2020 (6) TMI 348 - AT - Service Tax

Photo book creation deemed manufacturing, subject to VAT. Revenue appeals dismissed.

The Tribunal upheld the decision that the respondent's creation of photo books constitutes a manufacturing process under Chapter 4911, subject to VAT and ... Classification of services - Photography service or not - manufacture and sale of photobooks to photography studio or individual photographers who outsourced such work to the respondent against agreed consideration - HELD THAT:- The issue is decided in the case of M/S. VENUS ALBUMS CO. PVT. LTD. VERSUS CCE, CHANDIGARH/LUDHIANA/AMRITSAR [2018 (11) TMI 754 - CESTAT CHANDIGARH] where it was held that As the activity of printing has also been exempted from payment of service tax, if we take note of the fact that the activity undertaken by the appellant in relation to photography service then also the activity undertaken by the appellant is not taxable service. Appeal dismissed - decided against Revenue. Issues Involved:1. Classification of the respondent's activity under 'Photography service'.2. Applicability of service tax on the respondent's activity.3. Consideration of the activity as manufacturing under Chapter 4911 of the Central Excise Tariff Act, 1985.4. Applicability of VAT on the sale of photo books.5. Exemption from service tax under specific notifications.Detailed Analysis:Classification of the respondent's activity under 'Photography service':The Revenue contended that the respondent’s activity of creating photo books falls under 'Photography service' as defined under sections 65(78) and 65(79) read with section 65(105)(zb) of the Finance Act, 1994, before 1.7.2012, and under section 65B(44) read with section 65B(51) after 1.7.2012. The Revenue argued that the entire process from receiving predesigned photos to delivering the photo book involves steps integral to photography services.Applicability of service tax on the respondent's activity:The Revenue issued show cause notices to the respondents, asserting that the activity should be taxed as a service. However, the Commissioner (Appeals) set aside the demand based on the Tribunal's decision in the case of Venus Albums Company Pvt. Ltd. The Tribunal reaffirmed that the activity of printing and binding photo books does not constitute 'Photography service' but rather a manufacturing process, thus not attracting service tax.Consideration of the activity as manufacturing under Chapter 4911 of the Central Excise Tariff Act, 1985:The Tribunal examined the process undertaken by the respondent and concluded that the transformation from digital photos to printed and bound photo books constitutes a manufacturing activity. This classification falls under Chapter 4911, which includes printed pictures and photographs. The Tribunal referenced various judicial pronouncements, including the Supreme Court's decision in Fitrite Packers and the Delhi High Court's decision in Delhi Press Patra Prakashan, to support this conclusion.Applicability of VAT on the sale of photo books:The respondent was registered under the Punjab VAT Act, 2005, and was paying VAT on the sale of photo books and other printed materials. The Tribunal noted that since the respondent's activity is classified under Chapter 4911 and involves manufacturing, it is subject to VAT rather than service tax.Exemption from service tax under specific notifications:The Tribunal highlighted that specific notifications, such as Notification No. 14/2004-ST amended by Notification No. 19/2006-ST, exempt the activity of printing from service tax. Additionally, subsequent notifications like Notification No. 25/2012-ST and its amendments further exempted printing activities performed as job work from service tax.Conclusion:The Tribunal upheld the Commissioner (Appeals)'s decision, confirming that the respondent's activity of creating photo books is a manufacturing process classified under Chapter 4911, attracting VAT and exempt from service tax. The appeals filed by the Revenue were dismissed, affirming that the issue is no longer res integra in light of the Tribunal's earlier decision in Venus Albums Company Pvt. Ltd.