2025 (3) TMI 201 - AT - Service Tax

Short payment of service tax - classification of service - preparing the advertising material - advertising service or not - extended period of limitation. Classification of service - preparing the advertising material - advertising service or not - HELD THAT - The appellants are engaged only in writing and/or printing banners which were given to them by the clients. They had no role in the design and conceptualization of the advertisement. It has been held in the cases cited above that mere preparing the advertising material does not come under the ambit of advertising and therefore the activity undertaken by the appellants cannot be held to be advertisement agency service . Extended period of limitation - HELD THAT - The show cause notice has been issued invoking the extended period. However no positive act of suppression mis-statement etc. on the part of the appellants has been brought on record. Further the show cause notice has been issued on the basis of the data available with the Income Tax Department in the form of TDS details and 26AS statements. Revenue has not conducted any enquiry so as to ascertain what was the service rendered? When it was rendered? To whom it was rendered? What was the consideration received by the appellants? etc. The burden of proving the same was with the Department for alleging non-payment of service tax by the appellants. Such a confirmation of duty cannot be sustained. Extended period cannot be invoked under such circumstances. Conclusion - i) Mere preparing the advertising material does not come under the ambit of advertising and therefore the activity undertaken by the appellants cannot be held to be advertisement agency service . ii) Extended period cannot be invoked. Appeal allowed.

Summary

The issues presented and considered in the legal judgment are as follows:1. Whether the appellants are liable to pay the balance service tax of Rs. 47,06,819 for the services provided during the period 01.10.2006 to 31.03.2011.2. Whether the activities undertaken by the appellants in preparing banners without involvement in designing and conceptualization fall under the category of advertising agency services.3. Whether the show cause notice issued to the appellants followed the correct procedure and whether the extended period for invoking the notice was justified.Issue-Wise Detailed Analysis:1. The Court considered the appellant's argument that they are not liable to pay the balance service tax as they believed the services provided by them were not taxable. The Court also noted that the show cause notice was based on information obtained from the Income Tax Department without conducting a proper investigation into the services provided by the appellants.2. The Court analyzed the nature of the appellant's activities in preparing banners and found that they did not involve designing or conceptualization, which are essential elements of advertising agency services. The Court referred to previous judgments and circulars to support the argument that mere preparation of advertising material does not constitute advertising agency services.3. The Court examined the procedural aspects of the show cause notice issuance and found that it was affixed to the last known address of the appellant without proper service. The Court also considered the lack of investigation by the Revenue before issuing the notice based on Income Tax Department data, leading to the conclusion that the extended period for invoking the notice was not justified.Significant Holdings:The Court held that the appellants are not liable to pay the balance service tax as their activities did not fall under the category of advertising agency services. The Court also determined that the show cause notice was improperly issued without proper investigation and service, leading to the allowance of the appeal with consequential relief.In conclusion, the Court found in favor of the appellants, ruling that they are not liable to pay the balance service tax and that the show cause notice was invalid due to procedural irregularities and lack of investigation.