Activity of Renting out of Hoardings not amount to ‘Advertising Agency Service’: CESTAT [Read Order]

Hoardings - Taxscan

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has ruled that the activity of renting out of hoardings is not subject to Service Tax under the category of “Advertising Agency Service” under the provisions of the Finance Act, 1994.

The appellants, engaged in renting of hoardings were registered with the service tax department under the category of “Advertising Agency Service”. After conducting audit, the department held that the appellants have received some amounts towards renting of hoardings which would fall under the category which are nothing but providing advertising on sub-contract basis. The department took a view that the above activity is exigible to service tax under Section 65 (3) of the Finance Act,1994.

The Tribunal bench found that there is no allegation that appellant had themselves made prepared displayed or exhibited any advertisings on their own.

“There is no dispute that the advisements which may have appeared on the hoardings are those that were prepared by the concerned advertising agencies and certainly not by the appellants. The appellants have only rented out these hoardings to the concerned advertising agency. The definition of “Advertising Agencies” in Section 65 (3) ibid does include the phrase “any service connected with”. Discernably, this phrase has to be read in keeping with the principle of ejusdem generis. Where a law lists specific class of persons or things and then refers to that in general, the general statements only apply to the same kind of persons or things specifically listed out,” the bench said.

Relying on the judicial decisions, the Tribunal held that the activities of the appellant cannot be brought within the fold of “Advertising Agency Services” for the purpose of Section 65 (3).

“This being so, the impugned order to the contrary cannot be sustained and is therefore set aside. Appeal is allowed with consequential benefits, if any, as per law,” the bench said.

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