The New Delhi bench of CESTAT in the case of CST Delhi vs. M/s IPAN decided that media monitoring services cannot be subject to Service Tax under the head ‘Business Auxiliary Service’.
In the instant case, the assessee is engaged in various business activities, some of which are liable to Service Tax under different categories. The sole issue related to the service tax liability of the assessee, with reference to certain public relation activities carried-out by them for their clients. The revenue had a view that these are liable to be taxed under Business Auxiliary Service.
The assessee contested the demand on the ground that wherever the amount received is for brand promotion, they were discharging Service Tax under BAS. On perusal of impugned order reveals that one of the services sought to be taxed under business auxiliary service is media monitoring services.
The original authority after hearing all the parties’ contentions, held that these activities are not directly or indirectly relating to business promotion for marketing of goods/services and, as such, is not covered by the tax entry in BAS and also added that such services are meant to broaden the knowledge of the client.
The advocate for Assessee, S.K. Pahwa before the bench including Justice Satish Chandra, (president) and B. Ravichandran, member (technical) truly contended that if the entire range of ‘public relations service’ was covered under the business auxiliary service, there was no reason for the legislature to enact another category of taxable service.
The tribunal bench rejected the contention of revenue that aforementioned services like arranging press conference, interviews, education workshop, contact programme, etc. will directly or indirectly have relationship to the enhancement of sales and promotion of the product/services of the client.
The Tribunal also pointed out that the arrangement of such events can be for various reasons like disclosing financial performance or clarifying certain issues to the public.