AI Drafter 
TaxTMI 
TaxTMI 
2019 (4) TMI 126
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....ed that the said amounts collected for flashing such advertisements were liable to service tax under the head "Sale of Space or Time for Advertisement" under Section 65(105)(zzzm) of the Finance Act, 1994. It therefore appeared that the appellants were liable to discharge service tax liability under this category in respect of such amounts collected by them, which was not done so. 2.2 It further emerged that appellants had received Affiliate Commission from one Mercado Online Pvt. Ltd., Bangalore. That appellants promote the business of Mercado by partnering with them and linking their website www.thehindushopping.com. That for any purchase order executed, when an order is placed through the said website, the appellants get a share of the net margins. It therefore appeared that this activity of the appellants falls under the category of "Business Support Services" in terms of Section 65(104c) of the Finance Act, 1994. Hence, service tax liability would require to be discharged on the amounts received by the appellants, which was not done so. 2.3 Accordingly, a number of Show Cause Notices were issued to the appellants which culminated in the impugned Orders confirming the tax....
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....and was nowhere involved in any service in relation to sale of space or time for advertisement. In other words, the appellant merely sold the space in the website and the service tax would get attracted only if somebody provides services in relation to sale of space or time for advertisement under Section 65(105)(zzzm) of the Finance Act, 1994. Nowhere in the provision it was stated that mere sale of space in the website would amount to rendition of service. On the other hand, space in the internet being 'goods', capable of being bought and sold, cannot be treated as service. (ii) Even assuming but not conceding that the transaction attracts service tax, in respect of payments received from M/s. Google Inc. in foreign currency, the same would amount to Export of Service and consequently, the service tax demand on this score is not sustainable in view of Rule 3(1)(iii) of Export of Services Rules, 2005. (iii) For the demand under Business Auxiliary Service, nothing was available on record that the appellant was providing any operation marketing assistance to M/s. Mercado. On the other hand, as can be seen from salient points of the MoU extracted in Order-in-Original No. 3 and ....
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....t in the website/internet, is the appellant's own interpretation. It is an undisputed fact that clicks enable a viewer to enter into M/s. Google Inc. site displaying their client's products/services. These clicks are the resultant measure of accounting the payment viz., payable by M/s. Google Inc. or receivable by "The Hindu". (ii) The appellants had entered into an agreement with M/s. Google Inc. to provide an exclusive search box to browse the advertisement displayed by M/s. Google Inc. At times, the space provided in the web page invites internet users to click them which leads to the web page of the concerned client whose advertisement is flashed. As per the agreement, they cannot display any Ad Unit on a page that contains advertisements associated with another Google Adsense customer, unless authorized to do so by M/s. Google Inc. (iii) Payment is not made for the provision extended to M/s. Google Inc. by putting up a search box to enable users to access Google web content or space for advertisement or teaser but for valid clicks, valid impressions, the browser make in the search box to view the advertisements and/or valid completions of Referral Events initiated throug....
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....benefited M/s. Mercado. (x) Invocation of extended proviso to Section 73(1) is justifiable in respect of Show Cause Notice No. 104/2009 dated 01.04.2009 5. Heard both sides and have gone through the facts. 6. We intend to take up the issues one by one. 7.1 To understand the issue better, the relevant provisions of Section 65(105)(zzzm) of the Finance Act, 1994 in respect of the category "Sale of Space or Time for Advertisement" brought into the service tax net with effect from 01.05.2006, is reproduced as under : "(zzzm) to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organisation. Explanation 1. - For the purposes of this sub-clause, "sale of space or time for advertisement" includes, - (i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet; (ii....
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....man needs. (vii) Service tax is a value added tax which, in turn, is a general tax applicable to all commercial activities involving provision of service. (viii) Value added tax is a general tax as well as destination based consumption tax leviable on services provided within the country. (ix) The principle of equivalence is in-built into the concept of service tax. (x) The activity undertaken in a transaction can have two components, namely, activity undertaken by a person pertaining to his performance and skill and, secondly the person who avails the benefit of the said performance and skill. In the said context, the two concepts, namely, activity and the service provider and service recipient gain significance." 7.2.3 The Finance Act, 1994 provides only for taxation of services connected with Sale of Space or Time for Advertisement and not the Sale of Space or Time per se. True, the inclusive definition of "Sale of Space or Time for Advertisement" in Explanation-1 to Section 65(105)(zzzm) ibid includes providing space or time, as the case may be, for display, advertising or showcasing of any product or service, inter alia, on the internet. However, this definition....
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.... 9. The appeals in respect of these demands are therefore allowed with consequential benefits, if any, as per law. 10.1 The second set of demands have been made under the service tax category of Support Services of Business of Commerce under Section 65(104c) of the Finance Act, 1994. The said provision as extracted by the lower authority, reads as under : "[(104c) "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. - For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities,....
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....12.1 In the event, the amounts demanded under Business Support Service of Rs. 51,606/- with interest thereon and Rs. 72,505/- with interest thereon (Appeal No. ST/185/2011), Rs. 30,745/- with interest thereon and Rs. 26,963/- with interest thereon (Appeal No. ST/40551/2016) and Rs. 2,163/- with interest (Appeal Nos. ST/40678-40679/2017) are sustained. Consequently, the appeals filed by the appellants in respect of these demands are dismissed. 12.2 However, coming to the penalties imposed in respect of the tax demands under Business Support Services, as has already been discussed hereinabove, the provision of Business Support Service on the internet world is definitely a new business concept and understandably, a recent business foray for the appellants. It is evident that the appellants were under the bona fide belief that it was a mere joint venture with Mercado in the nature of partnership and no service tax would be attracted on that account. Hence, there is a case for setting aside the penalties imposed in respect of these demands. This being so, while we confirm the demands with interest under the category of Business Support Service in all these three appeals, the related ....