TaxTMI 
TaxTMI 
2021 (2) TMI 7
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....anch of Surat-I Commissionerate against the appellant. After a detail investigation and collecting various documents viz. Form 26AS, ST-3 Returns and payment of Service Tax, Audited Balance Sheet, Bills issued for relevant period alongwith Work Order, the investigation was of the view that the appellant is not merely selling/renting of bare spaces to their clients but providing additional services to its customers for displaying their advertisements on the hoardings and kiosks and therefore, liable to service tax. Investigation also recorded statements from the partner of the appellant Shri Yashwant Shah and contended that as per the statement and the statements taken from four customers, it reveals that the appellant is engaged in providing the Advertising Services to their clients which is liable for Service Tax and does not fall under the Negative list. After detail investigation a Show Cause Notice dated 13.06.2017 was issued invoking extended period. After considering the detailed reply submitted by the appellant and providing Personal Hearing, the adjudicating authority passed the impugned order confirming the charges and allegation levelled in the Show Cause Notice and deman....
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....it does not cause any harm to the general public. He submits that no separate consideration is charged from the client for maintenance of the advertisements or electrification as the same are already included in the consideration charged for displaying of the advertisements. He further submits that at the end oF the agreed term, either the contract is renewed or it gets expired. In case of renewal of contract no further activity is carried out by the appellant except considering the element of discount or price reduction, if any, demanded by the customers. However, in case of expiry of contract the advertisement material i.e. Flex banners of the clients are removed and printing material containing contact details of the appellant are again mounted on the hoarding/bill board/kiosk, etc. at the cost of the appellant so as to make the media space available for new client. 2.2 As regard legal provision he submits that the service of sale of space for advertisement other than advertisement by radio or televisions are taxable prior to 1st July, 2012. With the introduction of negative list of services with effect from 1st July, 2012, the above referred services were covered....
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.... Finance Act, 2006. At the time of introduction of new service, the Joint Secretary, Ministry of Finance, Department of Revenue, Government of India issued a clarification on this service vide D.O.F. 334/4/2006-TRU dated 28.02.2006 which shows that advertisement on building covers under the scope of sale of advertising spaces. 2.5 He submits that partner of the appellant Shri Yashwant Shah explained about the procedure/practice of the appellant for obtaining work order related to preparation and displaying of advertising materials and hoardings. He specifically mentioned that the appellant arranged/managed to display advertisements of their clients on the hoardings for the specific period and charge for the service rendered by them. Advertising agencies provides printed vinyl or flex which was mounted on hoardings by themselves or through the sub-contractors namely Aagam Publicity. He further states that in a case where advertising agency wanted the services or printing of the material of their clients, they have suggested the name of M/s. Milan Publicity who did their work of printing their material on vinyl/flex. The appellant paid Service Tax on such transaction w....
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....ce therefore, liable to pay Service Tax on a consideration received from the customer. 2.8 Shri Modh submits that the respondent has not considered the fact that services provided by the appellant are not composite service and the same are naturally bundled as per Section 66F(3) of the Act. The appellant provided the main service of selling of space for advertisement and other services such as repair and maintenance or electrification of hoardings, etc. are ancillary to main service for which no separate consideration was charged by the appellant. Therefore, as per section 66F (3) which provides taxability of bundled services, the bundled services provided by the appellant would fall under Negative list. In support of his submission he referred the "Taxation of Services : An Education Guide" dated 20th June, 2012 issued by Central Board of Excise and Customs according to which large number of service receivers of such bundle of services reasonably expect service to be provided as a package then such a package could be treated as naturally bundled in the ordinary course of business and if the nature of service in such bundled services that one of the service is the ma....
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....annot be visible at night in absence of electrification. Therefore, the same is cost for providing the service for the appellant not for rendering an additional service. He further submits that the respondent in holding that four customers agreed in their statements that the appellant designed and printed the advertising material of vinyl/flex material. The respondent ought to have appreciated that the authorized signatory of M/s. MADISON COMMUNICATION PVT. LTD. deposed that the appellant designed, conceptualized the advertisement material. He in his letter dated 4th September, 2016 stated that they ordered the appellant for displaying the advertisements on hoardings. The appellant in turn managed all work to mounting of the printed advertisement materials on the hoardings. A brief note to the letter clearly states that art work and creating work has been supplied by the client to the appellant. It reveals that the appellant did not provide all these services. He submits that Shri K.N. Prakash Shetty, Finance Controller & Authorized signatory of M/s. Kinetic Advertising India Pvt. Ltd. Which is an advertising agency in his statement dated 16th September, 2016 deposed that in ....
