2018 (1) TMI 1093 - AT - Service Tax

Tribunal rules in favor of respondent, rejecting Revenue's appeal on tax liability for public relations activities.

CST Delhi Versus M/s IPAN

CST Delhi Versus M/s IPAN - 2018 (12) G.S.T.L. 103 (Tri. - Del.) Issues:Tax liability of the respondent for public relation activities under Service Tax.Analysis:The appeal pertains to the tax liability of the respondent for public relation activities under Service Tax. The dispute arose when the Revenue contended that certain activities, such as 'media monitoring services', were liable to be taxed under Business Auxiliary Service (BAS). The original authority examined the nature of these services in detail and concluded that they did not directly or indirectly relate to business promotion for marketing goods/services. The original authority emphasized that the 'media monitoring service' provided by the respondent was primarily for broadening the client's knowledge and not for sales promotion. The authority highlighted the importance of strict interpretation of taxing statutes and the need for concrete evidence to establish tax liability.The original authority noted that the absence of evidence supporting the Revenue's presumptions and assumptions regarding the purpose of the public relation activities undermined the case for tax imposition. It was emphasized that if public relations activities were entirely covered under BAS, there would have been no need for a separate taxable service category for 'public relations management service'. The introduction of 'public relations service' as a taxable service from May 1, 2006, indicated a distinct tax treatment for public relations activities. The respondent had been paying proper service tax on their public relations earnings since the introduction of this service.In dismissing the Revenue's appeal, the Tribunal found no sustainable ground for taxing 'media monitoring services' and similar public relation activities under BAS. The Tribunal disagreed with the Revenue's argument that these activities indirectly enhanced sales and promotion of client products/services. It was observed that activities like arranging press conferences or interviews could serve various purposes beyond sales promotion, such as disclosing financial performance or addressing public concerns. The Tribunal concluded that the presumption of the Revenue regarding tax liability for these activities was not justified, especially considering that public relation activities were separately brought under tax liability from May 1, 2006, without amending previous tax entries like BAS. Therefore, the Tribunal upheld the original authority's decision and dismissed the Revenue's appeal.Overall, the judgment underscores the importance of clear statutory interpretation, concrete evidence, and the distinct tax treatment of different services under Service Tax regulations.