Composite advertising contracts may be taxed as goods when printed material is supplied with creative services.
A composite advertising contract that includes supply of brochures, printed material and other content embodied on a medium may be treated as a taxable supply of goods, even where the work also involves concept development, design and related services. Separate billing of components does not change the indivisible character of the contract or its taxability. Rectification is unavailable unless the record shows a clear, self-evident mistake; where the original conclusion follows the applicable legal position, no mistake apparent on the face of the record exists. Both challenges were answered against the assessee and in favour of the Revenue.
Issues: (i) whether the consolidated bills for advertisement-related work constituted a taxable sale of goods as part of an indivisible/composite contract; and (ii) whether the order was amenable to rectification on the ground of mistake apparent on the face of the record.
Issue (i): whether the consolidated bills for advertisement-related work constituted a taxable sale of goods as part of an indivisible/composite contract.
Analysis: The appellant was engaged in rendering advertisement services, but the contracts involved supply of brochures and printed material together with concept development, design, photography, scanning and related components. Relying on the principles stated in the decisions concerning drawings, designs, software and other intellectual property embodied on media, the Court held that once such content is transferred on a medium and marketed, the transaction may amount to goods. On the facts, the entire activity was treated as a comprehensive and indivisible contract for supply of printed material, and the separate billing of components did not alter its taxable character.
Conclusion: The issue was decided against the assessee and in favour of the Revenue.
Issue (ii): whether the order was amenable to rectification on the ground of mistake apparent on the face of the record.
Analysis: The rectification request did not disclose any obvious or self-evident error in the original order. Since the conclusion on taxability followed the applicable legal position and the record did not reveal a patent mistake, rectification was not available.
Conclusion: The issue was decided against the assessee and in favour of the Revenue.
Final Conclusion: The challenge to the taxability of the composite advertisement contract and to the refusal to rectify the order both failed, and the questions of law were answered for the Revenue.
Ratio Decidendi: Where a composite advertising contract includes transfer of printed material or similar content embodied on a medium, the transaction may be treated as a taxable supply of goods, and rectification is unavailable absent a mistake apparent on the face of the record.
TaxTMI 
AI Drafter ✕
TaxTMI 
