2021 (2) TMI 7 - AT - Service Tax

Tribunal rules in favor of appellant, finding activities not taxable as advertising agency services.

Shah Publicity Versus C.C.E. & S.T. -Surat-I

Shah Publicity Versus C.C.E. & S.T. -Surat-I - TMI Issues Involved:1. Whether the service rendered by the appellant falls under the expression “selling of space or time slots for advertisement other than advertisements broadcast by Radio or Television” in the negative list under Section 66D of the Finance Act, 1994.2. Whether the appellant's activities constitute 'advertising agency services' and are thus liable for Service Tax.3. Whether the extended period of limitation for demand is applicable.4. Whether interest and penalties under Sections 75 and 78 of the Finance Act, 1994, are applicable.5. Whether the benefit of cum tax price should be granted to the appellant.Detailed Analysis:1. Service Classification under Negative List:The primary issue is whether the appellant's activities fall under the negative list of services as per Section 66D of the Finance Act, 1994. The appellant contended that their services were restricted to selling space for advertisements and ancillary services, which should fall under the negative list effective from 01.07.2012. They argued that they did not engage in creating or conceptualizing advertisements, which would classify them as an advertising agency. The Tribunal agreed with the appellant, noting that the services provided included selling space for advertisements on hoardings, billboards, and kiosks, and maintaining these structures. The Tribunal concluded that the appellant's activities fell under the negative list during the period from 01.07.2012 to 30.09.2014, as they were merely selling space for advertisements.2. Classification as Advertising Agency Services:The appellant argued that their activities did not include making, preparing, or conceptualizing advertisements, which are essential components of advertising agency services. The Tribunal examined the definition of an advertising agency and found that the appellant's activities were limited to displaying advertisements provided by clients on their hoardings. The Tribunal noted that the invoices raised by the appellant did not include charges for creating or preparing advertisements but were solely for display charges. Consequently, the Tribunal held that the appellant's activities did not constitute advertising agency services and thus were not taxable under this category.3. Extended Period of Limitation:The appellant argued that the extended period of limitation should not be invoked as there was no deliberate intention to evade tax. They contended that they were under a bona fide belief that their services fell under the negative list and had disclosed all relevant information in their Service Tax returns. The Tribunal agreed, noting that the issue was interpretational and the appellant had a bona fide belief regarding the non-taxability of their services. The Tribunal concluded that there was no suppression of facts or mala fide intention, and thus, the extended period of limitation was not applicable.4. Interest and Penalties:Since the Tribunal held that the demand for the extended period was not sustainable, it also concluded that interest and penalties under Sections 75 and 78 of the Finance Act, 1994, were not imposable. The Tribunal emphasized that the appellant's actions were based on a bona fide belief and there was no contumacious conduct.5. Cum Tax Price Benefit:The appellant argued that the benefit of cum tax price should be granted as per Section 67 of the Finance Act, 1994, which provides that the gross amount charged for services is inclusive of Service Tax when no tax has been separately collected. The Tribunal agreed, citing relevant judgments, and held that the money recovered from the service receiver should be considered as cum tax price.Conclusion:The Tribunal allowed the appeal, setting aside the demand for the period from 01.07.2012 to 30.09.2014, and directed the adjudicating authority to verify the calculations for the period from 01.10.2014 to March 2016. The Tribunal also ruled that the extended period of limitation was not applicable, and no penalties or interest were imposable. The appeal was allowed in the above terms.