TaxTMI 
TaxTMI 
2026 (5) TMI 1592
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....ellant was holding Service Tax Registration No. AACPO3105AST001 under the category of Advertising Agency Services. During the audit of the Appellant, conducted for the period 2004-2005 to 2006-2007 on 16.08.2007 to 17.08.2007, it was revealed that the Appellant has provided advertising services to above companies; Appellant used to make payments to the wall owners on account of wall rent and provided services by painting the given matter of advertisement on the surface of such rented walls; the Appellant raised invoices to the recipients of the services without including the amount of wall rent in the gross amount of the service for the purpose of discharging Service Tax liability; the Appellant utilized the services of other service providers who arranged for the structures for such hoarding for a fixed period of time and flexes containing printed material used in the advertisement through hoardings; the Appellant did not include the expenditure incurred on the printed flex in the gross value of the service; M/s Sonia Plastics, an HUF with Shri Ashwani Oberoi, operating from the same address; were supplying the printed flex for the advertisements on the hoardings; M/s Sonia Plasti....
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....ecipient of service and makes payment to the third party for the goods and services procured, the same are not includible in the taxable value; the said Rule stipulates that activities performed as the pure agent are not liable to service tax; Circular No. B-43/1/97TRU dated 06.06.97 and instructions issued under F. No. B1/4/2006-TRU dt. 19.04.2006 clarify that various other reimbursable expenses incurred are not to be included for computing the service tax. He submits it is not in dispute that the appellant paid rent to wall owner on behalf of companies and same was reimbursed to them as per actuals; the appellant acted as pure agent of the company and payment was made by them to "wall owner" by raising voucher of company; the appellant being a pure agent and the same is not includible in the taxable value as per ibid Rule 5 & ibid circulars. 3.2. Learned Counsel further submits that the "wall owner" is a service provider in respect of "wall" given on rent to company; the service tax on rent is required to be paid by the "wall owner" under category of "Renting of Property Services" as per section 68 of Finance Act; "Renting of Property Services" was brought under service tax ne....
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.... of service subject to furnishing documentary proof thereto; intent of legislation is to levy service tax on the service charges received & not on the material sold while providing taxable service. Hon'ble Gujrat High Court in the case of Addition Advertising Vs. UOI 1998 (98) ELT 14 (Guj.) held that service tax is not a tax on "sale or purchase of goods"; it is in respect of services rendered; as per entry No. 92-C of Union List in Schedule VII of constitution it is a "tax on services"; it is against the edifice of constitution to demand service tax on the gross amount received; the material bought and sold as such are chargeable to sale tax, which is a state subject; Central Government has no power to tax on purchase or sale of goods under the garb of service tax; supply of goods involved in a works contract is subjected to sales tax in view of the legal fiction created by the 46th amendment to the constitution, w.e.f. 02.02.1983. 4.2. Learned Counsel submits also that as per Section 65B (44) - "Service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - (a) an activity which constitutes m....
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....at the amount is received from M/s Hero Cycles Ltd Ludhiana on account of rent, it is the appellant who pays the 'Wall Owners' in cash; the cost of wall rent is incurred by the Appellant though recovered/ got reimbursed from the clients; a perusal of the rent receipts, claimed to be agreements/invoices by the appellants, indicates that only the 'wall owners' signed the same; Commissioner rightly held that the charges recovered by the Appellant from the wall owners cannot be said that of a Pure Agent, as it is essential component of cost of taxable service and that the contention of the Appellant that the "Wall Owners' are the service providers and only they are required to pay the service tax is not correct; it's another matter that the said wall owners are required to pay service tax, if otherwise payable, under 'renting of immovable property services' and that the appellant would have been eligible for credit under Cenvat credit Rules, 2004. He submits that in the instant case, conditions, specified under rule 5(2) of the Service Tax Valuation Rules 2006, are not satisfied to treat the service provider as pure agent and therefore, the costs of expenditure or t....
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.... the assessable value for the purposes of payment of service tax by the appellant; it is another matter that had the wall owner charged and paid service tax on Renting of wall, the appellant could have availed Cenvat credit on the same; however, it is not fact record that the wall owner has paid service tax and therefore, the question of availability of Cenvat credit on the same does not arise. 7. Learned Authorised Representative submits that the impugned order rightly holds that since the service in question i.e. displaying of advertisement on hoarding could not be provided without use of Flex printed with advertising material, its cost is an essential component of the advertising service; Manager (Marketing & Admn.) of the Appellant, in his statement dated 23.4.08, admitted that their clients do not supply them any material except the design of Advertisement and the value of Flex pertains to M/s Sonia Plastics only; though M/s Sonia Plastics has raised bills directly to the recipient of the services, fact remains that the Flexes were never delivered to the recipient of Services; they were used by the Appellant in relation to provision of the advertising services by displaying....
