2023 (9) TMI 1098 - AT - Service Tax

Taxability - Advertising Agency Service - whether same was performed in India or outside and whether the same was received by the appellant in India? - HELD THAT - It is found that merely because the recipient is located in India that is not the deciding factor that the service was received in India. As per the submission of the appellant the service of advertising agency service was provided by foreign based service provider in relation to the marketing and sales promotion of appellant s goods in foreign country only. However, this aspect was not properly considered by both the lower Authorities. As per the facts available in record, it is found that if the service so provided in foreign country admittedly is not received in India and not used in India, the appellant are primafacie not liable for Service Tax. However, whether the advertising agency service was received in India for use in relation to the marketing and sales promotion of goods in India, without ascertaining this fact cannot be concluded that the appellant is liable for payment of service tax. In this position the matter needs to be reconsidered in the light of the observation. Appeal allowed by way of remand.

Summary

Issues involved:
The issue involved in the judgment is the taxability of Service Tax on 'Advertising Agency Service' and whether the service was performed in India or outside, and whether it was received by the appellant in India.

Comprehensive details of the judgment:

1. Background:
The appellant, engaged in manufacturing various products, was held liable to pay Service Tax on payments made to foreign-based service providers for services like Exhibition expenses, Sales Promotion expenses, and Advertisement expenses. The Adjudicating Authority confirmed the Service Tax demands along with penalties under the Finance Act, 1994.

2. Appeal before Commissioner(Appeals):
The appellant appealed before the Commissioner(Appeals), who dropped certain demands related to 'Business Exhibition Services' and 'Business Auxiliary Service.' However, demands related to 'Advertising Agency Service' from foreign-based providers were upheld.

3. Appellant's submission:
The appellant contended that the demand for Service Tax on advertising agency service was unjustified as the service was provided outside India. Citing relevant judgments, the appellant argued that services performed outside the taxable territory are not liable to service tax in India.

4. Revenue's stance:
The revenue supported the findings of the impugned order, maintaining the liability of the appellant for Service Tax on the advertising agency service.

5. Tribunal's analysis and decision:
After considering submissions from both sides, the Tribunal observed that the crucial issue was whether the advertising agency service was received in India for use in relation to the marketing and sales promotion of goods in India. It was noted that if the service provided in a foreign country was not received or used in India, the appellant may not be liable for Service Tax. The Tribunal found that this aspect was not adequately considered by the lower authorities and remanded the case to the Adjudicating Authority for a fresh order, emphasizing the need for a thorough examination based on the observations made.

6. Conclusion:
The Tribunal allowed the appeal by remanding the case for further consideration, highlighting the importance of determining whether the advertising agency service was received and used in India before concluding the liability for Service Tax.

This summary provides a detailed overview of the judgment, focusing on the issues involved and the Tribunal's decision to remand the case for a fresh order based on the specific considerations outlined in the analysis.