2023 (9) TMI 723 - AT - Service Tax

Levy of Service Tax - appellant was rendering advertisement agency services by placing advertisement boards in the buses of leading consumer brands - period from January 2002 to June 2006 - HELD THAT - The Board vide Ministry of Finance F. No. 345/4/97-TRU, dated 16-8-1999 had clarified that no service tax is chargeable on the advertisement booked for yellow pages. The reasoning given therein is also applicable to this case. It was clarified that if persons undertake any activity relating to making or preparation of an advertisement, such as designing, visualizing, conceptualizing etc., only then will they be liable to pay service tax on the charges made thereon under advertisement agency service. A similar matter was also examined by the Tribunal in COMMISSIONER OF CENTRAL EXCISE, KOLKATA-V VERSUS THE INCODA 2004 (6) TMI 7 - CESTAT, KOLKATA . It was held hiring of space will not bring the appellant under the definition of advertising agency . Since the issue has been decided on merits in favour of the appellant the question of interest, penalties or invoking the extended period does not arise. Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the classification of services provided by the appellant as an "advertising agency" for the purpose of service tax, interpretation of relevant provisions of the Finance Act 1994, and the applicability of time limits and unjust enrichment in the case.

Classification of Services:
The appellant, a Government of Tamil Nadu Undertaking, provided transportation services and offered space on buses for advertisement display. The appellant contended that they were not an "advertising agency" as they only facilitated the display of advertising boards and were not involved in the making, preparation, or display of advertisements. The Tribunal found that the appellant's activities did not qualify as those of an "advertising agency" under the relevant provisions of the Finance Act 1994. The Tribunal emphasized that the appellant's role was limited to selling space for advertisement display and did not involve conceptualizing or designing advertisements, as required for classification as an advertising agency.

Interpretation of Provisions:
The Tribunal examined Section 65(3) and Section 65(105)(e) of the Finance Act 1994, which define an "advertising agency" and the services related to advertisement. The appellant's activities of providing space for advertisement display were found to be distinct from the services typically provided by an advertising agency, such as making, preparation, and display of advertisements. The Tribunal referred to relevant case laws and circulars to support its interpretation that the appellant's role did not fall under the definition of an "advertising agency" for the purpose of service tax.

Applicability of Time Limits and Unjust Enrichment:
The Tribunal noted that the lower authorities did not consider a Ministry of Finance circular dated 16-8-1999, which clarified the applicability of service tax on activities related to conceptualizing, designing, or preparing advertisements. As there was no finding on the question of the time limit in the impugned order, the Tribunal set aside the order and remanded the matter for further examination by the Jurisdictional Assistant/Deputy Commissioner. The Tribunal directed a reevaluation of the chargeability of the activity to service tax in light of the circular and consideration of the question of time limits and unjust enrichment.

Conclusion:
The Tribunal set aside the impugned order passed by the Commissioner of Central Excise (Appeals), Salem, and allowed the appeal in favor of the appellant. The Tribunal concluded that the appellant's activities did not classify them as an "advertising agency" for the purpose of service tax. As the issue was decided in favor of the appellant, the question of interest, penalties, or invoking the extended period did not arise. The appeal was allowed with consequential relief, if any, as per law.