gross amount collected for organizing the Exhibition. The Additional Commissioner confirmed the demand, but the Tribunal found that the appellants had already paid a significant amount towards Business Exhibition Service before the show cause notice was issued. Therefore, the demand for service tax on the Business Exhibition Service was not sustainable.

2. The appellants also collected advertising charges for displaying advertisements on gates and entry tickets. The question was whether they were liable to pay service tax as an advertising agency. The Tribunal observed that the appellants did not fall under the definition of an 'Advertising Agency' as per the Finance Act, 1994. Since the appellants were not engaged in activities defined under an Advertising Agency, the demand for service tax on advertising agency service was deemed unsustainable.

3. Penalties under sections 76 & 77 of the Finance Act, 1994 were imposed by the Additional Commissioner. The appellants argued that penalties were not imposable as they had paid the service tax along with interest before the show cause notice. The Tribunal agreed with the appellants, stating that penalties were not justified under the circumstances presented.

4. Regarding the electricity charges collected from stall owners and paid directly to the electricity department, the appellants argued that this amount did not include any service element and should not be subject to service tax. The Tribunal concurred, ruling that the electricity charges did not form part of the assessable value for service tax purposes, as there was no service element involved in supplying electricity. Therefore, the demand for service tax on the electricity charges was deemed invalid.

In conclusion, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal filed by the appellant with consequential benefits.

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