Business Auxiliary Service limits tax on newspaper space selling before 1-5-2006, while newspaper promotion remains taxable.

Service tax on newspaper space selling for the period before 1-5-2006 was not sustainable under Business Auxiliary Service because the specific taxable entry for sale of space in print media was introduced only from that date; the tax paid on that component was refundable, subject to unjust enrichment. Service tax on newspaper promotion was treated as falling within Business Auxiliary Service because the activity was incidental or auxiliary to the promotion or marketing of the client's product; refund on that component was therefore rejected. The result was partial relief, limited to the space-selling element.

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Issues: (i) Whether service tax paid on space selling in newspaper during the period prior to 1-5-2006 was leviable under Business Auxiliary Service and refundable; (ii) Whether service tax paid on newspaper promotion was leviable under Business Auxiliary Service and refundable.

Issue (i): Whether service tax paid on space selling in newspaper during the period prior to 1-5-2006 was leviable under Business Auxiliary Service and refundable.

Analysis: The definition of taxable service relating to sale of space in print media was introduced only from 1-5-2006 by section 65(105)(zzzm) of the Finance Act, 1994. Before that date, the activity of selling space in newspapers was not a taxable service under the statutory scheme. The later specific insertion showed that the activity could not be brought to tax for the earlier period under Business Auxiliary Service by resorting to a wider construction.

Conclusion: The levy on space selling for the period 9-7-2004 to 28-2-2006 was not sustainable and the tax paid was refundable, subject to the bar of unjust enrichment.

Issue (ii): Whether service tax paid on newspaper promotion was leviable under Business Auxiliary Service and refundable.

Analysis: The newspaper sold by the client was treated as goods or an article marketed in the course of trade, and the appellant's activity was held to be incidental or auxiliary to the promotion or marketing of that product. The service therefore fell within the scope of section 65(19) of the Finance Act, 1994, and specifically within the auxiliary service limb. The authorities' rejection of refund on this component was upheld.

Conclusion: The levy on newspaper promotion was upheld and no refund was due on this component.

Final Conclusion: Relief was granted only for the space-selling component, while the rejection of refund for newspaper promotion was sustained, resulting in a partial success for the assessee.

Ratio Decidendi: When Parliament introduces a specific taxable service with effect from a particular date, the same activity cannot ordinarily be taxed for an earlier period under a different service category; and an activity that is incidental or auxiliary to the promotion or marketing of a client's product falls within Business Auxiliary Service.

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