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.... statements cannot be relied upon in view of the following decisions:- a. SWADESHI POLYTEX LTD. Vs. CCE,MEERUT- 2000 (122) ELT 641. b. BASUDEV GARG Vs. CC, NEW DELHI- 2013 (294) ELT 353 (DEL) c. J&K CIGARETTES Vs. CCE, 2011 (242) ELT 189 (Del.) d. ARYA FIBRES PVT. LTD. Vs. C.C.EX. 2014 (311) ELT 529 (T) 4.1 He submits that provisions of Section 9D of the Central Excise Act, 1944 is applicable in relation to Service Tax in terms of Section 83 of the Finance Act, 1994. He submits that Section 9D of the Central Excise Act provides that statement of any witness will not be considered as an evidence only if such person who made the statement has been examined as a witness by Central Excise Officer and thereafter having regard to the circumstances of the case decides whether it is appropriate to consider the statements of witness as an evidence. Therefore, it is an obligation upon the respondent to examine four customers before placing reliance upon their depositions. He placed reliance on the following judgments:- • ARYA FIBRES PVT. LTD. Vs. C.C.EX. 2014 (311) ELT 529 (T), • Telest....
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....pellant interpreted that the services provided by them fall under Negative List of Services therefore, there is no contumacious conduct on the part of the appellant in withholding/suppressing information and the Service Tax Department had knowledge of the activities of the appellant especially when appellant has disclosed the details in their Service Tax Returns. The invocation of extended period of limitation and imposing penalty on the appellant is legally not sustainable. 4.5 Without prejudice to submission made on merit of the case it is submitted that in view of principle of valuation provided under Section 67 of the Act, the benefit of cum tax price was not granted to the appellant. It ought to be considered that Section 67 of the Act provides that the gross amount charged for the Services is inclusive of the Service Tax payable in a case when no tax has been separately collected on service and taxes be demanded subsequently. Therefore, the money recovered from the service receiver would have to be considered as cum tax price. He placed reliance on the following judgments:- a. SRI CHAKR TYRES Vs. CCE (MADRAS)- 1999 (108) ELT 361. b....
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....lling of space or time slots for advertisement other than the advertisements, broadcast by Radio or television" which is placed in negative list of Services provided under Section 66D of the said Act with effect from 01.07.2012 or not. Before deciding the category of service, it is necessary to carefully understand the fact of activities carried out by the appellant which is described as under:- 6.1 In view of the above activities explained by the appellant which is not under dispute, the services provided by the appellant is summarized as under:- The services as per the above broadly categorized as under:- 1. Selling of space for advertisement on hoarding/Bill boards/kiosk, etc. including electrification and repair and maintenance thereof, during the contract period. 2. Mounting of flex or other printing banners on the said hoardings/bill boards/kiosk where the flex banners of printing banners were included in the consideration. In the second category the appellant have admittedly discharged the service tax and on first category the appellant's contention is that the service is of the sale of space for advertisement therefor....
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....ement example for visualizing, conceptualizing, designing, etc. of the advertisement therefore, it is clear that the invoices raised by the appellant is not for making or preparation of advertisement but only for the display charges for the space used for display of such advertisement. The appellant has submitted that the printed material/flex is provided by the client therefore, there is no question of including the cost thereof in the media space invoice of the appellant. The appellant's service is confined to display of advertisement on the hoardings, boards, kiosk, etc. and charge for the same is as per the space provided. 6.6 As per the advertising service display of advertising (in this case sale of space for advertisement) is one of the various advertising service but by virtue of entry provided in the negative list selling of space for advertisement is not taxable. 6.7 In our view, if providing space for advertisement is taxed then the entry provided in the negative list under Section 66D (g) will become redundant. The appellant can be charged service tax only in case where they themselves developed printed vinyl/flex and display the same on th....
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....ertising agencies are taxable under Section 65(105)(e). This entry proposes to levy service tax on sale of time or space for advertisement, excluding sale of space for advertisement in print media. Sale of advertising time in television and radio by any person other than broadcasting agency or organization is also covered under this sub clause. Some of the other modes of advertisement covered under this mode are internet advertisement, advertisement on buildings, vehicles, etc., advertisement in motion pictures, television, serials, video and music albums, mobile phones, ATM's, films, & television serials (known as product placement). It may be noted that advertisement in print media is excluded." 6.9 As per the above clarification it shows that advertisement on building covers under the scope of advertising space. We further find the respondent has heavily relied upon the statement of Shri Yashwant, Partner of the appellant, Statements of four customers. In this regard we find that Shri Yashwant C. Shah, Partner of the appellant has categorically stated that the advertising agencies approach them to display advertisement of their client. Advertising a....
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....llant have categorically asked for the cross examination of the witnesses who have given the statements but the adjudicating authority giving a lame excuse rejected the request for the cross-examination. Section 9D mandatorily put obligation on the adjudicating authority to examine the witness before relying on the statements recorded during investigation. 6.15 In our view even if, the appellant does not ask for the cross-examination, the adjudicating authority is duty bound that he must examine each and every witness whose statement he is going to rely upon for adjudication of the case. Since witnesses were not cross examined, their statement cannot be used as evidence. In that case only other documents available on record can be used for deciding the case. As per the documents as discussed above, we do not find that the appellant are engaged in visualizing, conceptualizing , creating, making, preparing the advertisement, these activities are done by advertising agencies who in turn provide the readymade advertising material to the appellant only for displaying on their hoardings. Therefore, firstly the statements particularly in the nature of the present case....