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....d full declaration in the mandatory returns; the appellant intentionally chose not to disclose the amount collected by them from the customer with intent to vade payment of Service Tax. He relies on * Days Inn Deccan Plaza 2016(45) STR 502 (Mad.) * Star India Pvt Ltd 2015 (38) STR 884 (Tri. - Mumbai). * Tech Mahindra Ltd 2015 (38) STR 1200 (Tri. - Mumbai) 10. Heard both sides and perused the records of the case. There is no dispute as to the fact that the appellant is providing taxable services. The appellant is engaged in advertising on the walls by getting the publicity material pained on the walls and flexes and displays the flexes in vantage points. Section 65(2) defines "advertisement" to cover hoardings and visual representations. Section 65(3) defines "advertising agency" to include any person engaged in preparation, display or exhibition of advertisements. Therefore, the appellant is an 'advertising Agency. The activities undertaken by the appellant, namely painting advertisements on walls and display through hoardings, fall within the statutory definition of taxable advertising agency service. Any service provided by an advertising agency in r....
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....deration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of Service Tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of Service Tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation. - For the purposes of this section, - (a) "Consideration" incl....
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....o avoid payment of service tax. 14. Another argument/contention of the appellant is that wall rent represented reimbursable expenditure incurred as a "pure agent" and therefore could not form part of taxable value. Ongoing through the records of the case, we do not find any tripartite or bipartite agreement which indicates that the appellant is an agent of his customers, leave alone 'pure' agent. All that the appellant could place on record are some documents titled "Agreement Form Cum Receipt" to claim the same as agreement between the wall owners and the companies. However, ongoing through the so-called receipts, we find that they contain the signatures of the wall-owners alone. It appears that they are just receipts for the rent received by the respective owners of the walls. We find that the same cannot be held to be agreements, as they are not executed between two contracting parties. In addition to the inadequacies of the 'Agreement-cum-Receipts', what is important is that the so called 'Agreement-cum-Receipts' are not relatable to the service provided by the appellants. The demand is in respect of amounts received/liable to be received by the appellants from their custome....
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....due to a categorical finding that the appellant therein collected the rent amount from their clients and paid to the house owners acting just as an intermediary. In the instant case, the so called "Agreement Form Cum Receipt" does not even indicate that the rent was collected from the appellant. Thus, the first question is answered in affirmative in favour of Revenue. 17. We now proceed to examine the issue relating to printed flex material supplied through M/s Sonia Plastics. It is alleged in the show cause notice that M/s Sonia Plastics and the Appellant i.e. M/s Punjab Advertising Agency are having common business interest as the former is an HUF with Shri Ashwani Oberoi as Karta who is also the proprietor in the latter. We find that mere commonality of management or relationship between persons cannot automatically give rise to the conclusion that justify clubbing of turnover or disregard of separate legal identity. The records demonstrate that M/s Sonia Plastics and the appellants possessed separate registrations under fiscal statutes, maintained independent books of account, issued separate invoices. M/s Sonia Plastics have discharged VAT/sales tax on the printed flex mate....
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....ts, rather than just failing to declare something they might have genuinely overlooked or misunderstood. The Hon'ble Supreme Court has repeatedly held that mere negligence, bona fide mistakes, or divergent interpretations of law are insufficient grounds for invoking the extended period. It is for the department to prove a deliberate intent to evade duty. One of the foundational judgments in the series is that of Pushpam Pharmaceuticals Company 1995 (78) E.L.T. 401 (S.C.). It was laid down that "suppression of facts" and "wilful misstatement" demand deliberate intent and positive acts of evasion. It places the burden to prove the satisfaction of these pre-conditions on the Revenue. It is also consistently held that prior knowledge on part of the department, or the department's capacity to acquire such relevant knowledge (e.g., through audits, filed returns, or site visits), effectively negates any allegation of suppression. 19. We find that Show Cause Notice dated 18.09.2008 was issued consequent to an audit. It has been held in many cases that under the circumstances, extended period cannot be invoked. We find that Principal Bench held in the case of Sunshine Steel Industrie....