2024 (2) TMI 438 - AT - Service Tax

Exemption from Service Tax - Advertisement Agency Service - Selling of Space - covered under the Negative List or not - burden to prove on Department, whether service provided by the appellant was selling of space for advertisement or not - burden can be shifted on the Appellant or not (onus to prove) - interest and penalty - HELD THAT - The Appellant is providing service of displaying the advertisement through various mode such as hoarding, kiosk, etc. However, he is not providing the services like basic planning of advertising, preparing the detail exhibition program for advertisement. On the basis of planning, printing of the material for display or exhibition the service of selling of space or time slots for advertisements falls under negative list of Services specified under Section 66D (g). The words selling of space or time slots for advertisement are not defined in the act therefore, the meaning of these words is to be understood in commercial parlance which means providing space for displaying advertisement. At the time of introduction of new service, the Joint Secretary, Ministry of Finance, Department of Revenue, Government of India issued a clarification on this service vide D.O.F. 334/4/2006-TRU dated 28.02.2006 which shows that advertisement on building covers under the scope of sale of advertising spaces. The customer or client approaches the appellant with advertisement material and the appellant displayed the same on a space for a particular period and charge the customer on monthly basis. After expiry of the period the advertisement is removed. Such activities of providing space for displaying advertisement was covered in the Negative list and as such not taxable. It is evident from the details given in above invoices that the Appellant was not engaged in designing and conceptualising advertisement. The Tribunal has observed in the case of Zodiac Advertisers 2006 (3) TMI 138 - CESTAT, BANGALORE that a service is covered under Advertising Agency service when all activities as mentioned in the definition are done by a person - The ratio of the above decision are squarely applicable in this case also and demand of service tax for that period is not sustainable. Interest and penalty - HELD THAT - The issue is no more resintegra. Once demand is not sustainable, penalty imposed under Section 78 of the Finance Act, 1994 would not be imposable. The penalty imposed on the partner, Shri Sanjay Adhlakha is also set aside. The Late Fee is restricted to Rs.1,00,000/-. The demand of Service Tax alongwith applicable interest set aside - The penalty imposed under Section 78 on the Appellant firm and under Section 78A on the partner Shri Sanjay Adhlakha are set aside - appeal allowed in part.

Summary

Issues Involved:
1. Classification of Services Rendered by the Appellant.
2. Applicability of Service Tax on the Services Rendered.
3. Invocation of Extended Period for Demand.
4. Imposition of Penalties and Late Fees.

Summary:

1. Classification of Services Rendered by the Appellant:
The Appellant, a partnership firm, contended that their services were restricted to 'Selling of Space for Advertisements' and did not include making or preparing advertisement material, which is essential for classifying a service under 'Advertisement Agency'. The Adjudicating Authority, however, classified the services under 'Advertisement Agency Service' based on the registration certificate in ST-2 format, ST-3 returns, and statements of Shri Sanjay Adhlakha. The Tribunal found that the description of services in ST-2 and ST-3 returns did not conclusively prove that the Appellant provided 'Advertisement Agency Service'. The Tribunal held that the services rendered by the Appellant were indeed 'Selling of Space for Advertisements' and not 'Advertisement Agency Service'.

2. Applicability of Service Tax on the Services Rendered:
The Tribunal observed that the service of 'Selling of Space for Advertisements' was covered under the Negative List as per Section 66D(g) of the Finance Act, 1994, from 01.07.2012 to 30.09.2014. The Appellant was not liable to pay service tax on these services during this period. The Tribunal relied on the definition of 'Advertising Agency' and previous case laws to conclude that the Appellant's services did not fall under 'Advertisement Agency Service'. Consequently, the demand for service tax for the period 01.10.2012 to 30.09.2014 was set aside.

3. Invocation of Extended Period for Demand:
The Appellant argued that the demand was barred by limitation as there was no suppression of facts. The Tribunal agreed, noting that the value of services was declared in the ST-3 returns, and the Department had the opportunity to initiate action within the standard period. The invocation of the extended period under Section 73(1) of the Finance Act, 1994, was deemed unsustainable.

4. Imposition of Penalties and Late Fees:
The Tribunal found that since the demand for service tax was not sustainable, the penalties imposed under Section 78 on the Appellant and under Section 78A on the partner Shri Sanjay Adhlakha were also not maintainable. The Late Fee was restricted to Rs.1,00,000/- as the Appellant had already deposited Rs.80,000/-. The Tribunal set aside the penalties and the excess late fee.

Conclusion:
The Tribunal set aside the demand for service tax along with applicable interest and penalties. The appeal filed by the Appellant was partly allowed, providing consequential relief.