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....llant is to display the readymade advertisement on the hoardings. Since the appellant is the owner of the hoardings, it is their obligation to provide the electrification and maintain the Wear and tear of the advertisement which are nothing other than the ancillary services which needs to be provided unavoidably along with main service i.e. sale of hoardings for advertisement therefore, merely because some ancillary services like electrification and repair and maintenance is provided by the appellant, the principal service of sale of space for advertisement will not change its classification. 8. The appellant vehemently submitted that this is nothing but bundled service and in case of bundled service category of the service would be the nature of the principal service among the bundled service. In this case also even if, we consider that there is a bundled service of sale of spae for advertisement, electrification, repair & maintenance of advertisement/ hoardings as per the invoice of the appellant they are charging for providing the space on monthly basis and there is no variable cost of other ancillary services. Accordingly, the service will be pre-dominantly sale of spa....
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....rch, 2016 the appellant has repeatedly submitted that from 01.10.2014 they have been paying Service tax regularly and there is no short payment of Service Tax rather there may be excess payment. It is observed that from the submission made by the appellant before the learned adjudicating authority and the finding in the impugned order that some service of sale of space was provided during the period 01.07.2012 to 30.09.2014 but the invoices were raised on or after 01.10.2014. The Adjudicating Authority since decided the matter on merit that service of the appellant is taxable he has not gone into the issue that in case service was provided prior to 30.09.2014 and invoices were raised after 01.10.2014, Whether the service tax should be chargeable considering the date of service or the date of the invoices. 12. In this regard we are of the clear view that the taxability of the service shall be as per the time of providing the service irrespective of the fact whether the invoice was raised at that time or at later stage. In the fact of the present case when service was provided during the period 01.07.2012 to 30.09.2014 and even if invoices were raised subsequently, the....
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....d discussion and findings, We allow the appeal in the above terms. (Dictated & Pronounced in the open court on 29.01.2021) ============= Document 1 6. SUBMISSIONS Nature and model of the business of the Appellant Before dealing with the finding of the impugned order, the nature and model of the business of Appellant is described as under: Steps Particulars Step Location on rental basis for development of Media 1 Space The Appellant identifies various vacant spaces such as Foot over bridges, poles, houses, plots where hoardings kiosks can be erected for display of the advertisements; The said vacant areas may be owned by private owners or societies, trusts or Surat Municipal Corporations ('SMC'). Subsequent to identification of the vacant space, the Appellant enters in to lease rental agreement with the owners; As per the local rules and regulations, the Appellant needs to obtain permission from Surat Municipal Corporation (SMC) through set procedure, pay license fees to fabricate and display hoardings on the designated areas in in private locations. The Appellant pays necessary license fees ....
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.... For other corporate clients Various customers directly or through other advertising agents approach the Appellant to display their advertisement materials on the hoardings. Billboards/kiosks, etc. The consideration is charged on the basis of various parameters such as time period for displaying the advertisement, size of the hoarding, location etc. The sites are proposed on individual rates to clients. The rates for sites are negotiable and vary from clients depending on relations with client. In event of rates which are below the benchmark value, is not disclosed on individual basis for commercial purpose and Document 4 10 3 4 therefore, sold as a package deal for disclosing it to another clients. Once the booking is confirmed, the space is blocked by way of mail /work order verbal communication, from clients. The advertising material such as flex banners are printed by the clients itself or the Appellant suggest the name of the vendors from his empanelment who are engaged in printing of the flex banners and the like articles. It is to be noted that the Appellant is never engaged in creating the idea ....
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....l containing contact details of the Appellant are again mounted on the hoarding billboards / kiosks, etc. at the cost of Appellant so as to make the media space available for new client. Document 7 Sr. Services No. 1 Sale of space for advertisement on hoardings/ kiosks, etc. billboards 2 Mounting of flex banners or other printing banners on the said hoardings billboards / kiosks, etc. 3 Services of electrification of 4 hoardings billboards / kiosk, etc. Repair and maintenance services of hoardings during the contract period as mentioned in the agreement / mutual consent with the clients Document 8 શà«àª°à«€ વિઘà«àª¨àª¹àª° પારà«àª¶à«àªµàª¨àª¾àª¥àª¾àª¯ નમઃ SHAH PUBLICITY Out Door Advertisers Off. 17, Everest Building, Opp. Railway Reservation Center, Athwa Gate, Surat-395 001 (Off.) Phone: 2478910, 2479479 Fax: (0261) 2476154, E.mail: [email protected] M/s. TRIBHOVANDAS BHIMJI ZAVERI 10. Add. 241/43.7AVERI BAZAR, MUMBAI.,. Tele./Fax 022-23425001/23435001. ....